Scan the QR code in the image to register In 2020, we experienced staying at home to contribute to the country, and in 2021, before we could celebrate, we faced the call to "celebrate the New Year locally." Indeed, the pandemic continues in another form. In such a macro environment, new opportunities are bound to emerge, because any transformation of traditional models requires an external force to drive it. The SARS outbreak in 2003 gave rise to search-based e-commerce represented by Taobao and JD.com. So, does the community group buying model catalyzed by the COVID-19 pandemic in 2020 signify another retail revolution? Major giants have successively entered the fray, and everyone inside and outside the track is thinking about getting a piece of the pie. The chaotic battles among various players have gradually educated consumers, cultivated new shopping habits, and are destroying the traditional purchase-sale system. As the track develops, it has evolved into a three-way split:

1. Grassroots entrepreneurs, such as Zhihua Zhiguo and Youjing Youtian, are local warlords who acquire traffic by empowering group leaders and have steadfastly held their ground in community group buying.

2. Those from prestigious backgrounds, who from the start have worn the cloak of community group buying while engaging in community e-commerce, attempting to turn group leaders into "porters," are the new and old top three players tightly controlling traffic.

3. Store-group group buying, represented by Xiaoai Alliance and Xiaobu Youxian, are new-style "store merchants." Awakening chain physical stores are building store-group integration around their stores and cultivating professional group leaders. It should be noted that within the community group buying track, community e-commerce from prestigious backgrounds brings large capital to burn on subsidies and price wars, while offline stores have years of accumulated goodwill and compatible supply chain and warehousing systems. So, as the weakest party, regional platforms lack everything—what kind of survival strategy do they have? -01- Youjing Youtian: A Story to Tell Before the Chinese New Year, while on a business trip to Henan, I overheard a saying: "In the nationwide fight against COVID-19, for vegetables, go to Youjing Youtian." Later, when I visited Youjing Youtian's headquarters, I asked about this. Founder Wang Shouren explained that during the most severe outbreak, cities and roads were sealed off nationwide, and work stoppages and holidays began. At that time, either essential supplies were cut off, or there was malicious price gouging like "sky-high cabbage." Youjing Youtian organized the only group buying in Zhengzhou starting from the third day of the Lunar New Year, and pioneered a community delivery model using "vegetable containers." This one-stop, affordable, contactless delivery model was quickly endorsed by the government and replicated nationwide. "Looking back now, I think it was nothing special. Perhaps a timely help is better than a delayed favor. When a company truly begins to fulfill its social responsibility, consumers will remember you, just like the many companies that donated money and supplies during the pandemic. Of course, this also relies on having sufficient insight into the local customs and consumption habits of a region. This is probably why the local strongman always prevails over the outsider." Mr. Wang added. As a veteran born in the 1970s, Wang Shouren often jokes that he is not only a community group buying veteran but also an "old-timer" in the track, having to deal with "youngsters" every day. Before entering fresh produce, he spent 15 years in home appliances. In 2009, the home appliances to the countryside policy sparked his idea to switch, and he noticed the fresh produce industry as a potential opportunity. Why is the fresh produce industry profitable? First, the entry barrier is low; at that time, buying a tricycle to wholesale fruit was enough to sell. Second, although fresh produce has high spoilage, the gross margin is indeed considerable. Third, at that time, there was not a single professional fresh produce store in Zhengzhou; fruit selling was still at roadside stalls and supermarkets. Wang Shouren thought his opportunity had come, but he didn't realize he was just "the first to eat the crab." In an era dominated by roadside stall economy, the sudden appearance of a high-end fresh produce store made people instinctively think that something sold for one yuan at a stall would cost five yuan in the store. The community fresh produce store format appeared too early and soon died on the road. His first exposure to community group buying was in 2014-2015. Wang Shouren mentioned that he saw a specialty store in Zhengzhou that collected orders in many residential communities and delivered them uniformly the next day. He thought this pre-sale + delivery and self-pickup model was innovative and could be tried with fresh produce. However, due to immature considerations, after two failures in supply chain and warehousing, the community group buying plan was shelved indefinitely. Later, as vice general manager of Liancai Wang, which grew into a local unicorn in Henan, Wang Shouren looked back and felt that the basic conditions for community group buying were now in place. So, in May 2018, he officially launched the Youjing Youtian project. After three months of operation, he personally visited Changsha, the birthplace of the community group buying trend, to conduct field research. He confirmed that his model could work and became more confident in continuing on this track. After two years of development, Youjing Youtian now has over 2,000 group leaders in Zhengzhou, with monthly GMV exceeding 10 million yuan. -02- The Third Way of Survival "The operating costs of community group buying companies nationwide are basically never below double digits, averaging around 12%, with some exceeding 20%. But my total costs, including logistics and wages, are only 7%. That's my magic weapon for survival." Wang Shouren, founder of Youjing Youtian, told New Distribution. Money in the FMCG industry is hard-earned, picked up coin by coin, and community group buying is not a quick-money channel. Whether community group buying can be profitable ultimately depends not on how much you can earn, but on how much you can save. A typical example: a platform with monthly GMV of tens of millions came to learn from Youjing Youtian, which has a monthly GMV of 10 million. As they left, they joked, "If I could control my costs like you, I'd already be rich." All business philosophies boil down to four words: cost reduction and efficiency enhancement. In Wang Shouren's view, community group buying should essentially return to a 2B business, where the platform acts as an online wholesale department. The traditional wholesale department stays in a store or at a stall, while community group buying directly stays on the platform. Developing the platform as an online wholesale department versus an online retail store involves completely different cost investments. Youjing Youtian aims to cut all retail functions and minimize operating costs, thereby replacing the group leaders' original supply chain. For example, many of Youjing Youtian's products are in large specifications. Other platforms sell eggs in packs of 6, 8, or 10, boxed, while Youjing Youtian typically gives group leaders a basket of 33 jin (about 16.5 kg) directly. The saved operating costs are passed on to empower group leaders. Most community group buying platforms sell directly to C-end consumers, with group leaders performing mechanical tasks of receiving and sending. Youjing Youtian, on the other hand, sells directly to group leaders. Thus, if you have 100 group leaders, you have only 100 customers. This fully leverages the small B-end role of group leaders, allowing them to further reach the C-end, rather than the platform directly connecting with consumers. Wang Shouren believes, "The expense ratio of offline physical stores is around 18%. If our operating costs also reach double digits, then this so-called supply-side reform of community group buying would be meaningless." Only by minimizing operating costs can one have a foothold in such "turbulent times." Therefore, Youjing Youtian's 1,000-square-meter warehouse corresponds to 10 million yuan in GMV, with each square meter needing to produce at least 10,000 yuan in CMV per month. This avoids both warehouse overflow and waste of space. To achieve this reasonable warehouse "ping efficiency," Youjing Youtian has moved warehouses four times. As for Youjing Youtian's headquarters, it is set in a simple two-story attic in the same compound as the warehouse, with four very basic offices at 600 yuan per month each, totaling 2,400 yuan per month. In Mr. Wang's words, "This doesn't hinder my employees' work compared to a high-rise, nor does it impede the collision of ideas during exchanges." -03- Amoeba Operating Model However, such a locally influential group buying platform, a startup with monthly GMV exceeding 10 million yuan, is actually supported by fewer than 10 people. This is precisely the most important part of Youjing Youtian's cost reduction and efficiency enhancement—the Amoeba operating model. Everyone is familiar with the Amoeba model, but reading about it in books is one thing; implementing it specifically in community group buying is another. Wang Shouren stated frankly that, including himself, there are only 9 people: 4 purchasers, 1 customer service, 1 planner, 1 operator, and 1 warehouse and distribution person. Each person is an independent operating center, especially the 4 purchasers, who also serve as shelf managers and graphic designers. More accurately, Youjing Youtian's purchasers are integrated sales and purchasing. Moreover, the more you purchase and sell, the more profit you share from the platform. But once a product is taken over by an individual, that individual will track and operate it throughout the entire process. What are the advantages of this model?

  1. It avoids blurred responsibility boundaries between departments and mutual buck-passing.
  2. It prevents corruption from the source; any kickbacks you take are rightfully yours. Those who have worked in purchasing know that internal theft can never be completely eradicated. In November last year, Xingsheng Youxuan's official website announced that it even established a police-enterprise cooperation office with the Changsha Criminal Investigation Detachment. In Youjing Youtian's model, the company earns its commission, and in the profit-sharing model between individuals and the platform, any excess returns belong to the individual as their due.
  3. Employees are hard to poach externally. First, other platforms cannot offer such large profit shares, making it difficult to lure them away with higher salaries. Even if an employee is poached, they will find that one person at Youjing Youtian can do the work of five, but at another platform, they become a "tiger without claws and teeth," unable to perform.
  4. Cost reduction and efficiency enhancement. With a smaller personnel base, total costs will decrease, but with each independent operating center, it is more flexible and easier to implement, and efficiency actually increases. Someone once joked that Wang Shouren, founder of Youjing Youtian, should be the most leisurely boss in the community group buying track. During a chat, his phone sat on the table without a single ring. He explained that responsibilities and tasks have been delegated; contacting him is useless, and all coordination must go directly to the purchasers. In general, a good system can turn "bad" people to "good," while a bad system can stimulate the hidden "evil" in human nature. Final Thoughts: Community group buying was not born for the pandemic, but the advanced model of online pre-sale + centralized delivery + next-day self-pickup seems naturally "born" for the pandemic, directly catalyzing it into the biggest trend in the internet industry in 2020. The giants' entry, from community group buying to community e-commerce, has always been a pseudo-group buying, with all arrows pointing at the untapped traffic in lower-tier markets. But the community group buying track, represented by regional group buying platforms, must focus on improving efficiency in intermediate links and reducing operating costs. That is the essence of group buying. Otherwise, it will regress to a zero-sum game, meaningless and unnecessary. (Note: Chen Haichao, chief consultant at Mai Marketing, also contributed to this article.) Add the author's WeChat to communicate Note: NameCompanyPosition