---
title: "A Comprehensive Analysis of Shihuituan"
description: "Shihuituan is a community group buying startup focused on fresh produce, aiming to participate in all household daily purchases and supply. The company sees vast potential in the fresh food market due to high-frequency demand, pain points in lower-tier markets, and the efficiency of direct supply chains. With plans to expand to 3 million pickup points in three years, Shihuituan targets a trillion-yuan market, positioning itself as a leading fresh food distribution channel."
author: "万德乾"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-09-24"
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# A Comprehensive Analysis of Shihuituan

> Shihuituan is a community group buying startup focused on fresh produce, aiming to participate in all household daily purchases and supply. The company sees vast potential in the fresh food market due to high-frequency demand, pain points in lower-tier markets, and the efficiency of direct supply chains. With plans to expand to 3 million pickup points in three years, Shihuituan targets a trillion-yuan market, positioning itself as a leading fresh food distribution channel.

Participate in all household daily purchases and supply.
The community group buying track has been extremely hot this year, with a very significant industry indicator being that major companies have basically all entered the game through investment, joint ventures, or direct operation.
Community group buying is the only business model among all internet innovation models that can do fresh produce well. This statement comes from Shihuituan and is a common consensus from the founder to grassroots employees.
Shihuituan is a community group buying startup brand that started with fruit and focuses on the fresh produce category. The company sees broad development conditions in the fresh food market based on three objective conditions: high-frequency, rigid-demand, and highly sticky consumption needed by everyone; many pain points still exist in the fresh food sector of the entire industry, mainly in lower-tier markets; and a high-circulation fresh food model that reduces intermediate transfer links will have enormous value.
Looking at these three conditions from another angle, they are like a condensed close-up of Shihuituan's business model: fresh produce accounts for over 60% of total orders, focusing on community household users in 3rd to 6th tier cities, and fresh produce from source to customer only involves logistics, with no switching or jumping in commercial flow.
Simply put, in the community group buying model represented by Shihuituan, the customer's order interaction object can be directly reflected at the source. Similar to Pinduoduo, everything revolves around retail-side orders, reverse-designing a full-chain circulation and fulfillment efficiency for products from source to terminal (which can be understood as a special form of C2M).
Ensure that with orders locked, the entire order's full-process controllability is maximally guaranteed. Group buying also provides at least a scale guarantee for the full-chain cost and efficiency designed around single orders. It is not an exaggeration to say that a fresh food retail business with almost no inventory is evaluated as the most efficient among existing fresh food circulation models.
Horizontally, its orders are scaled and precise; vertically, its fulfillment chain is strongly controlled from front-end orders triggering back-end fulfillment. Everything revolves around customer needs, highly adapts to personalized requirements, uses scale to average costs, and ensures efficiency through direct connection from start to end, eliminating intermediaries. This is a business model that is advanced in theory.
Internet, group buying, and fresh produce are the three basic elements connecting everything. Everyone has a mobile phone, everyone is ordering, and everyone needs to eat. If something starts from the most basic needs of the largest group in society and explores a mechanism and model that can connect all people and needs, then this business is no longer a simple so-called trend business, but closer to a basic livelihood business at the level of "water, electricity, and coal."
Once the direction is accurate, the method is not difficult. The remaining thing is capability building at the methodology level: how to make quality better, prices better, and fulfillment faster. Shihuituan CEO Wang Peng said that the company's internal definition of the value of the group buying business also has a similar capability building goal: Hema's quality, Pinduoduo's price, JD.com's timeliness, combined to bring consumers an extraordinary experience.
This is a goal definition that integrates strategic thinking and tactical methods. The full-chain group buying business designed around single orders determines that the platform can and must focus resources on back-end capability building.
Invest resources in the heaviest back-end supply chain parts such as "supply sources, processing, quality control, and logistics," and leave front-end marketing, operations, and fulfillment to "group leaders." A business similar to the B2B2C model, with a reasonable division of labor, lets Shihuituan do the heavy investment it should do, and lets group leaders do the customer connection they are good at.
The community group buying business represented by Shihuituan, in addition to the internet's penetration effect, group buying's scale effect, and fresh produce's rigid demand effect, also has the social resource effect of group leaders. Just like recently, Shihuituan co-founder & Chairman Chen Ying confidently stated: In the next 3 years, Shihuituan will develop 3 million group leaders (pickup points) in urban and rural areas across the country.
It is beneficial for consumers to buy fresh produce and for social roles (group leaders) to share the development dividends of community group buying. What everyone needs to compete on is who can realize this good business as "Hema's quality, Pinduoduo's price, JD.com's timeliness, bringing consumers an extraordinary experience."
Therefore, based on fresh produce quality building, order scale expansion through group leaders, and the highly competitive situation of the community group buying model, all indicate that Shihuituan is currently on a track of rapid development and fierce competition. How to change and what to do to seize this "best fresh produce model" industry development opportunity?
**-01-** **Shihuituan's Two 30% Opportunities**
#### Some industry insiders believe that part of the reason for Shihuituan's goal of 3 million pickup points in the next 3 years is that during the spring epidemic this year, due to capacity reasons, Shihuituan's originally higher growth trend was somewhat affected.
Of course, Wang Peng is very positive about Shihuituan's growth during the epidemic. During the peak of the epidemic, Shihuituan not only achieved about 3x growth in orders and new customers, but also continued a higher double growth trend in Q2.
This structural change clearly brought by the epidemic points to business changes brought by the epidemic, which is a discovery-type change. Just like the emergence of short videos made everyone feel that the seemingly ordinary public has so many interesting and watchable life scenes every day. For consumers, their original strong experience requirements have been met by community group buying, which can be so affordable, convenient, and reliable.
[Image: Shihuituan CEO Wang Peng]
The goal of 3 million pickup points in the next 3 years is one of the reasons for this victory pursuit. The 3-year 3 million goal has many macro factors, conforming to the country's emphasis on agriculture and fresh produce industry, the people's vegetable basket livelihood needs, reducing consumers' daily living costs, and sharing Shihuituan's development achievements.
For Shihuituan's business development, this is the beginning of a new stage under macro trends where competition begins on who can do community group buying better, after all, the competitive landscape of this market has started direct competition among major companies. This is also the core condition for Shihuituan to complete two rounds (C1 & C2) of total financing of nearly 3 billion USD in just half a year. It is also the decision product of investors comprehensively evaluating market structure changes, Shihuituan's double growth trend, and industry competition landscape, highly optimistic about Shihuituan's development.
Specifically, Wang Peng has the following two major plans and goal breakdowns for Shihuituan's future phased planning.
**First, the fresh produce supply chain and categories will be further strengthened and expanded. Shihuituan needs to expand from basic fresh produce categories to household fresh produce categories, meeting the needs of three meals a day.**
Transform from "buying what the platform sells" to "selling what users want to buy." It's not about how much I order and sell, but what users need and I sell. At the same time, centralized procurement capabilities will be further strengthened, and regional warehouse processing centers will be enhanced. Through centralized procurement and centralized processing, product costs will be further reduced, and quality will be more controllable.
**Second, strengthen the warehouse and distribution network construction. The 3 million goal in the next 3 years specifically means that Shihuituan users can complete product pickup within a 5-minute walk from their homes.**
****And the logistics delivery timeliness of trunk and branch lines can also be further improved, upgrading from next-day delivery to same-day delivery, and implementing the two industry capabilities that are not yet available in community group buying and timely consumption, first in Shihuituan.
**Self-capability building and market development trends always influence each other.** Community group buying has developed to today, from a supplementary scenario of new retail to an independent business model that can build a mainstream shopping scenario.
The Hunan market, which the entire industry is watching, will reach 30 billion yuan in community group buying scale this year, is expected to reach 50-60 billion next year, and will reach 100 billion the year after. With the entry of various players and the development of other provinces with GDP and population scale, the trillion-yuan scale of community group buying is a highly probable industry evolution scale. This time may be achieved within 3-5 years.
There are over 1 million communities nationwide, not including rural areas in lower-tier markets. There are nearly 7 million mom-and-pop stores nationwide, not including fruit stores, laundry shops, flower shops, community stations, etc., which can also serve as group leaders and pickup points. Adding these, there will be at least 10 million existing online store scales. Shihuituan naturally expands with the industry. In the next 3-5 years, Shihuituan plans to complete annual sales scales of 100 billion yuan in 2022 and 300 billion yuan in 2024.
Based on the average base of 100,000 yuan annual sales per pickup point (group leader), Shihuituan's positioning of 3 million pickup points is quite precise. Combined with the national existing network scale just mentioned, even if Shihuituan achieves 3 million pickup points, the penetration rate is only 30%, making Shihuituan's positioning seem relatively conservative. Of course, conversely, there is not much doubt that this market will reach a trillion-yuan scale in the next 3-5 years. The entire fresh produce market is 3 trillion yuan, and community group buying will account for 30%+.
Standing on the base of two 30%s, Shihuituan is also several times the scale of any existing single fresh produce circulation channel. Unless there is an oligopoly in the community group buying market, Shihuituan's two 30%s can also be understood as the goal positioning of China's first fresh produce circulation channel. This performance level has exceeded the scope of community group buying and fresh produce retail, ensuring Shihuituan enters the ranks of China's first-tier internet companies.
**-02-**
#### **From Fresh Produce to One-Stop Household Shopping**
On top of the two 30% positioning, Shihuituan also has a call from a larger market.
3 million pickup points (group leaders) correspond to at least 100 million household customer groups, close to 300-400 million actual consumer population. Because Shihuituan enters household consumption from fresh produce, and a household's daily consumption more than half of expenditure, its penetration rate of household daily consumption exceeds that of general physical retail formats. With such a high penetration rate, Shihuituan can easily enter the other half of high-consumable categories in household daily consumption: fast-moving consumer goods, household cleaning, personal care, etc.
[Image: Common pickup point in the community]
In this regard, Wang Peng stated that Shihuituan has already put forward clear plans and programs:
**Phase 1: Fresh Produce Basic Plate.** Focus on building the fresh produce basic plate and household consumption necessities, such as fruits, vegetables, meat, poultry, eggs, and milk. Through fresh produce as an entry point, quickly enter community households, and form user awareness through high-frequency, livelihood, and high-cost-performance fresh produce basic plate. At this stage, Shihuituan's SKU count will not be too many, with about 100-150 SKUs online daily. The purpose is to reduce the complexity of the back-end supply chain and ensure fulfillment experience.
**Phase 2: Fresh Produce Expansion Plate.** Including rice, flour, oil, seasonings, three-meal ingredients, frozen products, seafood, household kitchen and bathroom supplies will be added. Product categories and brands will be richer, with total SKU count around 3,000-5,000. The number of SKUs on sale daily will expand to about 300-500, meeting the relatively basic rigid needs of household consumption.
**Phase 3: Household Consumption Plate.** At this stage, Shihuituan's total SKU count will expand to over 10,000, with about 1,000 SKUs on sale simultaneously. Brands and categories will be richer, covering major brands and categories of local household consumption, meeting diversified household consumption needs.
Currently, Shihuituan is in the second phase, and it is doing so. Shihuituan is continuously covering categories such as rice, flour, oil, leisure food, and daily necessities. Even including life service items, such as recharge services and community surrounding discount consumption services, Shihuituan is also involved.
Shihuituan plans to complete the third phase of product expansion and layout by 2021 as the overall supply chain capability and depth strengthen. At that time, Shihuituan's SKU count will reach a stable state of over 10,000, with about 1,000 SKUs online daily.
Among these, fresh produce sold online daily will account for about half. Of course, for mature household daily purchase products, more is not necessarily better. Because Shihuituan is not an e-commerce stocking model after all, too much stocking and product pool will violate the high turnover rate rule of group buying due to inventory and fulfillment pressure, causing reduced back-end fulfillment efficiency, making front-end consumers less focused, and increasing selection difficulty.
Community group buying is essentially a fast-in, fast-out retail model, requiring high circulation, high turnover, and high execution business efficiency. But pursuing a balance point between consumer demand and platform execution efficiency is also very necessary.
This tests Shihuituan's reasonable planning and precise operation of product single-item structure. Once a mature model is reached, one-stop shopping satisfaction for household daily needs is the most imaginative remote area of Shihuituan's business development.
Back to the current stage. Shihuituan is in the expansion plate stage, and fresh produce remains the top priority. Shihuituan's current supply chain, Wang Peng clearly stated, is also planned and built around fresh produce.
On the supply side, we have mentioned many times above that community group buying based on fresh produce is a circulation industry that can and must remove all intermediate links. The supply chain of community group buying in Shihuituan is mainly divided into supply side and fulfillment side. On the supply side, direct procurement (origin + local) is a highlight, with a procurement team of dozens of people distributed across major fruit production areas nationwide.
On the fulfillment side, from source to consumer, the more you want to remove all intermediate links, the more you need to ensure precise and efficient logistics connection, building a fulfillment network that conforms to the business attributes of community group buying. Regional central warehouses, fruit and vegetable processing centers, distribution centers, urban front warehouses, community pickup points, a complete fulfillment network, simultaneously meeting distributed circulation models in urban and rural areas, balancing experience and efficiency.
Then, as mentioned above, with the increase in network density of 3 million urban and rural pickup points, same-day delivery timeliness and lower-tier market share have entered Shihuituan's planning plate.
The complexity of the fresh produce business is half in the supply chain and half in repurchase rate. Quality freshness and category width are the two major challenges of fresh produce repurchase rate. Since Shihuituan is doing community group buying, for quality and category, it still needs to find opportunities from the model, letting new products gather orders, and orders gather fulfillment.
What does that mean? Suppose a certain fruit is in season. Shihuituan puts this fresh product to group leaders to collect orders. After orders are locked, Shihuituan then purchases in bulk from the source to fulfill delivery.
How fresh? How affordable? How rich? Whatever community group buying model can do, Shihuituan does. Shihuituan's existing members have reached an average of 12 times/month.
Of course, the premise is still having a highly mature capability of centralized procurement and tiered fulfillment network.
Order first, then purchase, remove all intermediate links, centralized procurement and direct supply, precise tiered fulfillment... This is Shihuituan's model, which is extremely difficult in execution but clear in concept.
The difficulty of execution: community group buying has already solved the problems of rapid circulation and inventory loss very well. The difficulty of quality control is the difficulty that is talked about year after year and month after month. Shihuituan COO, also the founder of Ni Ni Nin, Sun Yuanbo, clearly stated that the answer still needs to be found in centralized procurement. Because centralized procurement can bring quality control from the source and orders from pre-sale.
[Image: Shihuituan COO Sun Yuanbo]
Centralized procurement can bring quality control from the source, which is easy to understand. The scale of centralized procurement can bring attention to major suppliers' key projects, ensuring that quality control at the source is comprehensive quality control of product specifications, product quality, and supplier relationships. Then, there is the source of tiered fulfillment on the fulfillment side - the processing center, for quality inspection and warehouse management quality control.
Shihuituan's fresh produce in the entire circulation chain, especially for product anomaly rate, has been controlled to within one-thousandth. And Shihuituan's goal for the next 3-5 years is to control it to within three ten-thousandths.
**-03-**
**Group Leaders, Irreplaceable**
We have mentioned the value of group leaders (pickup points) many times. Today's group leader role is no longer a simple convenience store type group leader or individual type group leader. A group leader with a complete set of marketing, operations, service, transfer, and fulfillment capabilities looks at capability building, not background source.
Group leaders are responsible for C-end customer acquisition and service, and Shihuituan naturally needs to be responsible for the expansion and cultivation of group leaders (similar to small B or large C roles). Cultivating an excellent group leader requires not only evaluating the inherent excellent common qualities of group leaders in the early stage of expansion, but also long-cycle, systematic, and refined cultivation and precipitation of group leader "nurturing" methods.
Shihuituan's group leader training system will help group leaders grow through a series of management handles such as new group leader training growth system, target assessment incentive system, group leader tiered operation, and promotion system.
Its purpose is to standardize and model the business capabilities of group leaders, and can be quickly replicated nationwide. This is the foundation for ensuring that Shihuituan's group efficiency (single group output) is the highest in the industry (exceeding the average level of 30%), and also the premise for ensuring that group leaders are willing to continue to develop deeply in Shihuituan.
Shihuituan's training can be broken down in many specific ways. For example, in Hunan Province, Shihuituan's key market, Shihuituan has achieved weekly training in every city and county. With every 500 to 1,000 group leaders as a business unit, training includes business methods, experience summaries, case reviews, etc.
Some excellent group leaders (internally called elite group leaders) also participate in similar training, which not only brings training income to excellent group leaders, but mainly improves the overall capability of Shihuituan's group leader group. There are also digital tools to help group leaders acquire customers, improve sales, and facilitate operations, provided for group leaders to use.
[Image: Convenience store type pickup point]
In general, the two functions of group leaders are currently irreplaceable for both community group buying and Shihuituan. One is the function of developing community surrounding customer acquisition; the other is the final fulfillment function.
Shihuituan's group leader expansion numbers are also objective. Still taking the most important Hunan market as an example, 15,000 group leaders were added in July; now in August, Shihuituan's group leader expansion goal in Hunan is 20,000. That is to say, within this year, Shihuituan will complete the expansion of about 200,000 new group leaders in Hunan Province alone.
After all, the 3-year 3 million goal has been prepared with theoretical deduction and market prediction. Execution expansion cannot lag behind.
Hunan is an important single market for community group buying. Hunan is also a province where small store group buying is very common, with nearly 80% of the province's small stores already participating in community group buying business. And many people still hold a relatively stubborn view that Shihuituan's group leaders have a low proportion of store resources.
However, the actual situation is that group leaders are not divided into those with stores and those without, and all are premised on meeting Shihuituan's complete fulfillment capability. For those group leaders with stores, Shihuituan's business can bring unexpected complementary effects to their store's inherent business.
Because Shihuituan's main fresh produce products, combined with the daily necessities that store-owning group leaders have in their stores, will form a complementary rather than conflicting category combination. After group leaders with stores on Shihuituan's platform do group buying business, store traffic will rise significantly, and single-store efficiency can generally bring more than 80% performance growth.
Coupled with Shihuituan's strong operational capability training for group leaders, including training in WeChat group operations, mini-program ordering and fulfillment, etc., group leaders on Shihuituan's platform will have triple benefits in operational capability, category supplementation, and store improvement.
This is something that no other community group buying brand can do for now.
But the most critical point is that all community group buying platforms realize that the current state of this market is that the plate is big enough and the traps are enough. That is to say, at this stage, the competition in the community group buying track is about the solidity of early business foundation, the level of operational efficiency, the strength of team expansion and execution efficiency, the quality of user experience, the continuous optimization and upgrading of fresh produce supply chain, and the growth indicators of group leaders' progress with the group.
And, whether there is comprehensive strength to expand nationwide.
Currently, in Shihuituan's overall market layout, the highest performance share is still in the Hunan and Hubei regions, followed by Guangdong. Others include Jiangxi Province, Southwest Chengdu-Chongqing region, Jiangsu, Zhejiang, and Anhui provinces in East China, Shandong and Henan provinces in North China, and Northeast China. Shihuituan is currently the community group buying platform with the widest national expansion scope, and this summary is not wrong.
This is the complex and special industry environment Shihuituan currently faces in terms of company development, future planning, business characteristics, and competitive points. This is also a special industry status that has not existed before. No company has ever, like Shihuituan, with the efforts of a startup company, verified the value of an industry track to the point that big companies are tempted. And the existence of big companies and competitors has accelerated the popularization and maturity of the industry's guidance and education for the market and users.
When it comes to the end, or in the next 3-5 years, whoever can stand out from this highly competitive track, its core foothold should still be what Wang Peng said: "Unaffected, focused on ourselves, polishing business, doing experience well, maintaining growth, maintaining profit. Finally forming our own ultra-high competitive barrier, making it impossible for others to break in, this is the only way to break through."
And community group buying no longer needs to prove the development value of this industry to the outside world. The phased success of this industry's development achievements at present should be credited to Shihuituan.
Source: Future Consumption APP (ID: lslb168); Author: Wan Deqian


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