---
title: "Community Commerce Reaches Mid-Game: Alibaba's Trump Card and the Terminator of Internal 'Horse Racing'"
description: "Alibaba is gearing up for community commerce, facing both internal and external challenges. The MMC business group, led by partner Dai Shan, is exploring a new 'near-field e-commerce' model focused on digitizing small mom-and-pop stores, with a strong emphasis on supply chain integration."
author: "New Distribution"
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published: "2021-07-17"
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---

# Community Commerce Reaches Mid-Game: Alibaba's Trump Card and the Terminator of Internal 'Horse Racing'

> Alibaba is gearing up for community commerce, facing both internal and external challenges. The MMC business group, led by partner Dai Shan, is exploring a new 'near-field e-commerce' model focused on digitizing small mom-and-pop stores, with a strong emphasis on supply chain integration.

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** __In community commerce, Alibaba is sharpening its weapons. __**
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Before Alibaba, the chess player, lie two chessboards—one large, one small. Within the group, the near-field e-commerce game is in its ascendancy, and on the community e-commerce board, Alibaba is also striving to make its moves.
Recently, a reporter from the National Business Daily exclusively learned that Chen Tongtong (nickname: Jingshi), head of product operations at Alibaba's MMC business group (hereinafter referred to as MMC), has also taken on the role of General Manager of Alibaba's Digital Agriculture division, reporting to Dai Shan, the Alibaba partner leading MMC.
Established in March of this year, MMC has been shrouded in mystery since its inception. Led personally by Dai Shan, one of the 'Eighteen Arhats of Alibaba,' and holding several key cards such as Hema Market, Retail Link, Digital Agriculture, and 1688 & Taote, its strategy is high-profile, yet it remains low-key externally. It is even seen as the terminator of internal 'horse racing' in community commerce for a period.
**Unlike its competitors, MMC entered the game relatively late and is not fixated on aggressive expansion. It is clearly exploring a new 'near-field e-commerce' model, placing its key pieces on front-end small stores—mom-and-pop shops.**
According to the few official statements, MMC hopes to complete the exploration of the 'near-field e-commerce' business model through digital upgrading of small stores and supply chain production based on sales.
This also means that, based on the internal integration of Retail Link and Hema Market, MMC regards Retail Link—a business not previously in the spotlight—as the core infrastructure.
At the same time, MMC is showing a high degree of emphasis on the supply chain. As of now, MMC has connected the supply chains of Hema, RT-Mart, Retail Link, 1688, and Digital Agriculture on the production side, and on the sales side, it connects Taote, which has over 100 million active users. Benefiting from the resource sharing of the B-system and Alibaba's ecosystem, the reporter learned that MMC's recent performance has achieved exponential growth.
Compared to other high-profile and aggressive competitors in the community commerce market, whether MMC can catch up and take control is still uncertain.
However, for the community commerce track, can MMC and its near-field e-commerce become Alibaba's trump card as the chess game reaches mid-game? What exactly does Alibaba want from this near-field e-commerce layout? Perhaps Alibaba's thoughts and actions have already gone beyond the scope of community group buying.
## **Terminator of Internal 'Horse Racing'? Under the Mystery, Why Is MMC So Low-Key**
Before the establishment of MMC, multiple teams within Alibaba had tested the waters in community group buying. As a product of Alibaba ending internal horse racing, it can be said that MMC has had 'top-level configuration' since birth, yet it often remains invisible.
After much speculation, on the evening of April 1, Alibaba partner Dai Shan released an open letter to all employees—'MMC, Sound the Assembly Call!'—responding for the first time to news about MMC.
Earlier, in early March, there were reports pointing directly to MMC focusing on community group buying, but MMC did not respond positively at the time.
Public information shows that Dai Shan (nickname: Su Quan) is one of the Eighteen Arhats who founded Alibaba and the 11th employee.
In Alibaba, employees habitually call Dai Shan 'MM.' In addition to MMC, she also oversees Alibaba's B-series business groups and the Hema business group, and is responsible for coordinating Alibaba's agriculture-related businesses. Dai Shan's leadership of MMC demonstrates Alibaba's high regard for the MMC business group.
After that, MMC went into hiding again until May 17, when the 2021 Alibaba Rural Wealth Conference was held. Alibaba announced that in 2020, with sales of 303.7 billion yuan, it continued to be China's largest agricultural product upward platform. Some interpreted that the MMC business group, established in March this year, would expand new upward channels for agricultural products for Alibaba.
In terms of specific organizational structure, MMC combines Hema Market and Retail Link, with Digital Agriculture providing supply chain support, and the original Retail Link team mainly responsible for ground promotion.
Both Hema Market and Retail Link were spun off from other business groups.
According to data, in May 2016, the Retail Link division was formally established under Alibaba's B2B business group, helping offline small stores build digital distribution channels for FMCG brands and achieve digital upgrading. Previously, the Retail Link platform had connected 1.5 million small stores in China.
In 2016, the 'new retail species' Hema Fresh came into being. In October 2020, Hema Market under the Hema business group was officially launched, focusing on the lower-tier market, complementing Hema Fresh, which targets first- and second-tier cities.
In terms of specific development routes, MMC emphasized the importance of small stores (mom-and-pop shops) from the very beginning.
On April 1, when Alibaba partner Dai Shan released the open letter to all employees, she stated that **the MMC business group would continue to focus on the digital upgrading of small stores, giving them stronger digital capabilities to serve surrounding consumers and making neighborhoods warmer.**
In the letter, Dai Shan said that **this network of small stores, reaching 1 billion people daily, would achieve digital production in industrial belts, factories, and agriculture through real-time insights into consumer demand.**
But the more information the outside world obtains about MMC, the harder it seems to understand MMC. Why is this business group, led by one of Alibaba's Eighteen Arhats, so mysterious? Even by July, MMC had not embarked on a high-profile development path, but instead had countless connections with the B-system.
Perhaps MMC's mystery is not deliberate.
From the current perspective, although both are based on the community business scenario, Alibaba's mission for MMC is clearly not just selling vegetables or group buying. It is also distinct from Alibaba's local life same-city retail and online Tmall Supermarket.
According to an analysis by a senior industry insider who has long tracked community commerce, the biggest difference between MMC and community group buying platforms lies in the positioning of 'small stores.'
'Other community group buying platforms mostly view small stores as pickup points, the last terminal link in the long chain, with a relatively low business status in the entire industry chain.
The concept of near-field e-commerce should be to place the entire business closed loop within a small store, giving it a complete set of capabilities for selling, marketing, and product selection, including warehousing and fulfillment services, completing the entire cycle of an order from start to finish within that small store.'
In terms of actual functions, MMC is not simply moving Tmall Supermarket from online to offline. Compared to traditional centralized e-commerce like Tmall Supermarket, which can deliver nationwide as long as it has logistics capabilities, MMC needs to expand business one small store at a time, one community at a time, thus showing a clear difference.
From the 'near-field' defined service range of '500 meters and 1 kilometer,' MMC also shows clear service differences from local life same-city retail. After all, 3 kilometers can be said to be the service limit for near-field e-commerce.
This may also be the reason why MMC is so mysterious and once difficult to define. Its efforts at the front end are all focused on the 'micro' level, namely the renovation and upgrading of small stores, which is a slow process. Compared to the subsidy wars triggered when giants previously entered community group buying, MMC's chosen direction is clearly more suitable for a 'thick accumulation and thin release' route.
## **Front-End Small Stores, Back-End Supply Chain: MMC's Precise Moves**
On MMC's chessboard, Alibaba places its key front-end pieces on small stores. As long as these pieces can be activated, half of Alibaba's layout in near-field e-commerce will be successful.
**Whether the other half can succeed depends on the supply chain.**
For a long time, agricultural products have faced the problem of high loss rates. According to Guotai Junan's calculations, the current proportion of agricultural-supermarket docking in China is still very low. About 70% of agricultural products still use a three- or four-level circulation system, and too many intermediate links make it difficult to avoid the common high loss rate in agricultural product circulation.
According to MMC's model design, based on the 1.5 million mom-and-pop stores already connected by Retail Link, digitally empowered small stores will form a huge community digital sales service network.
If this network can be formed, small stores will have efficient distribution capabilities and can also aggregate large-scale community demand, reversely influencing production-side supply and product creation.
(Photo: A Tmall small store in a residential area in Yichang, Hubei. Image source: IC Photo)
Taking agricultural products as an example, MMC attempts to achieve 'order agriculture' in the agricultural product supply chain and continues Taote's M2C model on industrial belt products, both achieving 'production based on sales' and 'optimizing production based on sales.'
In agriculture, MMC's product operations head Jingshi has also taken on the role of General Manager of Alibaba's Digital Agriculture division, reporting to Alibaba partner Dai Shan, who leads MMC.
It is reported that currently, the supply chains of Alibaba Digital Agriculture, Hema Market, and RT-Mart's direct sourcing of agricultural products, as well as the many brand factories, industrial belt factories, and cooperative factories of Taobao Deals, have all been fully connected to MMC. These supply chains will set up 'cloud shelves' for front-end small stores.
Clearly, in the future, MMC will be a component of Alibaba's digital agriculture, continuing Alibaba's previous layout in this area. The National Business Daily reporter learned that the 1,000 digital agriculture bases created by Alibaba Digital Agriculture are gradually being connected to MMC.
For industrial belt products, considering the millions of mom-and-pop stores across the country, the MMC model is a continuation of the C2B2M model previously promoted by Retail Link.
As early as August 28, 2020, Retail Link launched the 'W Plan' to promote 1.5 million small stores to 'go to the cloud.' One measure was to establish the C2B2M model, allowing small stores to form closer relationships with source factories. The reporter learned that next, MMC will continue and upgrade this plan based on Taote's industrial belt factories.
Cui Lili, executive director of the E-commerce Research Institute at Shanghai University of Finance and Economics, told the National Business Daily that if community group buying wants to be profitable, it can only do so in two aspects: one is to increase efficiency on the consumer side, raising average order value and increasing repurchase; the other is to reduce costs on the supply side, such as reducing loss and forming economies of scale. 'In economies of scale, reverse customization can be derived.'
'Improving the certainty of agriculture is definitely the future direction. The large price fluctuations in agriculture largely come from uncertainty, partly from market uncertainty and partly from the planting process,' Cui Lili said.
## **Behind the Near-Field E-Commerce Chessboard: New Opportunities for Household Consumer Goods**
For Alibaba, its layout and continuous moves in near-field e-commerce clearly aim for more than just this.
The reporter learned that in terms of positioning, unlike modern convenience stores that sell personal items, the mom-and-pop stores where MMC focuses its efforts sell more household consumer goods.
A set of industry-recognized data is that the 6 million mom-and-pop stores nationwide, despite being huge and scattered, firmly occupy 40% of the domestic FMCG market share. Moreover, this 40% market share has not declined over the past decade despite the large-scale development of e-commerce.
This fully proves the vitality and long-term value of small stores. At the same time, the distribution of these mom-and-pop stores is more even than that of supermarkets, hypermarkets, and convenience stores.
But previously, the categories of household consumer goods sold in mom-and-pop stores were relatively few. Among them, tobacco has long occupied the first position in shipment volume, followed by alcohol, and third is personal care products or weak-brand daily groceries.
In addition, there are significant differences in quality and price in the circulation of household consumer goods across the country, leaving considerable room for improvement. This space happens to be a new dividend that can be realized through digital transformation.
As for the duration of this dividend, 'For example, eating eggs as a daily household consumption behavior can have differences in egg quality, but there is no difference in the behavior itself.
Therefore, the more basic the goods and services, the higher the frequency and demand for household consumer goods, the broader the corresponding population, and the more highly dispersed the supply method must be,' a senior industry insider told the reporter directly.
The fresh produce category, which was previously hot in community group buying, is also a beneficiary of this dividend in a sense.
MMC is attempting to fully graft this dividend onto mom-and-pop stores. The near-field e-commerce plan not only tries to solve the supply chain and operational difficulties faced by community mom-and-pop stores in selling fresh produce but also helps small stores provide multi-category or even full-category household general consumer goods, building a circulation chain advantage that directly connects the terminal channel of small stores with the supply chain.
It can be said that with the layout in near-field e-commerce, Alibaba can not only provide closer and more personalized services based on far-field e-commerce but also have the opportunity to rely on the millions of mom-and-pop stores supported by Alibaba's ecosystem to occupy the field that traditional e-commerce has not yet fully conquered—household consumer goods.
**If it is estimated that each mom-and-pop store can radiate at least 200 people offline, 6 million small stores mean a huge offline traffic of over one billion people.**
'From the perspective of the community dimension, the biggest development value proposition of near-field e-commerce is that it allows internet companies to see a growth point just from the design of the model before business advancement. It may be the first time it can better solve the problem that household consumer goods have not yet been circulated through all channels,' the aforementioned senior industry insider said.
In the planning of near-field e-commerce, Alibaba hopes that small stores will have the full-category product supply capability of RT-Mart and Walmart, as well as the business upgrading awareness of micro-internet units. Although the specific methods are still being explored, the general direction has already emerged.
At the same time, near-field e-commerce, a business model closely related to the supply chain, also aligns with Alibaba's future development trend of shifting to a dual-engine drive of 'consumer internet' and 'industrial internet.'
## **Mid-Game: Community Commerce Has Become a Battlefield for Giants**
If we examine Alibaba's near-field e-commerce model within the entire industry, Alibaba established MMC at a time when it was about to formally make its move on the community commerce chessboard, when community group buying was entering 2.0.
But in terms of specific models, MMC, which declares itself not equal to community group buying, indeed shows obvious differences from the 'old three groups' (Tongcheng Life, Xingsheng Youxuan, Shihui Tuan) in the 1.0 era and the 'new three groups' (Didi, Meituan, Pinduoduo) in the 2.0 era.
In the 1.0 era, community group buying platforms mostly adopted an asset-light model, not controlling goods themselves, minimizing platform capital and inventory pressure. On this basis, the platform used group leaders as the core to collect consumer demand within the community, produce based on sales, deliver the next day, and have group leaders distribute.
This model can effectively reduce the cost per item, and the way group leaders bring goods to open markets gives community group buying lower customer acquisition costs. At that time, in terms of product selection and sales, group leaders on community group buying platforms tended to prefer so-called large-specification, high-margin products.
It was also for this reason that before the giants entered, players in the small and medium tracks of community group buying had already begun to approach profitability, and group leaders played a key role, not only representing traffic but also playing a role in bringing goods, with group leader commissions once reaching over 30%.
At the same time, Tongcheng Life, one of the 'old three groups,' developed smoothly and continued to expand. In 2019, Tongcheng Life acquired Guangzhou Qianxianhui and fully entered the South China market; in September 2019, Hunan's Kaola Select merged into Tongcheng Life; in July 2020, Tongcheng Life completed a strategic merger with Linlinyi.
The entry of giants changed everything. The 'new three groups'—Didi, Meituan, and Pinduoduo—with fierce firepower and sufficient funds, directly triggered another round of reshuffling in the track.
In the 2.0 era, group leaders no longer need to provide traffic; platforms tend to direct traffic to their apps. The main tasks of group leaders have become providing space, sorting goods, and providing services, with goods being a low-margin, high-volume model. The functions of group leaders and group points have separated, and the commission ratio for group leaders has decreased.
The entry of giants not only caused small and medium players to fail, but also quickly deprioritized the importance of group leaders as platforms hoped to communicate directly with users.
A small store owner who simultaneously serves as a group leader for multiple head community group buying platforms told the National Business Daily that even though she is currently a group leader for several community group buying platforms, due to low commission income (around 10%), the combined commissions from multiple platforms give her a daily income of only a few dozen yuan.
'Group leaders aren't that important, and the requirements for group leaders aren't high either. Not far from my store, there's another store owner also working as a group leader, diverting my business.'
Now, with the high-profile promotion of Alibaba MMC's near-field e-commerce model, the value of small stores and their owners has been elevated to an unprecedentedly important position, and the forms of community commerce are becoming increasingly diversified.
What exactly has made community commerce a battleground for all?
In this regard, a senior industry insider told the National Business Daily that the sudden popularity of community commerce was driven by the pandemic. During the pandemic, the social management model based on communities corresponded precisely to the community-based purchasing and fulfillment method of community commerce.
It not only stimulated everyone's purchasing habits but also honed the maturity of the entire industry's business details. Internet giants also noticed the advantage of community group buying in facilitating shipment volume.
In this context, giants also noticed that community commerce can make up for the shortcomings of previous centralized e-commerce in covering household consumer goods, which is also a new opportunity.
**What Alibaba sees is that household purchases of consumer goods are highly homogeneous. By turning this homogeneity into synchronized ordering and fulfillment, economies of scale can be generated, thereby optimizing the cost efficiency of existing e-commerce and physical retail in supplying household consumer goods.**
At the same time, by strongly controlling the supply chain at the back end to ensure quality and opening the front end to community small stores, it balances the dual advantages of quality and flexible service.
The current problem is that without subsidies, community group buying's ability to penetrate daily household purchases in communities is actually insufficient. Can optimizing the supply chain itself produce lower costs than general channels, thereby creating a low-price effect?
Even within Alibaba, there may be different opinions and competition on how to capture this piece of the community commerce cake.
(Photo: Hema Market. Image source: Provided by interviewee)
On July 7, it was reported that Alibaba's Hema Fresh had secretly launched a new community e-commerce project called 'Hema Neighbor' in May, with the internal code name 'NB Project.'
It is reported that the Hema Neighbor model is that users place orders on the Hema Fresh app one day in advance, choose the self-pickup store closest to them, and pick up their orders starting at 8 a.m. the next day.
This looks very similar to the community group buying model, but the difference is that Hema Neighbor uses self-operated self-pickup stores rather than directly setting up pickup points in small stores, and there is no group leader role in the chain.
The reporter learned from Hema that Hema is also very clear about distinguishing Hema Neighbor from community group buying.
On the other hand, the competitors Alibaba will face directly in the future will inevitably become fewer and more concentrated.
Earlier this year, Dai Shanhui, founder of Shihui, said in a media interview that the community group buying market has a 5+5 structure at the national level: five platform giants—JD.com, Alibaba, Meituan, Didi, and Pinduoduo—and five startup companies—Xingsheng Youxuan, Shihui Tuan, Shihui, Tongcheng Life, and Meijia Youxuan.
On July 7, amid the encirclement of suppliers, Tongcheng Life, which grew up in the 1.0 era of community group buying, suddenly collapsed, adding further evidence to this great upheaval.
With the introduction of the 'Nine No's' new regulations for community group buying, giants have slowed their heavy subsidies in community commerce and adopted a cautious development attitude.
The route of exchanging 'burning money' for scale may not be effective in the long run.
He Pengyu, founder of Tongcheng Life, said at the end of last year: 'At the beginning, it was the craziest, desperately burning money; after burning, it recently began to converge. Continuously pouring money in, but the scale doesn't seem to grow, then everyone may start to rethink.'
As for future competition among giants, perhaps as many industry insiders said in interviews, one must 'wait,' or even use the word 'endure' to describe it. 'The channel switch for household consumer goods across society requires running-in and sedimentation. If the time is too fast, it's not a good thing.' Another point is that the mindset must be more 'public welfare,' allowing partners to also make money.
So in the end, what really matters is not the plan, but everyone's patience and mindset.
Source: National Business Daily
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