Click to read the original text for details Source: New Retail (ID: ixinlingshou) Community e-commerce is entering a cooling-off period, and traditional physical supermarkets are also warming up. In recent years, the government has successively issued relevant policies to continuously promote retail reform and upgrading, supporting the development of physical retail. From the recent macro-control measures, they are basically oriented towards the real economy, small and medium-sized enterprises, and people's livelihood consumption. With stricter supervision of community e-commerce and the introduction of relevant supportive policies, traditional physical retail, especially supermarket enterprises, still has great potential in the future. As early as November 2016, the General Office of the State Council issued the "Opinions on Promoting the Innovation and Transformation of Physical Retail," clearly stating that physical retail is an important foundation for commodity circulation, an important carrier for guiding production and expanding consumption, and an important channel for prospering the market and ensuring employment. In the community commercial field, on July 20 this year, the Ministry of Commerce and 11 other departments jointly issued the "Guidelines for Building a 15-minute Convenient Living Circle in Cities," which, while promoting the diversified development of retail formats and regulating community e-commerce, also encourages physical supermarket enterprises to develop community commerce. In the view of Sun Yulong, dean of the Lianshang.com Retail Research Institute, the current tightening of supervision and policy regulation are all carrying out structural rebalancing and optimization of online and offline retail, and are also an inevitable return to physical retail as the mainstay, with multiple retail formats developing simultaneously. We have noticed that many retail supermarket enterprises saw a significant decline in performance in the first quarter, which they believe is partly due to the impact of community e-commerce. In fact, the relationship between the two is by no means substitution. With the deepening of policy supervision, community e-commerce is entering a cooling-off period, shifting from low-price subsidies and seizing the market to seeking refined operation and profitability, becoming a part of the diversified development of retail formats. Entering the second quarter, many supermarket enterprises have seen a turnaround in performance. For example, Zhongbai Group expects to turn losses into profits in the first half of the year, due to the gradual implementation of government policy support and the improvement of internal efficiency management and digital transformation. In fact, the traditional problems faced by retail supermarkets mainly focus on organization, operation, and service, but many enterprises have also built their core competitiveness through new organizational forms, innovative operating mechanisms, and innovative service experiences. For example, focusing on consumer operations and firmly grasping supply chain capabilities, Shandong Aikduo started community e-commerce business as early as 2019, using group buying models to curb the decline in physical store traffic, thereby achieving a significant recovery in performance and building a local consumer ecosystem. Wang Guoping, a member of the Lianshang Senior Advisory Group, believes that although community e-commerce has developed rapidly in some areas and has taken away some supermarket market share, the main problem of traditional supermarkets is their weak operating capabilities. There may not be a very clear boundary between community e-commerce and physical supermarkets; diversified formats are the development trend of the retail industry. The two are not antagonistic Since 2020, under the influence of the epidemic, consumer demand for fresh food delivery has surged, and community e-commerce has become the hottest trend. At the end of last year, the State Administration for Market Regulation and the Ministry of Commerce jointly issued the "Nine No's" regulations for standardizing community group buying, drawing a "red line" for industry development: No abuse of independent pricing rights through low-price dumping; No abuse of market dominance; No false publicity or commercial defamation; No unfair competition practices; No use of data advantages to "kill familiarity" (price discrimination against existing customers), etc. Subsequently, several community e-commerce companies were successively summoned and administratively punished for low-price dumping, price fraud, and disrupting market order. Overall, community e-commerce is still in the exploration stage. We should rationally view its positive side and hope that the industry can become more standardized and healthy. To a certain extent, community e-commerce, by implementing the "pre-sale + centralized procurement + self-pickup" model, can reduce circulation links, improve circulation efficiency, further connect consumer demand with supplier matching, and reduce the markup links in traditional agricultural product sales. At the same time, it solves the "last mile" delivery problem of traditional e-commerce, allowing consumers to get lower prices while also saving time costs. The direct procurement and direct sales model of community e-commerce has expanded sales channels for agricultural products to move upward. At the same time, community e-commerce has also forced physical supermarket enterprises to improve service levels and shorten intermediate links. With stricter supervision and capital retreat, community e-commerce has also entered a cooling-off period, entering a new stage of orderly development and moving towards profitability. According to LatePost reports, Chengxin Youxuan's operating goal has shifted from loss-making growth to pursuing profitability. Many companies are also improving overall operational efficiency by reducing low-unit-price products, increasing high-unit-price products, and expanding SKU categories. For community e-commerce companies, whether the average transaction value and gross margin can be improved is the key to determining future development, and cost reduction and efficiency improvement will be the focus in the future. Some industry insiders said that at present, community e-commerce has opened up the consumer market at the community end. In the future, it will integrate with fresh food e-commerce, fresh food stores, front warehouses, and other formats, and scale effects and profitability will gradually emerge. With the regulatory authorities guiding and constraining community e-commerce, its development focus has gradually shifted from traffic diversion to building core capabilities such as warehousing, distribution, and supply chain construction. Community e-commerce is entering a new stage of rational development. "The solution to the profitability problem of community e-commerce is a very good supplement to the retail format." In Sun Yulong's view, community e-commerce has had a very strong additional attribute since its birth. It is a supplementary format of retail and must return to the essence of business. Without the creativity and profitability of independent sustainable value, it cannot continue no matter what. It is worth noting that when leading companies begin to focus on gross profit, the most intense subsidy war may come to an end. Some industry insiders pointed out that in the future, community e-commerce will not be the whole of retail, but a part of retail. It will tend to favor standard products in terms of product categories, and packaging quality will also improve. From the perspective of the development of community e-commerce and supermarkets, they are not antagonistic, but rather intertwined. Offline supermarkets are also actively exploring community e-commerce, expanding new traffic channels in addition to in-store and home delivery businesses. Many supermarkets have three operating models: home delivery, in-store, and community e-commerce, but supermarkets pay more attention to consumers' in-store experience and complementarity with catering and other formats. Community e-commerce also meets consumers' high cost-performance needs, but from the path of people, goods, and places, it is different from supermarkets. Retail is constantly superimposing and diversifying Jeff Bezos, founder of Amazon, once said in a speech: "People often ask me what will change in the next ten years? But few people ask me what will not change in the next ten years? In retail, we know customers want low prices, they want faster delivery, and they want more choices. This will not change in the next ten years." This is the famous "long-term thinking" strategy in Amazon management. In fact, for the ever-changing retail industry, what remains unchanged is the richness of product selection, the lowest price, and fast delivery. In the view of Li Ling, a senior retail person and consultant to Lianshang.com, the essence of consumer consumption is to buy things at a lower price, faster speed, and better service. As she said in her book "Eternal Retail": "The essence of retail is to sell goods to consumers, and there is nothing else." In other words, as long as merchants can meet the essence of consumer consumption, consumers will not care which platform or enterprise provides it. Enterprises need to focus on the essence, and the essence will not change. A fully competitive market will never have a single monopoly situation. Li Ling believes that from more than two thousand years ago to today, in the long history of development, no retail format has been eliminated; all have survived to this day. Retail has no iteration, only superimposition. The changes in retail are changes in consumers, consumption methods, and demand. In Wang Guoping's view, as a new format, community e-commerce is a component of the community commercial format. In the future, it will be in a process of multi-format integration with other retail formats. As long as it operates healthily and orderly under national policy supervision, it will promote the digitalization and innovative operation development of the retail industry. "In the later stage, it will be normal for community e-commerce to gradually open offline experience stores or for supermarkets to go online. Different formats can also cooperate with each other and develop healthily," Wang Guoping said. Community e-commerce and physical supermarkets are not a zero-sum game. Sun Yulong believes that community e-commerce returning to the essence of business has a certain restorative significance for the healthy development of physical retail. In the long run, retail always faces dynamic evolution, and the coexistence of multiple formats and models will be the norm. PS: From September 23 to 25, 2021, the 2021 (4th) China FMCG Conference hosted by "New Distribution" will be held in Shanghai. Focusing on industry trends + practical cases + connecting growth as the core, 3,000 FMCG practitioners will gather for the event. 11 themed forums involve new consumption under the 0 snack era · light wellness, small categories · big explosion, Z generation · new wine and tea; new retail under the community e-commerce, halftime? Final? Interpretation, heavy investment in same-city retail (O2O), short video and live streaming with goods; new marketing under the digitalization, BC integration, Martech, DTC and private domain traffic, distribution B2B, big business and digital distribution, etc. Operators in various sub-fields will bring the latest case interpretations. Some of the heavy guests confirmed so far include: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, global expert partner of Bain & Company and former vice president of marketing for Coca-Cola China; 4. Chen Xiaodong, senior vice president of Nestlé Greater China; 5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, general manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, vice president of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, general manager of Kuaishou E-commerce SKA Brand Operation Center; 10. Li De, e-commerce general manager of Gold Hong Ye Paper Group... A grand event for FMCG people, you must be there! Are you "watching" me?