Driven by capital and catalyzed by the pandemic, community group buying finally welcomed a new round of explosive development and growth in 2020. According to a Kantar industry report, the community group buying market size reached 28 billion yuan in 2018, 50 billion yuan in 2019, and nearly 100 billion yuan in 2020. However, data disclosed by various internet giants suggests the actual market size far exceeds these figures. On January 28, industry giant Shihuituan's daily order volume officially surpassed 15 million orders. Earlier, Xingsheng Youxuan's daily orders reached 12 million, and around the same time, Meituan Youxuan and Duoduo Maicai also announced daily orders exceeding 10 million... Based on an average order value of 10 yuan, just the daily orders of these few giants alone imply a market size of nearly 200 billion yuan, and this does not include the numerous regional platforms springing up across the country. Facing such a rapidly developing and promising new channel, should traditional brands and distributors follow suit or not? -01- Confusion and Hesitation Even though the community group buying industry has been around for over three to four years, New Distribution found that different types of brands and distributors have adopted different measures and strategies, leading to vastly different outcomes in their cooperation with community group buying platforms. Recently, New Distribution conducted in-depth research and interviews with many brands and distributors regarding their cooperation with community group buying platforms. Based on their cooperation status, brands can be divided into three categories: 1. Active Cooperation and Proactive Embrace Typical examples include companies like Haitian, Lanju, Baimao, Synear, and CP Group. These companies established relatively stable cooperative relationships with community group buying platforms early on. To avoid conflicts with traditional offline channels, these companies often adopt differentiated product, brand, or distribution strategies when cooperating with platforms. For instance, Qianwei Central Kitchen developed the Qianwei Xiaochu brand specifically for the community group buying channel, with products distinct from their main brand. One leading brand, to enhance market coverage, sets up franchised distributors for community group buying in specific regions, selecting differentiated products to cover the market. This approach minimizes conflicts with offline channels while maximizing market coverage and penetration, achieving good results with "doubled market sales." 2. Strict Prohibition of Cooperation Typical examples include brands like Weilong, Huahai Shunda, and Mengniu, which have huge offline sales. Any slight change in online product prices could severely damage their existing distribution channels and impact their core business. 3. Limited Cooperation These brands cooperate only in certain markets, often lacking comprehensive strategies or awareness for community group buying. Cooperation is usually initiated by distributors within their distribution system. Products are sold both online and offline without differentiation, leading to situations like "online promotions causing offline sluggish sales." Similarly, distributors' cooperation with community group buying platforms is not optimistic. This "lack of optimism" is not because community group buying is unsuitable for traditional distributors to distribute goods, but because most distributors cannot meet the cooperation requirements of community group buying platforms in terms of digitalization, feedback mechanisms, and product variety. Under such circumstances, the cooperation results are naturally predictable. -02- Iteration and Upgrading Although most brands and distributors are not cooperating ideally with community group buying platforms, does this mean community group buying is unsuitable for FMCG distribution? The answer is clearly no! According to New Distribution's "2019-2020 China FMCG Community Group Buying Industry Report," among the products sold by leading community group buying platforms, beverages, rice, flour, cooking oil, and snacks account for as much as 35%-40%. If we calculate based on a 200 billion yuan market size, the market space for such FMCG products in community group buying is as high as 70-80 billion yuan. The market is undoubtedly huge, and there are bound to be new ecological niche opportunities, both for brands and distributors. So, what should brands and distributors do to avoid being replaced by new ecological niches? New Distribution believes there are two main points: 1. Go Out and Self-Revolutionize This requires brands and distributors to truly transition from product-oriented to consumer-oriented thinking, abandon path dependence, and solve market problems with new methods and ideas. In the past, when supply and demand were imbalanced, whatever factories produced, the market sold. Now, factories not only need to produce goods but also place them where consumers can see and buy them. In the future, as personalized consumption becomes more prominent, manufacturers will be forced not only to place products where consumers can see and buy them but also to sell the right products to the right consumers at the lowest cost. 2. Bring In and Actively Iterate Iteration here refers not only to updating one's own concepts but also to iterating one's positioning, organizational structure, management model, and business model. Previously, distributors survived in a tough business environment; as long as they were bold and hardworking, they could make money in traditional trade. Now, the fragmentation of retail channels and channel stratification require distributors to not only understand the market but also understand operations, photography, and be able to write product notes. -03- The True Value of Community Group Buying Returning to community group buying, besides providing consumers with discounted products and hassle-free services, and helping brands and distributors distribute goods and gain market increments, what deeper value and significance does community group buying bring to society as a whole? New Distribution believes there are three main points: 1. Broader Consumption Upgrade Benefiting 800 Million People As we all know, China is a country with extremely uneven regional development, meaning we have both super-first-tier international metropolises like Beijing, Shanghai, Guangzhou, and Shenzhen, and economically underdeveloped areas, even poverty-stricken counties. Economic imbalance leads to differences in consumption levels. Community group buying, through direct sourcing from the source and pre-sale group buying, reduces the cost of delivering quality products to consumers in lower-tier markets from the supply side, while maximizing the connection between products and consumers. 2. More Complete and Inclusive Infrastructure for the Vast Lower-Tier Market The saying "To get rich, build roads first" reflects the importance of infrastructure for economic development. The rapid development of community group buying will also drive the construction of warehousing, distribution, and logistics in lower-tier markets. Through an extensive distribution system that reaches everywhere, it builds a new generation of fresh food logistics network. The impact and pull of such infrastructure on future business forms are unpredictable! Furthermore, community group buying will drive the development of related industries and create millions of new jobs. Chen Ying, founder of Shihuituan, once mentioned that in 2021, Shihuituan will build 5 million group-buying pickup points with fresh food fulfillment capabilities, as well as 5 million group leaders, benefiting 5 million households. In addition, Shihuituan will more firmly implement its fresh food strategy. In the past 2020, Shihuituan helped over 200 upstream fruit and vegetable bases distribute agricultural products, solving the sales problem for hundreds of millions of fresh products and creating hundreds of millions of yuan in revenue for fruit farmers and vegetable growers. Today (February 11), Shihuituan, together with Taobao Maicai, will officially appear on the 2021 CCTV Spring Festival Gala, giving consumers 8,000 fresh fruit and vegetable subsidies at the moment of bidding farewell to the old and welcoming the new, along with shopping cart clearing gifts, Year of the Ox pure gold coins, 100 million Spring Festival surprise red envelopes, and 200 million farm New Year gift packages to welcome the new year with consumers. Undeniably, community group buying has had various issues in its early stages. But once the business model is proven and the business logic returns to normal, we have reason to believe that the development of community group buying will be as promising as all new channels. Tips will be paid 400-2000 yuan once adopted.