---
title: "Community Group Buying: A False Fire?"
description: "Community group buying, once a hot trend leveraging WeChat's ecosystem, is now facing a crossroads due to intense competition, quality issues, and high dependence on group leaders. The article explores the challenges and potential paths forward for this retail format."
author: "刘华"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-07-23"
language: "en"
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---

# Community Group Buying: A False Fire?

> Community group buying, once a hot trend leveraging WeChat's ecosystem, is now facing a crossroads due to intense competition, quality issues, and high dependence on group leaders. The article explores the challenges and potential paths forward for this retail format.

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**How long has it been since you last joined a group purchase in a WeChat group?**
Editor's note: Pinduoduo, backed by the WeChat ecosystem, successfully went public in a short time. But another business model, community group buying, is facing even fiercer competition than Pinduoduo's field. Especially in many cities, almost every residential community has established WeChat groups, where group leaders attract neighbors to place orders.
Initially, these neighbors would participate actively due to social pressure and genuine low prices. However, as the novelty wears off and community group buying shows weaknesses in quality and delivery, it has reached a crossroads.
Over three years ago, when WeChat business (Weishang) was thriving, some entrepreneurs in small cities began experimenting with so-called community group buying. Since it relied on the social relationships within WeChat groups, it was later also called community group purchase or community group buying.
However, when more and more entrepreneurs and even giants saw the opportunity, they rushed in, almost instantly creating a storm around this social group buying trend.
Yet, since this year, most community group buying entrepreneurs report that times are tough, partly due to intense competition and partly due to a lack of innovation to break through homogenization.
More importantly, everyone knows that **group leaders, especially top leaders, are the core competitive resource for a community group buying platform in a region**. Therefore, since the second half of last year, major platforms have been poaching top leaders, making them the real beneficiaries.
Meanwhile, small and medium group leaders work diligently in group chats, promotion, receiving goods, inspecting quality, and delivery, only to find that what they earn is not as good as a regular office job, which would at least be easier.
**Thus, a phenomenon emerges: top leaders frequently switch jobs, small and medium leaders leave in large numbers to find other employment. Without enough high-quality group leaders, community group buying is undoubtedly doomed to fail.**
**A Pig on the Wind?**
According to incomplete statistics, from August last year to the end of the year, at least 15 community group buying companies completed financing totaling no less than 4.5 billion yuan. Such favor from capital shows that both entrepreneurs and investors see the potential for low-cost customer acquisition and profitability.
Especially as traditional e-commerce dividends fade and WeChat business is not respectable, the only ways to integrate with the WeChat ecosystem and fully leverage its 1 billion monthly active users are mini-programs and community group buying. Some tech-savvy community group buying platforms have even developed mini-programs that connect with WeChat groups, making it easier for group leaders to place orders for members and track logistics in real time.
But why did community group buying become such a big trend? **This is due to low customer acquisition costs and high stickiness, but more importantly, the underestimated potential and prospects of seizing offline community entrances.** At the time, founders were often complacent and did not think about "long-term worries."
An example is Tang Guangliang, founder of Kaola Select, who once boldly declared at a wine party, **"I want to achieve daily transaction volume of 100 million yuan for Kaola Select, ranking first in the mini-program backend. Do you think Ma Huateng would meet me then? Would he add us to WeChat's nine-grid?"**
Indeed, given the massive number of players in community group buying at the time, such boldness was understandable. Who else could claim to have seen and seized this big trend first? Besides the founders, many capital institutions also saw the opportunity. Take Kaola Select as an example: it completed a 20 million yuan angel round just three months after launch, and a few months later, a 30 million yuan Pre-A round.
This financing speed was not even achieved by the unmanned shelf format under the new retail concept. It is fair to say that community group buying experienced its absolute heyday in the past two years.
However, as the saying goes, things turn into their opposite when they reach the extreme. Community group buying has been on the decline this year, with **layoffs, salary cuts, and withdrawal from some cities**. Behind these adjustments, it is clear that community group buying has fallen into the abyss of homogenization. If it cannot continuously mobilize consumer enthusiasm and stickiness, retain top and quality small and medium group leaders, and give group leaders confidence to continue, such community group buying is like a shell without flesh and blood, naturally unable to survive.
**Is FMCG a Good Fit for Community Group Buying?**
From the beginning to now, the core category of community group buying has been fresh produce, specifically fruits, supplemented by items like frozen shrimp.
**What truly attracts consumers to community group buying is not quality but price.** For common fruits like apples, grapes, and pears, community group buying can offer the lowest group purchase prices. For items like cherries and lychees, they have also lowered prices to the low point of traditional e-commerce by connecting with supply chains.
However, despite the advantages of WeChat ecosystem and offline community acquaintance-based fission, looking beneath the surface reveals many problems: **poor management, heavy reliance on high-quality group leaders, and once a leader leaves or changes careers, the community's group buying business falls into a deadlock.**
The fatal issue is that the wild growth of community group buying uses low prices to acquire customers, but after receiving the goods, consumers often feel it's not worth it—for example, apples look odd, cherries and lychees are not fresh. Behind these problems lies a bigger and more challenging proposition for community group buying entrepreneurs: **how to integrate the supply chain, go deep into production areas, and connect farmland with communities.**
In fact, connecting with origin is not new. JD.com, Suning, and even Lenovo's Joyvio have all achieved efficient procurement, transportation, and delivery by connecting with origins. However, compared to these well-funded players, fledgling community group buying entrepreneurs **face tight funds and lack resources**, so achieving direct sourcing from the supply chain, bypassing second and third-tier distributors, remains an unsolved problem.
What's worse is that while fresh produce quality is still not up to par, community group buying entrepreneurs are simultaneously starting group purchases for FMCG items like toilet paper, tissues, and laundry detergent. Although you can sell anything in a WeChat group, how can the vast FMCG category, which is worlds apart from fresh produce, be managed by the small forces of community group buying?
Even JD Super and Tmall Supermarket only got on track in recent years, and the human, material, and financial resources they invested are astronomical. Moreover, in the supermarket FMCG category, the cat-and-dog battle between JD and Tmall has been frequent in recent years, showing that FMCG is not as easy to succeed in as low-priced fresh fruits and vegetables.
**A New Round of the Thousand-Group War?**
Community group buying, as a new retail format, along with unmanned shelves, can be seen as soldiers on the front line. Some may be killed, while others may find ways to survive.
But what all community group buying entrepreneurs should consider is **how to break through the barriers of homogenization**, how to innovate in categories, quality, supply chain procurement, management, warehousing and distribution, whether to use AI, IoT, etc., to reduce costs and increase efficiency, and how to research new incentive mechanisms to maximize retention of top leaders and motivate small and medium leaders, so as to solidify the foundation of community group buying and avoid failure.
Moreover, in the past year or more, the massive influx of capital has led **community group buying entrepreneurs to mistakenly believe that spring is here and the future is now.** Therefore, platforms that have secured some financing have entered an era of buying time through mergers and acquisitions.
Data shows that to date, there have been over a dozen M&A deals in community group buying, mostly targeting companies ranked in the top three in their regions. They do have certain user data and transaction volumes, but how to integrate and harmonize remains a challenge for the acquirers.
In fact, regional community group buying is very similar to group buying platforms like Lashou and Wowotuan from the past. They often avoid head-on competition in first and second-tier cities, instead advertising heavily on outdoor media like buses in second and third-tier cities, recruiting low-paid staff to do ground promotion in each community, and negotiating with stay-at-home moms and mom-and-pop stores to join their community group buying business. Industry insiders point out that the provinces where community group buying is doing well include Shandong, Henan, Jiangsu, Zhejiang, Jiangxi, Hunan, and Hubei. **In these provinces, there are dozens of community group buying platforms, but very few are doing well.**
From the perspective of capital, today's community group buying war is quite similar to the thousand-group war of the past. **Because many local players ultimately aim not to build a great business, but to make every effort to achieve a certain scale and data, then sell the company directly to giants like Alibaba and Tencent**, allowing the founding team and investors to cash out happily. However, the recent closures of some small and medium community group buying platforms are a wake-up call: do not repeat the mistakes of the thousand-group war.
An example from the thousand-group war era: a personal webmaster created a small group buying website, but instead of food, it offered novelty items like Taobao goods. Not long after, Meituan's Wang Xing acquired it and brought the webmaster on board to handle product group buying. Of course, years later, Meituan completely abandoned product group buying.
This is similar to how community group buying is now venturing into FMCG products in addition to fresh produce. The paths, detours, and pitfalls that predecessors have experienced are worth careful consideration for the surviving community group buying entrepreneurs today.


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