Click to read the original article for details Recently, Tongcheng Life collapsed and exited early. As one of the 'old three groups' (Xingsheng Youxuan, Shihuituan, Tongcheng Life), it was once highly anticipated, but ultimately couldn't withstand the pressure from internet giants. Despite its exit, the industry was in an uproar, with many condemning community group buying. However, as a new retail business model, community group buying still holds commercial rationality and value. Of course, today's discussion is not about community group buying itself, but about how leading brands should respond to this still-promising trillion-yuan track. In exchanges with brand owners, the deepest confusion often revolves around price control. Frankly speaking, completely avoiding the impact of community group buying on the stable distribution channels of the past is unrealistic. The emergence or development of new business formats will inevitably affect existing stakeholders. For some, it's an opportunity; for others, a challenge. Even if it's a challenge for most leading brands, from another perspective, if you do well while others don't, it's also an opportunity. Completely avoiding impact is unlikely. Is there a standard answer for moderate avoidance? No. Each company's consumer category, development stage, market coverage, and brand positioning differ. But overall, three principles should be established: First, set standards Second, differentiate Third, respond quickly Set Standards Don't let community group buying throw everything into chaos, patching things up and dealing with complaints. Never be led by the nose by community group buying; start from your own market development stage, categorize first, then match. For example, divide markets based on market share and distribution rate into potential markets, strong markets, opportunity markets, and optimization markets (source: classification from the community group buying industry report released by New Distribution). Different market structures, combined with community group buying platform coverage, should lead to different strategies. For instance, in strong markets, the overall strategy is to consolidate market leadership. For product structure in such markets, focus on potential and new products. For mainstream best-selling products, strictly control them. Another example: in opportunity markets, where existing coverage and market share are insufficient, leverage community group buying to penetrate lower-tier markets. In product matching, use mainstream and best-selling products to expand coverage and boost sales through community group buying. For leading brands, each company is familiar with its own market layout—which regions sell well and which don't. Match regional market positioning with operational strategies under community group buying. Four market types, four sets of strategy standards. Not too many, not too few. Too many strategy standards, and community group buying changes monthly, making it cumbersome and hard to adjust. Too few, and it's a one-size-fits-all approach, missing development opportunities. Additionally, at the regional market cooperation level, many companies are puzzled about whether to choose local distributors, designated TP providers, or core platform suppliers. Frankly, each partner has pros and cons. For example, local distributors are familiar with company processes and cooperate efficiently, but lack fulfillment and delivery capabilities and have cognitive limitations. Designated TPs are more professional and understand platform demands, but are less familiar with products and relatively unstable. Faced with this, one brand owner friend suggested cooperating with all: First, distributors are hard to control; it's unclear how far multi-brand distribution will develop. Second, since you don't know who will perform well, use a horse-racing mechanism, letting various distributors participate to screen for long-term stable partners. Of course, even if cooperating with all, there must be a premise: standardize the product price system. Set standards: Once a violation of the company's price system is found, trace the goods to the source. Even if you didn't set the price, if goods come from you, you must accept corresponding penalties. Therefore, setting standards has two core dimensions: First, a standard outline for operational strategies for different market types under community group buying; second, standards for the price system. Differentiate Different markets require different operational strategies. Behind operational strategies, the core is product differentiation. Regarding product differentiation, many immediately think of using different specifications, flavors, or even packaging to differentiate. But don't just think of these; still match product structure from the market classification dimension. For example, in strong markets, strictly control mainstream best-selling products, focus on supporting potential or new products, and the aforementioned special packaging products; for potential markets, mainstream products can be introduced but strictly monitor their price system. This is product structure matching by market type. Additionally, for different regions within the same market type, differentiate by different specifications and weights; for different platforms in the same region of the same market type, consider exclusive or co-branded formats. The above are two lines of defense for product differentiation. The final line of defense is differentiation in the selling method on platforms, such as multi-packaging for the same product, combination packs within the same category, cross-category combination packs, and value packs with product plus gifts. Returning to community group buying, brands should not just focus on the single dimension of best-selling products being underpriced. Instead, on the basis of defense and avoidance, think about how to effectively leverage community group buying for offense. With brand momentum, how to push more products, especially new products that local distributors previously had no willingness or capability to distribute. Target the consumer profile behind community group buying and launch new products with high cost-performance. Seize the remaining traffic dividend of community group buying, choose some advantageous regions for small-scale testing first, then expand. Under the new community group buying format, launching a brand-new brand is not impossible. Respond Quickly Quick response also has two dimensions: First, cognitive quick response. Strategies made today may be obsolete tomorrow. For example, last month, a friend mentioned that a certain platform had started charging brand owners in some regions, calling it a website service fee. It varies by category. The friend lamented that it suddenly felt like the hypermarket era. Facing such changes, brand owners must quickly assess and respond. Cognitive quick response doesn't mean everything is fixed; accept change. When changes come, continuously revise and set standards. Second, organizational quick response. Currently, platforms' 'regional procurement' significantly impacts local business, and at the platform headquarters level, it also affects overall direction and policies. Facing community group buying, brand owners should also adopt a department + regional sentinel form to ensure timely response. Departments handle platform headquarters, and regional sentinels handle regional procurement. At the department level, overall communication and coordination with headquarters platforms should remain smooth; simultaneously, develop strategies for different market types, and manage classification and agreements for distributors and designated TPs. Regional sentinels maintain communication with platform regional procurement, making immediate judgments and fulfilling orders. Overall, respond quickly to community group buying changes in a small organizational form. Community group buying has developed for over two years. Marked by government regulation and Tongcheng Life's exit, it has passed the barbaric growth stage and is about to enter deep market cultivation. During this process, brand owners must also shift from past patching and resistance to effectively cooperating with community group buying. Fundamentals remain unchanged. Shift from setting market types and development goals based on regional markets to subdividing into market types based on community group buying, matching corresponding strategic goals, and then configuring products and partners. For further cooperation guidance on community group buying, New Distribution will hold a special session at the 2021 (4th) China FMCG Conference in Shanghai from August 24-26, discussing cooperation between brand owners and community group buying. Interested friends are welcome to attend and discuss. Review: Asher -END-