Click the image above for details Core viewpoints: 1. In the past, offline chain retail was not impacted by online forces, not because we were strong, but because the enemy was not yet capable. 2. Meituan's strategy will impact not only community group buying but also offline store retail. 3. Countermeasure: Chain stores must complete the digitalization of local distributor inventory ahead of Meituan. Meituan has officially announced its entry into community group buying. As chain stores, we should not underestimate this threat; we must study it carefully and prepare thoroughly. -01- Part One In the past, chain retail was not impacted by online forces, not because we were strong, but because the enemy was not yet capable. Traditional offline chain retail has three fortresses: department stores, supermarkets, and convenience stores. Online e-commerce platforms represented by Alibaba and JD.com have relatively smoothly captured the department store fortress, with a large number of department stores closing or transforming over the past decade. However, online forces have not been able to effectively attack supermarkets and convenience stores. This has led many retail owners to underestimate the enemy, thinking that online competitors are not formidable. Let's analyze carefully: our past success was not due to our own strength, but because the enemy was not prepared. First, the main model of traditional e-commerce is "online pre-sale + express delivery," which we call express e-commerce. Supermarket products are heavy and cannot afford express fees; convenience store products have low average order values and high delivery time requirements, making instant delivery costs even higher. So express fees have blocked e-commerce platforms' attacks on offline retail. Second, the basic model of community group buying is "online pre-sale + offline self-pickup," which we call self-pickup e-commerce. Self-pickup solves the problem of high express fees, but after self-pickup e-commerce emerged, the first few players lost their way and fell into confusion. Among them: There were those who sold dog meat under a sheep's head. Customer needs fall into two categories: one is urgent, for immediate consumption; the second is stocking up, for gradual use at home. Since community group buying delivers the next day, it should focus on the second category of products. Xingsheng, in order to disguise its wholesale business to mom-and-pop stores as retail to inflate its valuation, did not focus on developing the second category of products, so their number of active SKUs has long been only a few hundred. In terms of operating regions, they chose lower-tier markets where customers' time cost is lower, and urgent and stocking products overlap more. Currently, Xingsheng is seeking a listing and will not adjust in the short term, meaning they won't sell lamb meat soon, so they won't affect our lamb-selling business. There were those who built their base on water. A base must be solid and reliable to serve as a base. Group buying companies represented by Shihuituan used individual mommy group leaders as their base. This group is inherently a floating social resource, following whoever pays more. Relying on them will only lead to a quagmire of vicious competition, and once the supply of funds is cut off, they will die. There were those who neglected their duties and destroyed their own defenses. Pre-sale is a basic feature of community group buying, and its biggest advantage is low cash purchase prices. JD.com, for example, extended payment cycles to use the money owed to suppliers to provide loans to them. Suppliers, unable to bear the burden, had to raise supply prices. For most products, once they pass through JD.com, they are no longer suitable for community group buying. The company within JD responsible for lending is JD Digits, which is seeking a listing, so JD.com will have limited success in this field. There were those who treated enemies as friends. The author often says that community group buying is the digitalization of supermarket business, and self-pickup e-commerce is a substitute scenario for offline supermarkets. However, Alibaba's community group buying business chose RT-Mart for supply chain, leading to high supply prices and losses on every order. -02- Part Two This enemy situation is different from the past. The various enemies mentioned above have not figured out the basic rules of this war and have not formed effective combat capability. But Meituan is different. First, Meituan has figured out the basic rules of this war. Meituan explicitly proposed to adopt the "pre-order + self-pickup" model, indicating that Meituan has understood the fundamental logic of community group buying. Second, Meituan has found the right base. Meituan explicitly proposed to "empower community convenience stores," which can only be mom-and-pop stores. These mom-and-pop stores are more stable than mommies. The method of cooperating with mom-and-pop stores has already been proven by Xingsheng, so Meituan can simply copy it. Third, Meituan has found the right allies. Meituan will follow its past experience of digitalizing local catering services, cooperating with local FMCG distributors to digitalize their inventory, allowing customers to directly buy products from distributors' warehouses. Finally, Meituan has no burdens and will not tie its own hands. Meituan does not need to monetize through financial business, so it will not make JD.com's mistakes. At the same time, Meituan also has the ability to replicate quickly nationwide. Currently, Meituan is piloting in Jinan. Since Meituan has a business team covering the national market, the speed of national replication after the pilot will be very fast. Integrating distributor resources on one hand and expanding mom-and-pop stores on the other are not difficult for Meituan. To summarize Meituan's strategy: Move distributor inventory online to solve the product problem; build sorting warehouses and delivery systems to solve the logistics problem; cooperate with mom-and-pop stores to solve the pickup point problem; and rely mainly on its own app traffic, supplemented by some store WeChat group traffic. -03- Part Three In the coming months, there may be unfavorable situations for chain stores.

  1. A large number of products on Meituan's platform may be priced significantly lower than offline supermarket retail prices. Meituan uses a pre-sale model, collecting customer money first, purchasing with zero payment terms, allowing it to buy standard products at prices 15% lower than chain stores with credit terms. Due to fast turnover and its own traffic, Meituan can sell with a 10% markup, resulting in retail prices about 70% of offline stores. If they put the main products of local distributors online, it will cause widespread price advantages over offline supermarkets, leading to a significant decline in supermarket foot traffic.
  2. Suppliers may follow Meituan, emptying store shelves. Once Meituan's sales volume rises, it may use the common e-commerce tactic of "exclusive deals," requiring distributors to supply exclusively to them. Combined with the lure of cash purchases, many distributors may abandon supplying supermarkets, leaving shelves empty, further reducing customers' willingness to visit stores.
  3. Convenience stores will not be immune. Empowered mom-and-pop stores will put pressure on convenience stores. After cooperating with Meituan, customers picking up orders at mom-and-pop stores may also buy urgent items there, so they won't go to chain convenience stores.
  4. Meituan's strategy will teach Alibaba, Xingsheng, Shihuituan, etc., and their competition will involve burning money on subsidies, putting more pressure on offline retail. In summary, Meituan's entry with this strategy impacts not only the community group buying market but also the offline retail market. -04- Part Four Our countermeasure: We must complete the digitalization of local distributor inventory ahead of Meituan.
  5. We must complete the digitalization of local distributor inventory before Meituan, allowing customers to see and buy products from distributor warehouses, and pick them up at our stores the next day. For distributors' online business, we should shorten payment terms, ideally zero. Doing this well will closely unite distributors with our business, making it difficult for Meituan to operate. If we do nothing, we are essentially handing over the distributor group to Meituan. Some supermarkets with strong direct sourcing from origins may easily overlook this issue. Direct sourcing may make your products 10% better than competitors, but digitalizing distributor inventory can make prices 30% lower. Many customers will switch due to price. The author believes that even if chain stores mainly rely on direct sourcing, they should now spare effort to digitalize local distributor inventory.
  6. The main resistance to this work comes from within: Local distributors and local retailers are natural partners, and chain stores are usually the most important clients of distributors. Logically, this integration should not be difficult, but internal resistance within chain stores is considerable. First, the purchasing department will oppose. In the offline retail buying and selling system, the personal ability of buyers is crucial. But in the pre-sale system, data determines purchasing content, reducing reliance on buyer ability. So buyers will oppose. Second, the finance department will oppose. The workload of settlement increases, and the pool of funds they manage shrinks. Third, the IT department will oppose. They serve the command of ground warfare, but now we need to fight air warfare. They can't help, feel a lack of presence, and will speak ill of the air command system, insisting on using the ground command system to command air warfare. Finally, if the boss still wants to use retail cash flow for real estate, credit, or stock speculation, that is an even greater obstacle. Overcoming these obstacles is difficult, but customers will like it because they can buy products at lower prices. Then they will be more willing to walk into our stores and buy more products. By uniting distributors with this method, we can unite our customers and not fear Meituan's invasion.
  7. Support from Dingdan Tu: Since 2018, Dingdan Tu has firmly supported chain stores in developing community group buying business. To support chain stores in quickly completing the digitalization of local distributor inventory, Dingdan Tu recently launched the "Supplier Management" function module.
  1. Chain stores can invite local distributors to become their suppliers. 2) Suppliers can submit their product inventory, images, prices, and other information to chain stores in the system. 3) After chain stores review the submitted products and determine retail prices, they can publish them for retail in the group-buying mini-program. 4) Suppliers can view real-time sales of their products in the system and prepare delivery accordingly. This function is free; all new features of Dingdan Tu are free. It only charges 3 cents per order for actual customer transactions, with a monthly cap of 1,000 yuan per chain store. Please be informed. Finally, I emphasize again: chain stores should complete the digitalization of local distributor inventory as soon as possible, and never leave this important ally to Meituan.