---
title: "Community Group Buying Enters Deep Water, Traditional Market Ecology Shifts"
description: "A field visit to Zhenjiang reveals how community group buying platforms are aggressively recruiting store owners as group leaders through 'street-sweeping' campaigns, reshaping the traditional FMCG distribution landscape. Dealers face declining offline sales, while some adapt by diversifying brands, channels, and embracing e-commerce."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-07-30"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/community-group-buying-enters-deep-water-traditional-market-ecology-shif-2a63ea13/"
markdown: "https://xinjignxiao.com/en/articles/community-group-buying-enters-deep-water-traditional-market-ecology-shif-2a63ea13.md"
original_source: "https://mp.weixin.qq.com/s/uwD8W-GJla_8qFAXgYl7zg"
translation: "https://xinjignxiao.com/zh/articles/%E7%A4%BE%E5%8C%BA%E5%9B%A2%E8%B4%AD%E8%BF%9B%E5%85%A5%E6%B7%B1%E6%B0%B4%E5%8C%BA-%E4%BC%A0%E7%BB%9F%E5%B8%82%E5%9C%BA%E7%94%9F%E6%80%81%E5%8F%98%E5%8C%96-2a63ea13.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/community-group-buying-enters-deep-water-traditional-market-ecology-shif-2a63ea13/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Community Group Buying Enters Deep Water, Traditional Market Ecology Shifts

> A field visit to Zhenjiang reveals how community group buying platforms are aggressively recruiting store owners as group leaders through 'street-sweeping' campaigns, reshaping the traditional FMCG distribution landscape. Dealers face declining offline sales, while some adapt by diversifying brands, channels, and embracing e-commerce.

**Click to read the original article for details**
Recently, while visiting the market in the Zhenjiang area, I found that this region has already been through multiple rounds of community group buying campaigns. Both merchants in the supply chain and consumers have a fairly deep understanding of community group buying. I visited several distributors and dozens of terminal stores, and here I share what I saw and heard.
**Community Group Buying's 'Street-Sweeping Campaign'**
During market visits, I encountered a promoter from a community group buying platform at a tobacco and alcohol supermarket, discussing with the store owner the installation of the app to become a group leader. The review process was simple and crude—they said as long as there was a storefront sign, other qualifications could be 'worked out.'
A brief chat revealed that the promoter's directive was to conduct a concentrated 'street-sweeping' campaign.
1. The company organizes all promoters, about 60-70 people, to converge on a single county town and install the app intensively over 2-3 days.
2. The campaign is not limited to supermarkets and other circulation channels; they also target grain and oil stores, restaurants, hair salons, milk tea shops, etc., trying to turn them into group leaders.
3. All promoters have performance targets, so they persist through cajoling and simplify procedures, aiming for immediate installation and use.
4. During the promotion period, to give new group leaders a taste of benefits, they may offer installation rewards or special-priced products to attract traffic.
5. It's not just our company doing this; other platforms have already started. The current battle is the 'fight for store owners' mobile phones.'
The 'street-sweeping' campaign has become routine for major platforms, similar to concentrated distribution in traditional industries, but with more people and simpler operations. The first round is promotion and installation, the second round activates installed users, and the third round fills gaps in terminal stores and reactivates dormant users.
**As long as platforms exist, promotion cycles continue.**
**Attitudes of Traditional Grocery and Supermarket Owners**
**Opposing Terminal Store Owners:**
1. I already have too many similar apps on my phone. Being a group leader earns little, and constantly posting to my Moments and groups has annoyed many friends. Close friends have blocked my Moments, and casual acquaintances have deleted my WeChat. Also, my WeChat contains important contacts like leaders and children's teachers, and I don't want to disturb them daily.
2. Even if I post, there are too many people doing this now; information is buried in seconds. Few people scroll back to see old posts. My Moments is full of ads, and I don't even bother looking at it myself.
3. I did the math: the consumer 'traffic' the promoters talk about is worthless. Over 95% of consumers pick up their orders at the door and leave immediately, which doesn't help my business. Plus, many group-buy products are also sold in my store, creating conflicts. With more group buying, I need a dedicated person to sort the goods every morning after delivery—it's just extra work.
**Non-Opposing Terminal Store Owners:**
1. Physical store business is getting worse, and I can't afford rent and utilities. If I don't install, the neighbor will. Since it's the trend, I'll give it a try.
2. Some products on the platform are on special offer, so I can buy them for myself. Many bestsellers like Pepsi, Master Kong, and Nongfu Spring are cheaper during platform promotions than from distributors, so I can restock my own inventory.
3. The store is mine, so no rent pressure. I can set aside a space with large shelves for community group buying products, making it the largest pickup point in the area. The scale effect can also boost my business.
4. The sales reps come repeatedly, offering cigarettes and water; they work hard. I'll install it for now, and occasionally share 'shocking price' products to support their work.
**The Mysterious 'Loot Group':**
Under community group buying, there are many organizations dedicated to exploiting the system, which distributors call 'loot groups.' Distributors and wholesalers can contact these groups for products they need, and they deliver to the distributor's warehouse at prices 3-5 yuan lower than the brand's factory price, **with fresh batch numbers, authentic quality, and guaranteed service.**
I haven't fully investigated their operation model, but the general steps are:
1. The organization buys large numbers of personal community group buying accounts for a few cents to a few yuan each (since special-priced products are limited per account, many accounts are needed to meet distributor and wholesale demand), and they take measures to prevent account bans.
2. They coordinate with platform personnel to assist with logistics. Drivers are happy because instead of unloading at a dozen locations, they can unload at one place through private arrangements. Platform staff are happy because their performance metrics are met quickly, leading to higher income.
3. Loot groups also have professional sales staff covering large areas, usually several prefecture-level markets around platform warehouses. They maintain regular contact with partner distributors, ensuring distributors meet factory targets and also find opportunities to earn extra.
4. Loot groups understand the market and platforms, have clear division of labor, and operate as teams with dedicated roles (some collect accounts, some handle purchasing, some do business development, and some coordinate). Clearly, they are new entrepreneurial companies under the current business environment.
The emergence of loot groups really surprised me. Everyone knew about individuals or single stores exploiting community group buying, but such organized, professional teams are rare.
This is the reality, and there are already many such groups (who knows how much wool the platforms can afford to lose; they've disrupted the market and themselves).
**Current Situation of Distributors**
I visited five distributors with annual sales of 30-60 million yuan. Three reported severe sales declines and much greater difficulty in making profits than in previous years. Especially from April to June this year, offline business seemed to freeze, almost no sales at all. If offline business can barely reach 50% of previous levels, they'd be grateful.
**Reasons for Offline Sales Decline:**
1. In the first half of the year, some major accounts closed down, reducing their ability to stock and sell. These stores were typically in city centers, rented premises, and around 200 square meters.
2. Consumer purchasing channels have diversified; 2B and 2C e-commerce are increasingly eroding offline business, but suppliers are often not local distributors.
3. Distributors have been slow to change their mindset. One distributor noted that B2B business used to take one to two years to penetrate, but community group buying achieved more in just a few months, and their response was too slow.
4. Another distributor admitted a mistake: previously they focused on 2-3 brands to grow big and strong, with good profits and sales. Now they need to represent multiple brands; only a multi-brand strategy can occupy limited terminal store resources and achieve high-density coverage of outlets and shelves.
**A Pure Offline Distributor Who Reported No Sales Decline:**
1. Single category, multi-brand operation: only beverages, with agency rights for two first-tier brands, plus four or five small brand beverage agencies, and also acting as distributor/wholesaler for three or four first-tier brands.
2. Integrate brand resources: for example, the freezers provided by their brands are stocked with their own beverages, totaling over 30 SKUs, and they combine display fees, which is more than sufficient.
3. Multi-channel operation plus years of customer relationships: terminal stores call him for almost all beverage needs because they trust him. Additionally, the restaurant channel in the service area is well-developed, and high-margin new beverages meet both profit and sales needs.
**A Distributor in Transition Who Saw Sales Growth:**
1. Last year, they established their own e-commerce department and actively connected with various platforms, which paid off this year.
2. CVS (convenience stores) has always been a key focus; they cooperate with all CVS in the service area, and the relationships are very harmonious.
3. Multi-brand and multi-category operation, focusing only on high-margin products. The first principle for taking on new products is to reject if the gross margin is below a certain point.
4. The boss is eager to learn, frequently exchanges with industry leaders, uses internet slang in communication, and the modern management and office environment attract many highly educated employees.
**A Word to Distributors:** The trend is inevitable; adapt by starting with changing yourself.
**A Word to Community Group Buying Platforms:** Stay true to your original mission; begin with the end in mind.
**A Word to Traditional FMCG Practitioners:** Stop complaining, disrupt yourself, and embrace the new.
**PS:** From August 24-26, 2021, the 2021 (4th) China FMCG Conference, hosted by New Distribution, will open in Shanghai. **Focusing on industry trends, practical cases, and growth connections**, **3,000** FMCG practitioners will gather.
Ten themed forums cover **new retail O2O, community group buying, short-video live e-commerce, distributor transformation, rise of new consumer brands, new alcoholic beverages, B2B supply chain for distribution, omnichannel marketing, and B2B2C new technology applications**, with operators from various segments sharing the latest case studies.
Confirmed heavyweight guests so far include: **1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings; 3. Lu Xiuqiong, global expert partner at Bain & Company and former VP of marketing for Coca-Cola China; 4. Chen Xiaodong, senior VP 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 Marketing Center; 7. Yang Hongbin, VP of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, general manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, e-commerce general manager of Gold Hong Ye Paper Group...**
**A grand event for FMCG professionals—you must be there!**
**Are you 'watching' me?**


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671