In Jingxing County, at the western edge of Shijiazhuang, Hebei, 200 meters east of the county's largest department store, you can find Gao Xiulin's supermarket. When Ran Finance walked into Gao Xiulin's supermarket, she was sitting behind the counter, giving change to a customer. Hearing the door, she glanced over, greeted us, and reminded, "Don't touch the vegetables in the baskets." Later, we learned that the plastic baskets filled with oranges, yogurt, and vegetables at the door were for Xingsheng Youxuan on the left and Meituan Youxuan on the right. On March 12, Gao Xiulin's orders were: 122 for Xingsheng Youxuan, 26 for Meituan, and a single-digit number for Chengxin Youxuan. Each platform's commission rate varies, some lower, some higher; Xingsheng Youxuan's is 10%, but the actual rate doesn't reach that. That day, she earned over 100 yuan from Xingsheng Youxuan orders alone. Jingxing County is a typical northern inland county with a population of over 60,000 and an area of about 11 square kilometers. In August 2019, Xingsheng Youxuan came to Jingxing County, and Gao Xiulin was among the first batch of group leaders in the county. Achieving 122 orders in a day is no small feat. According to Xingsheng Youxuan's backend, the top order volume in Hebei Province that day was 192. After six months of rapid expansion, community group buying startups and giants are diverging: some are heading to counties and rural areas, others to first-tier cities like Beijing, Shanghai, and Guangzhou. Now, community group buying players are no longer crowding together but have chosen their own key breakthrough directions. They continue in regions where they can succeed, and transform or exit where they can't. Order volumes can vary greatly by region and company. For example, in Hunan and Hubei, Xingsheng Youxuan holds an absolute advantage; but in Guangdong, Jiangxi, and Shandong, Meituan Youxuan is the frontrunner. Chengxin Youxuan was aggressive in the early stage of full subsidies in 2020, with posters like "Vegetables are cheap, 0.99 yuan flash sale," but order volumes were highly uneven geographically, with standout performance in Wuhan, Chengdu, Jiangxi, and Guangdong. In Guangzhou, Chengxin Youxuan typically gives new customers 7-8 yuan in cash incentives. A supply chain industry insider said, "Chengxin Youxuan is on the decline now; there are few cities where it's doing well overall." Additionally, there are reports of wage protests in some cities, suspected to be due to Chengxin Youxuan's financial issues. Meituan Youxuan, relying on its local life advantages and massive investment, has become the strongest competitor in this round of community group buying. In Guangdong, Shandong, Henan, and Jiangsu, Meituan's community group buying business surpasses other competitors. According to the 2020 financial report, the new business segment, which includes community group buying, continued to see high investment and high growth, with losses widening from 6.7 billion yuan in 2019 to 10.9 billion yuan in 2020. In the fourth quarter alone, losses expanded to 6 billion yuan, and operating margin fell to negative 64.9%. This new business includes Meituan Youxuan, Meituan Flash Purchase, and Meituan Grocery. Meituan Youxuan has now expanded to over 2,000 counties and cities, covering more than 90% of China's counties and cities. Duoduo Maicai is approaching by strictly controlling prices and costs. Ran Finance learned that in some regions, Duoduo Maicai has reduced group leader commissions to 4% or 5%, significantly lower than the industry standard of 10%. This means that under a low-profit model, some group leaders will exit, consolidating around top performers. Additionally, it's said that Duoduo Maicai's procurement staff like to infiltrate various community group buying WeChat groups. Whenever someone complains about Duoduo Maicai issues, they add them on WeChat and push for resolution, regardless of whether it's in their region. For startups, there are both joys and worries. Xingsheng Youxuan has gained support from giants and capital, securing $4.5 billion in funding in 2020 and early 2021. However, it is still in an adaptation phase in northern counties and rural areas, with slower progress than in the south. So recently, it has been offering high rewards to group leaders. For example, for every 10,000 orders, they pay as if it were 20,000; in some areas, they pay commissions based on triple the order volume. On February 18, according to media reports, fresh food e-commerce platform Dingdong Maicai is considering an IPO in the U.S., seeking at least $300 million in financing. This news came during Dingdong Maicai's rapid expansion. Since mid-2020, Dingdong Maicai has expanded beyond its home base in the Yangtze River Delta, penetrating North China and the Pearl River Delta, starting with first-tier cities like Beijing and Shenzhen, then second- and third-tier cities like Tianjin, Shijiazhuang, and Tangshan. Shihuituan under Taobao Maicai, backed by Alibaba, is recruiting in Zhengzhou. However, there are reports that Alibaba has established an MMC business unit, planning to enter the market itself, with the first group-buying point in Zhengzhou. How the two will balance competition and cooperation in the future remains a major test. Regarding Alibaba's MMC business, Ran Finance learned from an industry insider that in Zhengzhou, some owners applying for "Hema Market" were told it's temporarily unavailable, as this business is taken over by the Retail Link department, which may focus on supporting the "Lingxiaowa" business. However, Alibaba's business model may also form a distinction similar to Meituan's "Grocery" and "Youxuan" businesses, targeting different market users. Community group buying is going further downmarket, which also means greater risk. The community group buying that exploded in the second half of 2020 quickly expanded and blossomed, basically completing infrastructure construction for supply, warehousing, and logistics. The upcoming summer, with high temperatures and humidity, will further test the results of the past six months. Whether it's good or bad may lead to user evaluation divergence, which will further determine whether a platform's business continues or contracts. Summer is a test. By the end of 2021, the industry may see who is swimming naked and who is on the shore. -01- Down, Down On March 20, Wang Qi, working in Beijing, bought rice, cooking oil, dragon fruit, bananas, and strawberries for his parents in a rural village in Shandong on Duoduo Maicai. He set the pickup point at "Huahua Store" in their village, spent 105 yuan, and then called his father to pick up the goods before 4 p.m. the next day. "In the past, when buying on Taobao or JD, I had to ask the merchant if they could deliver directly to the village. Some couriers could, but most couldn't. Community group buying is one that can reach the village," Wang Qi said. Previously, when sending money home, his rural parents preferred to save, partly because their shopping channels were limited to village stores and markets, with limited product variety. But now, with community group buying, he can directly buy a wider range of food and fresh produce for his parents, rather than just sending money. The only drawback is that the "confirm receipt" button is confirmed by the "group leader," not by his parents after receiving the goods, which he then clicks. This bothers him a bit. Compared to traditional e-commerce like Taobao, JD, and Pinduoduo, community group buying more thoroughly builds a "city and village" same-position consumption link, extending e-commerce's reach to the last mile in rural areas through pickup points. In capturing the rural market, counties are an unavoidable link. If counties are done well, they can connect to the vast rural areas and also hold the basic market of lower-tier markets. On a larger scale, China's 2,800-plus counties and cities may be the final battlefield for community group buying, but this battlefield is complex and ever-changing. Unlike urban price and marketing wars, in counties, the network of acquaintances may be the key to success. Xingsheng Youxuan's focus is on counties. In Jingxing County, Shijiazhuang, Hebei, Xingsheng Youxuan laid out its presence in August 2019 and developed its first batch of group leaders, relying on them long-term. The local cold storage and warehouses were only improved in the second half of 2020, enabling village-level coverage. According to Gao Xiulin, through her connections, her brother has a car and cold storage, so they cooperate to deliver to villages. Xingsheng Youxuan's market promotion is distinctive. It has a basic law stipulating that when a group leader develops upstream, they get a commission based on the number. For example, after you go online, you develop 3 or more people, and you get a cut. According to requirements, 4 people is the smallest unit. For instance, if 4 people can achieve 2,000 orders in a month, taking 1%, the profit is considerable. Gao Xiulin developed 70-80 stores, and she also recommended her sister-in-law to do promotion, actively going to Baoding to sweep streets and reserve store manager information. Once Baoding opens, her sister-in-law can enjoy commissions from local order volume. Based on first-mover advantage, Xingsheng Youxuan has an advantage in the number of local stores, but order volume hasn't reached that advantage, especially in rural areas, where it relies on group leaders to promote; whatever the group leader pushes, villagers use. Duoduo Maicai, on the other hand, focuses on rural areas. In the "rural first" or "county first" priority, Pinduoduo once again shows its preference for "rural." In the north, it doesn't focus on strengthening brand awareness in counties but instead develops group leaders and stores in rural areas, even going door-to-door, sweeping village by village, registering information. "Pinduoduo continues to strengthen its presence in townships and rural areas, finding its suitable consumer base. This is the next potential growth pool after Pinduoduo's annual active buyers surpassed Taobao. Pinduoduo must maintain growth at all times," an industry insider said. Meituan Youxuan, on the other hand, chooses to take root in counties and stabilize the basic market. It has now expanded to over 2,000 counties and cities, covering more than 90% of China's counties and cities. In Jingxing County, Shijiazhuang, the food delivery business has matured after the pandemic education, which is one reason why local Meituan Youxuan quickly caught up with the pioneer Xingsheng Youxuan. Its ultimate goal is also the vast rural areas, but Meituan has no experience in rural business, so it must be cautious. Unlike Xingsheng Youxuan's proclaimed "revitalize stores" mission, Chengxin Youxuan, Meituan, and Pinduoduo have already shown signs of a "group leader elimination round." A Chengxin Youxuan market promoter said their external advantage is in returns and exchanges, all handled by their own operations, with no minimum sales or performance reviews. At the same time, opening a "Chengxin Youxuan Supermarket" now comes with 3,000 yuan in opening support, online top placement for traffic, and offline team promotion. He predicts that Chengxin Youxuan will eventually build its own direct sales and franchise system, combining with the group leader business model. Didi once claimed that Chengxin Youxuan plans to open 1 million Chengxin small stores in the next 3 years. Ran Finance learned that in some regions, Duoduo Maicai has reduced commissions to 4% or 5%, significantly lower than the industry standard of 10%. This means that under a low-profit model, some group leaders will exit, consolidating around top performers. "I sold over 1,200 yuan but only earned 56 yuan," a group leader complained about Duoduo Maicai on Baidu Haokan Video. Hou Yi of Hema Fresh said that community group buying is a brand-new e-commerce model, still in its infancy. What we see today is definitely not the final model. With various parties racing, community group buying will eventually take several paths. Just as fresh food e-commerce itself has several models, such as the "front warehouse + home delivery" model, mainly Dingdong Maicai and Meituan Grocery, with rumors that Dingdong Maicai is preparing to go public; and the "warehouse-store integration" model, such as Hema Fresh. -02- Price War Fading "In Anhui, Meituan and Duoduo are already selling at parity, that is, selling at the unit price given by suppliers," a person in Anhui doing cloud warehouse business said. This means that the subsidy wave in some regions of community group buying may be receding. Previously, community group buying platforms focused on price wars, with large-scale subsidies to exchange subsidies for traffic, especially in customer acquisition. Major platforms have not continued to increase their efforts or engage in vicious subsidies while maintaining previous levels. There are several reasons for this. One is national supervision. Another is the extreme enrichment of the supply side of community group buying. Many supply chain entrepreneurs told Ran Finance that Taobao created Tao brands, Douyin created Dou brands, and the immature community group buying is the next source of product hit brands. "Community group buying prices are low because there are no distributors taking a cut. Currently, platforms are focused on attracting users, with profit secondary," a community group buying supplier said. Subsidies are one reason for low prices, but not the only one. At the end of 2020, some brand owners initiated boycotts against community group buying platforms, accusing them of disrupting the market with low prices and upsetting the traditional distribution system, such as Weilong Trading and Cangzhou-based grain, oil, and seasoning company "Huahai Shunda." But now, they choose not to enter, while a wave of white-label and brand companies are rushing into the market. "On Douyin, daily chemical laundry detergent isn't selling; a host with millions of followers only sold 7 units. It's better to sell on Meituan Youxuan, where supply is always short. In the Shandong market, we shipped over 3,000 bottles a day at the end of last year," a manufacturer of daily chemical laundry products in North China said. Until recently, he started supplying to major community group buying platforms, sweeping the rural areas of North China with the lowest prices. Profits are low, but volume is huge. Additionally, many brand owners with traditional distribution systems, such as Yili Milk, have fully opened up in some regions, actively supplying community group buying platforms. In a county in Shijiazhuang, for example, Yili Shuhua milk sells for 40.8 yuan on Xingsheng Youxuan, 45 yuan from acquaintances in supermarkets, and generally 50 yuan to outsiders; Weijixian soy sauce sells for 11 yuan in supermarkets and 10 yuan on Xingsheng Youxuan. "They (Yili county distributors) also 'disciplined' us, found our warehouse and company, confiscated our goods, called 12345, went to the industry and commerce bureau, and even complained to higher-level distributors, causing many conflicts." A community group buying market promoter in Shijiazhuang said. But these are not the best solutions. Eventually, Yili opened up to community group buying. From January 1, 2021, Yili milk in all counties and cities of Shijiazhuang is sold through both community group buying channels and offline distribution simultaneously. Community group buying truly let county-level and township/village consumers see the power of transparent prices. It destroyed part and rebuilt part. Some distributors, using their store information, proactively transformed into market promoters for community group buying companies, promoting store participation and reaping significant benefits. Another notable point is that near-expiry products, especially food and beverages, flood into community group buying platforms, aggressively encroaching on the market with cost advantages, creating a long-term "low price" impression. Near-expiry food refers to products that are close to expiration but still within shelf life. Supplying near-expiry food to community group buying platforms generally means products with one-third of shelf life remaining, at most not exceeding half. "Last month, I supplied Duoduo Maicai with near-expiry food at half shelf life, and it passed," a food supplier said. However, you usually need to find the platform's 'xiaoxiao' (customer service) and note the date in the product title; you need strong connections to get it through. "65 yuan, a box, 30 cups, over 1,000 boxes of Assam milk tea, with more than 4 months to expiry, who wants?" "Hefei has 140 boxes of Lujiaoxiang red bean milk tea, can handle it, contact me." In a community group buying resource sharing group, everyone is connecting resources. On Taobao, the same style and packaging of Assam milk tea is priced at 107 yuan per box. The price system for community group buying is rapidly taking shape. Besides capital-rich enterprises and giants, some startups are moving toward vertical fields and localization. For example, Shihuituan focuses on seafood community group buying, and Shixianghui in Wuhan, Chengdu, etc. But the platforms' approach of "high frequency driving low frequency, low value driving high value" will continue for a while, so 0.1 yuan eggs, 0.5 yuan cucumbers, and various discount and hit product battles will appear on platforms from time to time. For mom-and-pop stores and small supermarkets, choosing multiple platforms for community group buying means covering more users. For users, after the initial incentives, the platform's fulfillment capability, such as fresh produce quality and service, is most important. Those who don't respect users are destined to be abandoned. But undoubtedly, blindly "subsidies + low prices" is not sustainable. As the community group buying model develops and SKUs rise, penetrating higher value-added products, the price system will also undergo changes. -03- Decisive Summer Alibaba's latest entry will bring new variables to community group buying. In mid-March, according to LatePost, Alibaba established the MMC business group, focusing on community group buying, integrating Retail Link's community group buying business and Hema Market. It's said the new business's first group-buying point is in Zhengzhou. According to the above media citing insiders, Alibaba's internal goal is to expand to 22 provinces by July 1 at the latest, surpassing Pinduoduo and Meituan in order volume to become the industry leader. The reason for opening major provinces before July 1 is to prepare for the upcoming summer showdown. "This is a newly opened business; I didn't know beforehand, it feels a bit sudden," an Alibaba rural business department employee commented. Ran Finance checked Alibaba's recruitment website and found over 500 positions related to the MMC business group. Besides technical roles like development engineers and risk control, most are operations roles, including central warehouse manager positions in Hebei, Hubei, Hunan, Jiangsu, Chengdu, and Hefei. This means Alibaba needs to quickly build a capable team, and poaching is the industry's most open secret. Some media reported that Meituan once poached an entire warehouse staff from Xingsheng Youxuan in a city, leaving only the supervisor, offering 5-6 times the salary. However, according to information Ran Finance learned, some fresh food e-commerce companies have established a "blacklist" system, where internally, malicious job-hoppers are listed on a certain list, restricting their re-employment in the company. "If internal employees discuss company policies and are found out, there will be severe punishment." In Dingdong Maicai's user QQ group, someone wanted to discuss company issues but was advised to stay silent. After building a good team, it's time to enter the battle. However, having successful e-commerce experience doesn't help Taobao take the lead in another unfamiliar industry. Taobao has been launching community group buying on platforms like Retail Link, Ele.me, and Hema Fresh, but hasn't become a major player. JD has always wanted to succeed in "community group buying," from early "Youjia Puzi" and "Ququ Gou" to the current "Jingxi Pinpin," but hasn't made much noise. They currently walk on two legs: "self-developed + investment." In 2020, JD made a strategic investment of $700 million in Xingsheng Youxuan. Taobao has few traffic entrances, such as Weibo and Youku, but both are declining. It must find new traffic entrances, and the lower-tier market tapped by community group buying is the best remedy for Taobao's anxiety. In the fresh food industry, loss has always been a challenge. The hot and humid summer will fully test the warehousing, freezing, and logistics capabilities of various community group buying platforms. Cold storage investment ranges from several thousand to tens of thousands of yuan per square meter, and cold chain transportation costs thousands per kilometer. For meat and seafood, this part is both profitable and highly demanding on storage and transportation. "I've lost a lot of money on fresh produce, so I don't dare to rush in. I'll wait until the platforms' warehouses stabilize before considering it," a dried fruit supply chain boss said. Waiting for the tide to go out might be a good opportunity to come ashore. Source: Ran Ciyuan (ID: chaintruth) Once the tip is adopted, a reward of 400-2000 yuan will be paid.