Core Reading: 1. After a year of brutal growth, what is the current competitive landscape of community group buying? 2. Is there still an opportunity to enter community group buying now? 3. Is community group buying truly worth partnering with for brands?
After experiencing the ups and downs of the "Thousand Group War," the noise around community group buying seems to have finally calmed down. Where there are people, there is a world; where there is a world, there are schools of thought. What are the dynamics of this community group buying world?
Represented by Xingsheng Youxuan, Meiyijia Xuan, Kaola Jingxuan, Dunjie Youxuan, and meal distribution 2B platforms like Meijia Maicai and Youjing Youtian, the B2B platform incubation type has become the absolute main force of community group buying version 1.0, leveraging strong supply chains and professional warehousing and distribution.
Represented by Haodongxi and Xiaoqu Le, the B2C e-commerce platform incubation type understands traditional e-commerce paths, has deep research on internet users, and precisely grasps internet tools.
Represented by Niwonin, the WeChat group buying and relay faction is the authentic first half of community group buying, handling orders, after-sales, WeChat transfers, upstream procurement, and local sorting and self-pickup.
Represented by Guangzhou Linli Life, the fruit group faction originally focused on fruit retail, inherently immune to the pitfalls of fresh produce, but not professional in standard products.
Over time, amidst the fierce competition, platforms that received funding in the early stages but cannot generate their own cash flow will inevitably be eliminated. Today, those once-active community group buying platforms have either disappeared into the crowd, been acquired by others, or survived and grown into a few leading brands.
-01- Community Group Buying Enters the "Three Kingdoms" Era
1. Xingsheng Youxuan Friends who follow community group buying are certainly familiar with Xingsheng Youxuan. As the earliest convenience store enterprise to enter community group buying, Xingsheng Youxuan has unique development advantages, seemingly born with a halo of countless benefits.
Besides being able to rely on Furong Xingsheng's over 12,000 chain franchise stores across 16 provinces, 80+ prefecture-level cities, and 200+ county-level cities to quickly convert small store owners into group leaders, the sheer number of stores provides support for Xingsheng Youxuan to gain bargaining power with upstream suppliers. At the same time, it can reversely increase the stickiness between stores and the platform, thereby boosting Furong Xingsheng's store franchise business.
Furthermore, the down-market strategy is also one of the important reasons supporting Xingsheng Youxuan's rapid development. Unlike most leading platforms that primarily invest human and material resources in second- and third-tier cities, Xingsheng Youxuan focuses its main market on prefecture-level cities, counties, and even township markets. To this end, it has established a "211 logistics distribution model," where consumers place orders before 11 PM, and goods arrive by 11 AM the next day, to enhance user experience.
Since its launch in February 2014, Xingsheng Youxuan's business model has undergone several iterations, finally forming the "community pre-sale, store self-pickup" model. As of now, Xingsheng Youxuan has over 3,000 employees nationwide, with monthly GMV exceeding 1 billion yuan, and is expected to reach an annual GMV target of 10 billion yuan in 2019.
While developing rapidly, Xingsheng Youxuan has also attracted significant capital attention.
In September 2018, Xingsheng Youxuan received a multi-million dollar angel round led by Today Capital, with participation from GSR Ventures and ZhenFund;
In May this year, Xingsheng Youxuan again received a massive Series A+ investment from Tencent's Strategic Investment Department's Industrial Win-Win Fund, with the amount undisclosed;
In July, global private equity firm KKR added to its investment in Xingsheng Youxuan. With this, Xingsheng Youxuan officially entered the $1 billion valuation club, becoming a global unicorn, and is also the first unicorn enterprise in Hunan Province with a valuation exceeding $1 billion.
2. New Shihuituan Shihuituan was established in April 2018 and currently covers 60,000 communities in over 50 cities nationwide, with over 2 million users consuming on the platform monthly, achieving monthly sales of 500 million yuan, and served by over 60,000 group leaders providing marketing and fulfillment services.
In August 2018, Shihuituan received 100 million yuan in investment from investors including ZhenFund, Qiming Venture Partners, and Joy Capital, as well as the premium community e-commerce company "Youhaodongxi."
Notably, in August this year, Shihuituan officially announced the completion of its merger with "Niwonin" and was renamed New Shihuituan.
In terms of products, Shihuituan pursues ultimate freshness, having assembled a professional buying team that goes deep into source origins across various regions to carefully select the freshest, highest-quality, and most cost-effective products for consumers. This provides an opportunity for hidden delicacies from deep mountains and secret jungles to become familiar to users and regulars on their dining tables.
In terms of warehousing and distribution, Shihuituan has independently and systematically developed and operated a strong global origin supply chain resource, covering modern regional center warehouses in North China, East China, and South China, supplemented by cold chain city warehouses in multiple cities, and a modern cold chain transportation system, weaving an efficient supply chain network of hundreds of thousands of square meters from origin to dining table.
In terms of user service, Shihuituan fully understands user needs in different regions, creating "one city, one flavor," with product categories closer to local users' daily habits.
It is worth mentioning that Shihuituan is launching a small store plan to support entrepreneurial group leaders in opening their own stores, with Shihuituan providing unified storefront, decoration, and financial support to help group leaders realize their life value.
3. New Shixianghui Shixianghui was founded in December 2017 by Dai Shanhui, former vice president of Benlai Life, who had been promoting the community group model at Benlai Life since 2016. Shixianghui has recruited 20,000 "group leaders" in nearly 50 cities nationwide, with platform categories covering fresh food, snacks, beauty and personal care, and household goods, with fresh produce accounting for the highest proportion at 60%.
Shixianghui is a typical S2B2C model, where B is the group leader, C is the community user, and Shixianghui is the platform, entering the family consumption scenario through the fresh produce category. Through mothers as "group leaders" acting as distribution nodes for online community operations and front-end sales, the pre-sale model is used to collect order quantities online.
The platform leverages this to activate the supply chain for product procurement and packaging, typically with origin or factory direct delivery to city warehouses with a turnover cycle of less than one day, then direct delivery to group leaders for users to pick up themselves. In this model, the platform provides support to mothers including brand effect, operational systems, tool systems, and product libraries.
In 2019, Songshu Pinpin merged into Shixianghui, giving birth to New Shixianghui.
-02- What Should Brands Do?
It is undeniable that consumption stratification has become an indisputable fact, and the exhaustion of demographic dividends is accelerating the entry of all industries into a stage of stock competition.
Moreover, mobile internet has drastically changed the way information is produced and disseminated compared to before, and specialized, modular, and efficient social production organization methods have enabled marketing to be separated from production. The development and rise of chain retail, traditional e-commerce, content e-commerce, and video e-commerce have broken the shackles of the previous unified channel, making the rise of new brands unprecedentedly easy.
Just as traditional e-commerce can create brands like Handu Yishe and Three Squirrels, and chain convenience stores have shaped brands like Yuanqi Forest, why can't the continuously emerging new channels also create a new brand?
For brands, community group buying is undoubtedly the opening of a new retail channel. Therefore, partnering with leading community group buying platforms is what brands are doing. However, the Chinese market is highly regional, and the entry barriers for community group buying platforms are relatively low. Besides the leading platforms, there are many regional community group buying platforms in various regions that better understand local markets.
However, brands do not have excessive energy and time to connect with regional community group buying platforms. In such cases, brands can find supply chain companies for regional community group buying platforms and cover various regions through the supply chain.
In summary, brands should do the following:
1. Entering community group buying is a must for brands.
2. Partnering with leading community group buying platforms can help brands quickly open up the market.
3. Regional community group buying platforms can help brands achieve deep distribution and reach more consumers.
4. Partnering with community group buying supply chains can help brands save time and improve efficiency.
Over time, the community group buying landscape has been set, with leading platforms continuing to lead the way in the new retail channel. In addition, regional community group buying platforms across the country are also flourishing. For brands, it is the right time to enter community group buying. Joining leading platforms can leverage their national channels to open up markets and enhance brand influence, while partnering with regional platforms can help brands increase sales and achieve channel down-market penetration.
Community group buying is not at its endgame; brands must follow!
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