---
title: "Community Group Buying's New Label: Launching New Products, Selling White-label Goods"
description: "Community group buying is essentially the monetization of group leaders' relationships. Due to the strong ties between leaders and users, what leaders recommend is what users buy. White-label products offer profit margins, and with quality assurance and recommendations, users accept them. Thus, white-label products with quality guarantees become a natural choice for group buying platforms. Supply chains should leverage this feature to launch new products, and white-label products can also seize this opportunity to grow."
author: "刘春雄"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-12-08"
language: "en"
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# Community Group Buying's New Label: Launching New Products, Selling White-label Goods

> Community group buying is essentially the monetization of group leaders' relationships. Due to the strong ties between leaders and users, what leaders recommend is what users buy. White-label products offer profit margins, and with quality assurance and recommendations, users accept them. Thus, white-label products with quality guarantees become a natural choice for group buying platforms. Supply chains should leverage this feature to launch new products, and white-label products can also seize this opportunity to grow.

Community group buying is essentially the monetization of group leaders' "relationship capital."
Because of the strong relationship between group leaders and users, whatever the leader recommends, users buy. So, what products do leaders promote?
Branded products have no profit margins, so group buying platforms are reluctant to sell them.
White-label products have profit margins, and as long as they are recommended after tasting or trial, users can accept them.
Thus, white-label products with quality assurance become a natural choice for group buying platforms.
As a supply chain, it's essential to leverage this characteristic of community group buying platforms to launch new products, and white-label products can also take this opportunity to develop.
For a long time, the label of community group buying has been: fresh produce, burning subsidies. **This is a misunderstanding of community group buying.** There are two types of community group buying:
**The first type is capital-backed groups.** Examples include Meituan, Pincaicai, etc. These are actually e-commerce platforms under the banner of community group buying, also known as community e-commerce. The label of group buying is an absurd promotional behavior backed by capital. Vegetables became a label because they are naturally high-frequency; burning subsidies became a label because low-priced standard products attract traffic quickly, potentially helping to form platform barriers rapidly.
**The second type is regional groups or local groups.** These are platforms that truly possess both "community" and "group buying" attributes. Since they haven't expanded nationwide, they are called local or regional groups. Local groups lack significant capital backing, so they operate within their means, and each group-buying session is profitable.
The label of local groups is launching new products. This includes promoting new products, new brands, and exploring new markets. Launching new products is an extremely scarce capability in current channel operations, and it is invaluable.
**The new product launch capability of community group buying provides the possibility for the rise of group brands. The practice of local groups has already verified the new product launch capability of group leaders. Continuously launching new products around a specific brand can lead to the rise of new group buying brands.**
**Supply Chain and New Product Launch**
The supply chain products of local groups are very unique, roughly falling into the following categories:
**1. Fresh products (excluding fresh vegetables) and simple packaged fresh products.** Examples include fresh eggs and milk, geographical indication agricultural specialties, aquatic seafood, frozen ingredients, flowers and green plants, and organic food. Fresh products are simply packaged processed fresh items. Their characteristic is long-channel products with high total channel gross margins. **2. Initially processed products.** These are products processed from fresh items, such as rice, flour, grains, oils, seasonings, and dried goods. They have some standardization, but brand preference is not particularly obvious. **3. Long-tail products.** These include leisure retail, convenient instant foods, etc. Long-tail products traditionally lack stable channels and are suitable for e-commerce. Their characteristic is low frequency. The group leader's mobilization can stimulate purchase desire in the short term, achieving centralized purchase of long-tail products, i.e., group buying.
**4. Circle-based products.** Examples include home furnishings, textiles, daily chemicals, personal care, mother and baby products, and alcoholic beverages. Relationship endorsement is the circle advantage of group buying.
**5. Marginal standard products.** These are third-tier or lower brands in high brand-awareness categories. For example, new dairy brands, although dairy is a high brand-awareness category, due to the relationship endorsement of group buying, third-tier or new brands still have opportunities.
The supply chain products of group buying have the following four major characteristics: First, they are mainly non-branded products, which are difficult to sell independently. Second, there are many non-standard products. Even if there are standard products, they are marginal standard products. Third, there are many supply chain links and long channels. They have basically not undergone the channel revolution of deep distribution over the past 20 years, mainly relying on wholesale with low-density radiation. Fourth, the manufacturers in the supply chain are not large-scale. It's difficult to penetrate terminals, let alone promote to consumers directly.
**In the traditional sales system, it's hard to find effective sales models for the above categories. But in the community group buying system, an ecosystem matching "supply chain, platform, and group leaders" has formed. It is precisely the new product launch capability of community group buying that has revitalized these long-marginalized categories.**
**Group Leaders and New Product Launch**
**Group leaders are the soul of community group buying. The value of group leaders' community relationship capability is realized in launching new products.**
What is the most important capability in group buying? Community relationship capability. That is, the strong relationship between group leaders and community users.
Now there are some "parachuted" group leaders who also need to quickly build community relationships. The offline strong relationship between group leaders and community users extends to community groups (group reporting, relay reporting) and online (mini-program reporting) transactions, which are based on group buying platforms. The difference between "group leaders" in community group buying and "store managers" in traditional retail is: **Store managers rely on location for traffic. The key to site selection is location, location, location; group leaders rely on relationships for traffic, and the core is relationship, relationship, relationship.**
Group buying is the monetization of group leaders' relationship capability.
Usually they are acquaintances, and when shopping, they are regular customers. This is the result of the overlap between life radius and business radius.
A basic characteristic of Chinese retail commerce is: relationships serve as trust endorsement, playing a role in rapid cognition. For example, because it's introduced by an acquaintance, even new products are bought without hesitation, with no worries.
**Because they are acquaintances, there is trust; because they are regular customers, new products have trust endorsement.**
Community group buying emphasizes community because this kind of universal relationship usually exists only in communities. This relationship often exists only in community small stores, not in KA stores.
In deep distribution practice, we have long discovered a characteristic: store managers with strong community relationship capabilities are also better at launching new products and new brands. In the community group buying system, northern group leaders are mostly store managers, while southern group leaders are mostly stay-at-home moms, with the common feature of community relationship capability.
Why has the traditional deep distribution channel system suddenly shifted to new product launch capability? There are two main reasons: First, due to e-commerce, offline traffic has decreased, and profits have decreased simultaneously. Second, FMCG is becoming increasingly head-oriented, with high price transparency and small gross margins for head brands.
The emergence of community group buying is a "timely rain" for many store managers, providing a means to increase profits in the current environment, so store managers become group leaders.
In the context of declining sales, how to expand profits? Of course, by increasing gross margin.
Which products or categories have high gross margins? The more non-standard, non-branded, and long supply chain products, the higher the gross margin. Therefore, the supply chain and platform of community group buying are the inevitable result of two-way selection.
What if high-margin products are difficult to promote? One solution is to leverage group leaders' community relationships to transform into "new product launch capability."
Group leaders without new product launch capability find it hard to survive in the community group buying platform system. Similarly, group leaders from capital-backed groups find it hard to survive in local group systems.
Group leaders in capital-backed groups are just delivery points, with traffic coming from large platforms; group leaders in local groups must complete three tasks: promotion, transaction, and delivery. **Without new product launch, there is no transaction; without transaction, there is no delivery.**
**New Product Launch and Group Brands**
More than 20 years ago, in the era of large wholesale, the FMCG industry was highly fragmented, showing a long-tail state with large, medium, and small enterprises coexisting.
After two rounds of "market sinking" since 1998—from "provincial agents" to "city agents," then to "county agents"—and deep distribution since 2002, head FMCG enterprises have grown larger, waist enterprises have largely disappeared, and long-tail enterprises have been on the brink of survival for a long time.
Brand growth is synchronized with channel changes. Community group buying is also an opportunity for the rise of new brands.
**New brands that rise by relying on community group buying platforms are group brands.**
Because group leaders have new product launch capability, big brands can use community group buying to launch new products. Small and new enterprises can not only launch new products but also new brands, new categories, and new markets.
**Continuously launching new products and forming user repurchase can achieve group brands.**
How to promote group brands? We can refer to the traditional channel-driven model.
Traditional FMCG head brands are either channel-driven or dual-driven by brand and channel. In short, channel driving is indispensable. There is no single brand-driven model in Chinese FMCG.
The local group pattern of community group buying is similar to traditional channels, so I believe group brands are channel brands, manifested as:
**First, channels are fragmented.** The "county agent" model is a fragmented channel model, and local groups are also fragmented.
**Second, channel scale is limited.** The scale of local group buying platforms is comparable to that of regional agents.
Therefore, building a group brand requires an organizational system similar to traditional channel driving, which can organize hundreds of community group buying platforms nationwide to form broader market coverage.
Community group buying provides an opportunity for the rise of group brands. So, who can seize the opportunity? I believe there are **three types of enterprises and three key elements.**
**The three key elements are: 1. Product strength; 2. Sales strategy; 3. Platform organizational capability.** Product strength is the premise, sales strategy and organizational capability are basic requirements. Platform organizational capability is a bigger test.
**The three types of enterprises are:**
**1. Manufacturer group brands.** In the past, they did wholesale markets, with one "provincial wholesale" covering one province. Now, for group buying, they need to connect platform by platform, forming a platform connection system.
**2. Operator group brands.** The supply chain system of community group buying has many small manufacturers, which provides opportunities for intermediaries. Upstream, they can connect with manufacturers; downstream, they can connect with platforms. This is the opportunity for group brand operators.
**3. Supply chain group brands.** Some industries are naturally fragmented, such as vegetables and fruits. At the same time, because small-scale farming due to household contracting is the basic form, these areas are more likely to form supply chain brands rather than producer brands. For example, Pagoda is a supply chain brand, and Chu Orange is a service provider brand.
Regardless of the type of group brand, it needs the organizational capability to connect with fragmented group buying platforms. Otherwise, it will still be like a wholesale market business, with sporadic orders rather than forming continuous repurchase.
In the traditional deep distribution system, without organizational capability, there is no channel driving. Similarly, without organizational capability, there is no group brand.


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