---
title: "Community Group Buying Still a Mess: Which Industry Pain Points Remain Unresolved?"
description: "Community group buying has fallen into a 'dead end' situation. Despite the convenience and low prices, quality issues and the inability to raise prices without losing customers have led to massive losses and closures across the industry."
author: "懂懂本尊"
publisher: "New Distribution"
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published: "2021-12-16"
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# Community Group Buying Still a Mess: Which Industry Pain Points Remain Unresolved?

> Community group buying has fallen into a 'dead end' situation. Despite the convenience and low prices, quality issues and the inability to raise prices without losing customers have led to massive losses and closures across the industry.

Source: Dongdong Notes (ID: dongdong_note)
**Community group buying has fallen into a 'dead end' situation**
Recently, MissFresh and Dingdong Maicai released their Q3 2021 financial reports. Analyzing the loss data of the two platforms, it's shocking to see that from 2019 to the current quarter, MissFresh has accumulated losses of nearly 7.6 billion yuan, while Dingdong Maicai has lost nearly 10.4 billion yuan.
In addition to the fresh food delivery track, community group buying also seems to be struggling. According to media reports, dragged down by new businesses like community group buying, Meituan reported an operating loss of 10.1 billion yuan in Q3. Furthermore, in September this year, Didi's 'Orange Heart优选' (Orange Heart Youxuan) reportedly withdrew from some markets, and it is said that only a few core cities continue operations.
After 21 months of bankruptcy restructuring, Dailuobo announced it would officially cease operations from October 20 this year. Data shows that Dailuobo had debts of up to 519 million yuan at the time of bankruptcy. During its 21 months of struggle, the community group buying track saw Tongcheng Life go bankrupt, Ele.me's 'Youcai' stop operations, Shihuituan and Meicaiwang face layoffs, and Taocaicai announce its withdrawal from Guizhou region...
China Merchants Securities predicts that losses in community group buying in 2021 will exceed 20 billion yuan. Once hailed as the 'last blue ocean' of e-commerce, community group buying is now in a state of devastation. What is puzzling is that whether it's fresh food delivery or community group buying, what pain points in the industry remain unresolved?
**Only 'cheap goods are not good'?**
"On weekdays, I don't have time to buy groceries, so I can only buy them all at once on Sunday."
On Sunday morning, Ms. Zhou, who lives in Qingshuihe, Luohu, Shenzhen, arrived early at the nearby Cuiyuan Market for a big shopping trip. She revealed that she and her husband work six days a week and often work overtime until 8 or 9 PM, so they have no time to go to the market except on Sundays.
Last year, several community group buying and fresh food delivery platforms expanded their services to Ms. Zhou's residential area. Because ordering online, picking up at stations, or even having delivery to the door was very convenient, for a long time, Ms. Zhou purchased her daily meat and vegetables through community group buying.
"If you arrive at the market even a little late, the stalls are closed. But with community group buying, you can pick up later." The couple just wanted to stay home on Sundays, so they could have fresh food delivered to their door. "The key was that during that period, the prices of meat and vegetables from community group buying and fresh food delivery were indeed much cheaper than at the market."
However, this good situation lasted only a little over a year, and Ms. Zhou returned to the traditional market.
She told Dongdong Notes that the quality of products from community group buying and fresh food delivery is now declining. Especially in the past six months, she often received rotten or damaged fruits and vegetables, as well as spoiled meat and frozen food. "If it were an occasional incident, I could tolerate it, after all, fresh food delivery is convenient." But what she couldn't tolerate was that similar situations happened repeatedly, and even the day after she complained, she still received rotten vegetables.
(Photo of rotten wolfberry leaves taken by Ms. Zhou)
Ms. Zhou emphasized that if one day she received only slightly stale eggs and meat, without rotten fruits and vegetables, it meant she was lucky that day. But such 'luck' was becoming rarer. Helpless, she had to give up fresh food delivery and return to the traditional market, buying a week's worth of vegetables, eggs, and meat every Sunday.
Also troubled by the declining quality of community group buying fresh food is Ahu, who runs a community group buying franchise pickup point in Pingshan, Shenzhen. According to him, the pandemic last year heated up community group buying. Seeing the business opportunity, he chose to join a well-known community group buying brand and became one of its community franchise stores.
"The price of meat and vegetables is 10-20% cheaper than the market, plus convenient pickup, which attracted many office workers in the community to place orders." But starting from June this year, Ahu occasionally received complaints from users about stale eggs and meat, and rotten fruits and vegetables. "At the beginning of the year, I received about five or six complaints a month, but now at least twenty to thirty times a month. It's really headache-inducing."
Although he would refund users first after seeing complaints, and the brand promised compensation for stale or damaged products, as the number of complaints and refunds increased, some users lost confidence in the community group buying brand and his store.
"Especially for office workers who are tired after a day's work, once they get spoiled fresh food, they have to spend extra time ordering takeout. Over time, they lose trust. Some return to the market, and some simply eat out." Ahu admitted that due to the decline in fresh food quality, the number of orders at his store has decreased by one-third compared to the beginning of the year. Despite repeatedly reporting the issues to the brand, they remain unresolved.
According to iiMedia Research statistics in 2020, up to 57% of consumers refuse to use community group buying due to concerns about product quality. It seems that the saying 'cheap goods are not good, and good goods are not cheap' also applies to community group buying.
So why don't companies consider raising prices while providing better quality fresh products?
**Dare not tear off the low-price label?**
"Community group buying should emphasize convenience, not blindly low prices and subsidies."
In 2017, after graduating from university, Xiao Li opened a convenience store in West District, Daya Bay, Huizhou. In December last year, to increase income, his store signed cooperation agreements with three community group buying platforms and became a pickup point for users. But in nearly a year of cooperation, he gradually discovered that community group buying platforms dare not give up the low-price strategy.
After all, almost all community group buying platforms initially attracted users and expanded the market through low-price subsidies. The internet giants that came later also burned money to grab target users. Because of this, low price has become the most obvious label of community group buying, and it can't be torn off.
"Everyone (consumers) is used to taking advantage of community e-commerce. Whoever raises prices first will be eliminated first." Since Xiao Li's convenience store is a pickup point for three community group buying platforms, he often sees the 'low-price game' between platforms and companies.
He told Dongdong Notes that although relevant national departments have intervened, requiring community group buying companies not to use low-price dumping to disrupt fair competition, there is no absolute low price among mainstream community group buying platforms now.
"It's all 'dynamic low pricing' now. Today my meat is cheap, others' fruits and vegetables have big discounts. Tomorrow my fruits and vegetables have promotions with big price cuts, and others' pork is 20% off. They take turns using low prices to attract users." Xiao Li revealed that if a platform's meat price is higher than other platforms on a certain day, the meat orders that day will significantly decrease.
Even if companies claim that higher-priced meat is of better quality, consumers who pay are unlikely to increase, and orders can easily be taken away by other low-price platforms.
After all, in the eyes of many users, the advantage of community group buying is cheapness and low price. Especially after fresh food companies engaged in a 'price war', users' distorted perception of the industry has become more deeply entrenched.
"Besides competition among community group buying platforms, there is also competition between community group buying and fresh food delivery." Xiao Li admitted that once consumers compare prices and find that fresh food delivery offers similar discounts and prices to community group buying, they usually abandon community group buying (which requires self-pickup) and choose fresh food delivery services that come to their door.
A consumer who picked up at the store once told him that they choose community group buying only if the price is cheap enough and the quality is acceptable. If quality improves and prices rise accordingly, consumers might as well go to the market themselves, where they can freely choose better quality, fresher meat and vegetables with a higher budget, which seems more comfortable and satisfying.
"To be honest, community group buying defeated the market with low prices. But if community group buying raises prices while ensuring quality, it will be defeated by the market. How can users cultivated through low prices and burning money be loyal?" Xiao Li told Dongdong Notes that if community group buying platforms lose the low-price advantage, they lose all advantages.
According to data from Wangjingshe, the domestic community group buying market transaction scale in 2020 was 75 billion yuan, a year-on-year increase of 120.58%. It is expected to reach 104.03 billion yuan in 2021, with a growth rate of 38.7%. But how many platforms are operating at a 'bleeding' loss? Perhaps the financial reports of community group buying companies can provide clues.
Perhaps community group buying, which defeated market vendors with low prices, is also deeply mired in trouble.
**Always in a 'dead end'**
If you ask why community group buying can be cheaper than traditional markets, most people would answer: because there is no middleman taking a cut. Indeed, compared to community group buying, traditional fresh food retail supply chains are less efficient. An analysis report by iyiou.com points out that the supply chain cost of community group buying is 20% to 30% lower than traditional fresh food retail.
But that doesn't mean that community group buying with strong supply chains has lower actual costs for terminal fresh products. Most community group buying platforms invest their cost budgets in marketing and promotion, and customer acquisition costs are not low, showing a gradual upward trend.
"What was the early strategy of community group buying? It relied on group leaders to bring in people, and group leader commissions were a significant expense." Sam, who once worked at the Guangzhou operations center of a community group buying platform, said that although strong supply chains and direct sourcing from origin avoided the layers of markup in traditional fresh food retail, saving 20-30% of costs.
But community group buying relies on group leaders to convert users, so companies naturally have to offer considerable commissions. According to him, as early as 2020 when business was rapidly expanding, his former employer offered a 30% commission on orders for ground promotion. "As for community group buying group leaders, it depends on the level, with commissions ranging from 15% to 30%."
Therefore, it can be said that the 20-30% saved in the supply chain is spent on marketing, and sometimes it's not even enough, leaving no profit at all. As for red envelopes, discounts, and low prices, the platforms and companies are paying out of their own pockets, essentially losing money for publicity.
According to Sam, the community group buying platform he worked for had a customer acquisition cost of only 5 yuan per person in 2019, but by April this year, before he left, the average customer acquisition cost had risen to 13.8 yuan per person. "And the users acquired are disloyal, only there to take advantage."
A small vendor at a meat and vegetable market told Dongdong Notes that as community group buying platforms reduce discounts and the quality of fresh products declines, more consumers are returning to traditional markets. However, platforms occasionally send out coupons to retain users and prevent them from completely leaving.
But how long can a business that loses money for publicity last? China Merchants Securities predicts that in the community group buying track, most players can only sustain themselves for 1-2 years with financing. As for Pinduoduo and Meituan, with trillions in cash on their books, they can fight a long-term war.
It is clear that community group buying has fallen into a 'dead end' situation. Whether raising prices and ensuring quality, or lowering quality to protect profit margins, both lead to user loss. If they continue to support, some companies will inevitably operate at a 'bleeding' loss, and eventually, due to severe 'blood loss', they will have to exit quietly.
In the past two years, the community group buying industry, which developed rapidly and grew wildly under the pandemic, has invested heavily in marketing, promotion, and customer acquisition, leading to excessive competition between platforms and segments, and making it difficult to fill losses and debts in the short term. The companies behind them are far from achieving real profitability.
**Are you 'watching' me?**


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