Chen Qi, co-founder of 'Xian Nv Guo', said that before the shutdown, 'Xian Nv Guo' ranked approximately fifth among community group buying projects nationwide. By Li Li, Reporter, Pencil Dao Just as the community group buying track was in its spring, 'Xian Nv Guo', a community group buying project reportedly financed with 1 billion yuan, covering over 30 cities in less than a year, and acquiring 400,000-500,000 paying users, was rumored to be shutting down. Pencil Dao reporter immediately interviewed Chen Qi (pseudonym), co-founder of 'Xian Nv Guo'. She said that the 'Xian Nv Guo' team had decided to shut down the project as early as June, and began implementation in August. Initially in Wuhan, followed by Guiyang, Guangzhou, Chengdu, Shenzhen... Currently, 'Xian Nv Guo' community group buying business has basically ceased. She explained that the shutdown was due to external reasons: too many players entering the track, and the team planned to 'pause and observe' first. Since July this year, the community group buying industry has become a hot trend, with entrepreneurs entering one after another and investors continuously increasing their bets. Internet giants such as Tencent, Pinduoduo, Hema, and Meicai have also entered this track. Pencil Dao Research Institute once counted that from July to October 2018, within about 100 days, the market had accumulated 2 billion yuan in capital inflow, with investors including top-tier institutions like Sequoia, IDG, and GGV. Only four months after the concentrated outbreak of community group buying projects, is the community group buying model itself unviable, or is it 'Xian Nv Guo's' own operational issues? Perhaps 'Xian Nv Guo's' sudden pause is an isolated case, but small and medium players in the industry are continuously being eliminated, which is already happening now. Rumored 1 Billion Financing but Sudden Shutdown At around 9:30 am on November 7, Lin Feng (pseudonym) was scrolling through his phone when a friend in the fresh food circle sent him a screenshot. He opened it and found it was a message from 'Xian Nv Guo' posted in the community leader group, reminding them of delivery and settlement. The screenshot mainly contained: Shenzhen Xian Nv Guo Company will cease operations from November 6, 2018; today (November 5) is the last delivery, and missing products will be refunded uniformly through the backend; Zuo, the head of Shenzhen Xian Nv Guo, resigned on November 1 due to personal reasons and will no longer handle related work; October community leader commissions and referral commissions will be paid normally on the 10th. 'Shenzhen market is so big, why did they exit in less than a year?' Lin Feng was astonished. Also in fresh food e-commerce, Lin Feng had paid attention to 'Xian Nv Guo', which was rumored to have received 1 billion in financing, but unexpectedly stopped operations suddenly. Someone posted a WeChat Moments update about 'Xian Nv Guo', and within minutes it attracted many comments. Since July this year, community group buying projects have rapidly exploded. A batch of community group buying companies such as Linlinyi, Shihuituan, Dailuobo, and Kaola Select have successively obtained financing, but the amounts were only tens of millions or over 100 million. What exactly is this 'Xian Nv Guo' rumored to have raised 1 billion? According to Qichacha, 'Xian Nv Guo' is officially Beijing Xian Nv Guo Technology Co., Ltd., with legal representative Hu Yanhui, affiliated with Beijing Yuewei Investment Group, and is a fresh food e-commerce company targeting mid-to-high-end consumers. Pencil Dao reporters did not find any reports on 'Xian Nv Guo's' financing on business or venture capital websites, and Qichacha also did not show its industrial and commercial change history. Whether 'Xian Nv Guo' raised 1 billion is unknown, but Pencil Dao found answers on Zhihu that seem to be from 'Xian Nv Guo' employees and community leaders, indirectly confirming that the project was indeed 'very wealthy'. From the text and Zhihu personal profiles, the left image appears to be a 'Xian Nv Guo' community leader, and the right image might be an employee. Fierce Competition, 'Exit and Observe' Regarding this matter, Pencil Dao contacted a shareholder of 'Xian Nv Guo'. She confirmed that 'Xian Nv Guo' had indeed ceased its community group buying business, and Zuo Li, the head of Shenzhen Xian Nv Guo Company, had indeed resigned. As for the reason for suspending the community group buying business, she explained that community group buying was not 'Xian Nv Guo's' main business, and with too many players crowding into this track, the team decided to suspend the business. Additionally, she added that Zuo Li was only the head of Xian Nv Guo's Shenzhen company and had been very competent during her 10 months on the job. 'Xian Nv Guo's' business started with smart hardware, later pivoted to fresh food e-commerce, and entered the community group buying project in the second half of last year. By June this year, in less than a year, 'Xian Nv Guo' had 400,000-500,000 paying users, covering more than 30 cities, with some cities already profitable. 'Before the shutdown, 'Xian Nv Guo' ranked approximately fifth among community group buying projects nationwide, and many players would pay attention to our moves.' She explained that although community group buying is relatively easy for traffic acquisition, it is not yet a complete model. Since July this year, a large amount of capital has heavily invested in community group buying, leading to price wars within the industry, with players desperately increasing transaction volumes, which has exceeded the normal state of the business. Chen Qi and others had originally expected that capital would enter massively before the end of the year. However, because the entry barrier for community group buying is too low—anyone with two orange trees can do community group buying—not only many small players entered, but also giants like Meituan, Meicai, and Pinduoduo began to lay out their plans. The founding team and investors became more cautious, which also cast a bigger question mark on the uncertainty of the original business. Under such circumstances, should 'Xian Nv Guo' continue to follow suit? After two months of discussion, the team concluded to 'pause and observe first'. 'We have seen too many price wars, and most players are still burning money. Considering ourselves and the investors' money, the Xian Nv Guo team decided to stop temporarily. We have other businesses, and even if we don't follow, we know how to move forward in the future,' Chen Qi added. In June this year, there were still investors proactively approaching to invest in 'Xian Nv Guo', but after discussion, the team decided 'we can't take this money', as they were determined to leave. Two months later, 'Xian Nv Guo' began to shut down its community group buying business step by step: Wuhan, Guiyang, Guangzhou, Chengdu, Shenzhen... Currently, the community group buying business has basically ceased. Small Players Will Continuously Exit, Giants Fight Besides 'Xian Nv Guo's' shutdown, Chen Qi also said that many small players have already died. Zhao Tian started community e-commerce in November 2015 and has seen many projects go bankrupt, but the frequency is now significantly higher. 'The main reason is that the entry barrier is too low. Many people enter with the idea of making quick money, underestimating the difficulties, leading to insufficient resources and funds later on.' 'The window for community group buying has closed, and the situation should become clear around the Spring Festival next year. Many companies will definitely not get the next round of financing, and will either be acquired or die.' Regarding future strategies, some believe that players should have clear positioning, choose a single category to focus on, or choose categories with strong relevance, such as fresh food plus frozen products, or fruits plus seafood. Opponents argue for expanding categories: if users buy one thing from me, they still have to go to the wet market for other things, which does not meet users' daily needs. Regarding the shutdown of 'Xian Nv Guo's' community group buying, New Distribution sought the views of Mr. Ren Xiaodong, a well-known FMCG B2B e-commerce expert:

  1. 'The venture ended halfway? Is it a strategic judgment or a retreat before battle? It's a mystery. But returning to the essence of entrepreneurship, those who ignore the laws of business and rely on stories to attract VC can take a rest.' 2. Low prices are definitely not the driver for community e-commerce; explosive products are. Low prices cannot bring loyalty; competitive, high-quality products can.
  2. Who is more suitable for this track? Two types: First, local self-operated B2B platforms. In the future, community e-commerce models will definitely become a standard feature of B2B platforms; Second, companies like Meicai and Meituan that have supply chains for non-standard fresh products—the ability to source directly from the source and select products is the core competitiveness of community group buying e-commerce. Under the 'Hundred Regiments War' background, community group buying companies lacking supply chain foundations will inevitably be eliminated. Regarding the future, as competition intensifies, more and more industry participants will be eliminated. The entry of giants and unicorns like Meituan, Meicai, and Miss Fresh adds more uncertainty to the final outcome. Unlike B2B, the competitive barriers of community group buying are almost negligible. In this case, the entry of giants will inevitably make the Matthew effect in industry competition more obvious. Community group buying based on LBS systems will inevitably face competition from Meituan in the future. Under such circumstances, what will the future battle situation of community group buying be? -END-