---
title: "Dialogue: Is Community Group Buying a Fit for FMCG?"
description: "At the 6th China FMCG Channel Innovation Conference, hosted by New Distribution, a roundtable discussion explored whether community group buying suits FMCG. Industry leaders from Coca-Cola, C&S, Haoji, and Maichun shared insights on the benefits, drawbacks, and strategies for collaboration."
author: "New Distribution"
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published: "2021-04-10"
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# Dialogue: Is Community Group Buying a Fit for FMCG?

> At the 6th China FMCG Channel Innovation Conference, hosted by New Distribution, a roundtable discussion explored whether community group buying suits FMCG. Industry leaders from Coca-Cola, C&S, Haoji, and Maichun shared insights on the benefits, drawbacks, and strategies for collaboration.

The 6th China FMCG Channel Innovation Conference, hosted by New Distribution, the leading new media for the FMCG industry, was grandly held from April 1 to 3 at the Chengdu Ascott Hotel. The event attracted 3,000 industry professionals, including distributors, community e-commerce platforms, brand owners, and internet companies from across the country, with a full house and an unprecedented atmosphere.

On April 2, at the main forum of the China FMCG Community E-commerce Conference, a roundtable dialogue titled "Is Community Group Buying a Fit for FMCG?" was moderated by Chen Siting, CEO of New Distribution. Guests included Zhu Qian, Head of Community Group Buying at Coca-Cola (China); Gong Zhiyong, Director of New Retail Channels at C&S Paper; Zhang Bing, General Manager of Haoji Baijia Trading Co., Ltd.; and Wukong, Founder of Maichun E-commerce, who shared their views.

Roundtable Dialogue

Community group buying is currently a topic of concern across society. The four guests invited to participate in the discussion include first-tier leading brand owners and typical operator representatives. Without exception, they are all maintaining deep cooperation with community group buying. So, what unique insights do they have about community group buying?

New Distribution has carefully organized and excerpted the essence of this roundtable dialogue for publication to benefit readers.

**-01-**
**Benefits and Drawbacks of Cooperation with Community Group Buying**

**At the start, the moderator raised a sensitive topic: In the process of cooperating with community group buying, does it bring benefits or drawbacks?**

**Gong Zhiyong, Director of New Retail Channels at C&S Paper, spoke first.** Community group buying had some development foundation before, but it truly rose only last year. Against the backdrop of the pandemic, everyone did their part to meet the needs of community consumers, which was an important part of the company's double-digit growth last year. As shown in the report shared by New Distribution, for us, community group buying brings more benefits than drawbacks.

Mr. Gong Zhiyong, Director of New Retail Channels at C&S Paper

Is community group buying really a fit for FMCG? First, community group buying does focus on "groceries" (fresh produce), but for paper products, they are also a very important high-frequency essential category in daily life.

Last year and even earlier, C&S Paper participated in some community group buying operations through different methods. Among our six major channels, five are cooperating with community group buying in various forms, including direct-operated KA, traditional distribution channels, new retail, e-commerce, and specialty channels.

Facing the transformation of new channels, C&S Paper chooses to embrace change. By formulating operational strategies through a unified management department and combining local "wisdom" for flexible execution, the emergence of new business models brings another opportunity for rapid development for our category or company. The decentralized operation model allows us to quickly penetrate lower-tier markets and also obtain low-cost traffic.

Speaking of drawbacks, besides the commonly mentioned challenge to the original brand price system, there is one point I want to use this conference to appeal to platforms: platforms and brand owners should jointly create a win-win solution. Most community group buying platforms adopt a model of multiple merchants per product or bidding for slots. This model not only leads to price conflicts among various brand channels but also raises a more worrying concern: the proliferation of counterfeit non-genuine products, which cannot provide consumers with good quality and service, ultimately resulting in a losing situation.

In fact, when brand owners cooperate with e-commerce platforms that use the "slot bidding model," there is also the issue of multiple merchants per product, but this "multiple merchants" is based on the brand's own orderly competition and mature genuine product authorization system. Perhaps brand owners and platforms need to build mutual trust: brand owners promise to offer trade terms no less favorable than other channels, and platforms promise to conduct activities according to the brand's preferential policies and strictly control counterfeit goods, jointly promoting the healthy development of this business.

**Then, Zhu Qian, Head of Community Group Buying at Coca-Cola (China), used Coca-Cola as an example to view the pros and cons from a dialectical perspective.**

Ms. Zhu Qian, Head of Community Group Buying at Coca-Cola (China)

First, for beverage brands, community group buying is a very beneficial platform for promoting potential single products or new products. For community group buying platforms, mature big products like Coke and Sprite are certainly more beneficial for their initial development, but conversely, they do not bring much benefit to the brand itself; instead, they may have adverse effects on channel and price control and standardized operations.

Therefore, when looking at this issue, first, we see that pros and cons are complementary, and we need to deeply explore how significant the drawbacks are for us. Cooperation with community group buying is certainly beneficial for categories and products like Coke, but it also poses challenges for Coke. This is a problem that brand owners and community platforms need to sit down and discuss together in the subsequent cooperation process.

**Zhang Bing, General Manager of Haoji Baijia Trading Co., Ltd., believes that** reviewing the channel development changes over the past decade or so, it is nothing more than changes in the location of people, goods, and places. From traditional hypermarkets to the rise of BC small stores and small supermarkets, and then to today's community group buying, it all reflects the evolution of consumer demand from long-distance to short-distance.

Ms. Zhang Bing, General Manager of Haoji Baijia Trading Co., Ltd.

For a new brand like Haoji, in the process of development, the drawbacks of community group buying platforms may be viewed differently than by Coke or C&S Paper. Mature brands may focus more on price balance between channels and whether low prices impact the entire channel.

But we are more willing to embrace community group buying platforms. Community group buying may mean more and better opportunities. It allows new brands to have close access to target consumers through channels and opportunities, because community group buying solves the last-mile fulfillment cost for consumers, which is very critical.

**Wukong, Founder of Maichun E-commerce,** as a post-90s entrepreneur with an internet background who grew from scratch to over 1 billion in scale in 3 years, possesses internet thinking distinct from traditional business. Community group buying strategy has now been designated as the first strategy of Maichun E-commerce.

Founder of Maichun E-commerce, Wukong

Wukong believes that from his initial B2B entrepreneurship to today's community group buying, he himself is a beneficiary of the era. When he first started doing B2B, he already noticed a phenomenon: this is a concept combining online and offline, and it does not use the traffic logic of traditional e-commerce.

B2C business may be more about displaying to consumers, using activities, promotions, traffic, and display slots to obtain orders. But if you simply use this method to do community group buying, you may fail because you lack the ability to deeply connect with regions, group leaders, and stations.

Today's community group buying trend is actually the same as the B2B logic. It is more about going from online to offline. The difference is that previously B2B was done through small stores, partners, and ground promotion personnel. Today's community group buying is the same old trick in a new bottle; it still needs to be done through group leaders and stations.

The reason Maichun E-commerce has been able to develop so quickly is precisely because we have achieved the integration of online and offline. We do not just do offline distribution, delivery, and replenishment, nor do we talk about traffic as glamorously as traditional e-commerce. Everything we do is simple, efficient, and down-to-earth.

Speaking of drawbacks, as a TP role, looking at these things from outside the community group buying circle, I can only say that some things are short-lived in terms of time. Just like Tmall or B2B back then, they also faced price control issues at the earliest stage. This is definitely a short-term phenomenon.

Today, looking at JD or Tmall, except for one or two nodes that may be uncontrollable, most of the time they are within a controllable range. So, the price chaos and quality control issues we talk about at this stage are just temporary transitional phenomena.

However, it must also be mentioned that in the long run, the drawback of community group buying may be that while it is friendly to some brands, it will certainly be unfriendly to others, and may even cause harm. That is, some brands are destined to retreat.

Because the total market volume will not double, some new or emerging brands seize the increment, or traditional brands relying on online and traditional KA touch the new BC small store field. Every order is an increment, but it will also be accompanied by the decline of competitors or peers.

**-02-**
**Case Sharing**

**After analyzing the pros and cons, the four guests also shared some practical cases.**

**Mr. Gong Zhiyong, Director of New Retail Channels at C&S Paper:** For all pros and cons, in terms of opportunities and risks, after a period of operation, there are solutions.

Last year, from the pandemic period to the end of the year, over half a year, C&S Paper's community group buying business grew about 20 times. We have established close cooperation with almost all leading community group buying platforms. The cooperation with the head platform, Xingsheng Youxuan, should be the fastest. We did several things with Xingsheng:

First, in traditional perception, because we consider the impact on the overall price system, we differentiated our product selection from traditional channels to some extent, while also meeting the operational needs of the community platform. This was also thanks to the wide variety of tissue products available.

In later cooperation, when it rose to a strategic level, we even used platform data for C2M customized product design. This effectively avoided conflicts with other channels' price systems.

Second, in the cooperation with Xingsheng, in terms of the organizational setup of the entire new retail team, excluding collaborative teams and partner personnel, there are now 5 full-time staff in the Central China region, especially in Hunan and Hubei. The entire new retail organization now has nearly 30 people.

Internal resources are all focused on community group buying operations, so the organization is prepared to be professional, timely, and effective in its interface with platforms.

Third, in terms of supply chain, in the early stage, we made multiple preparations for supply chain fulfillment. We had direct fulfillment from factory supply chains because C&S Paper has a factory in Xiaogan, Hubei, giving us a speed advantage in nearby regions like Hunan and Hubei.

Of course, we also organized local distributors, mobilizing existing distributors as part of supply chain fulfillment, making them participants and beneficiaries of community group buying development.

In community group buying, we hope to walk on multiple legs, fully leveraging existing internal and external organizational capabilities to optimize supply chain fulfillment efficiency. This is key to achieving win-win cooperation with community group buying platforms.

**Ms. Zhu Qian, Head of Community Group Buying at Coca-Cola (China):** Let me get straight to the point and share some practical insights on how Coca-Cola cooperates with these community group buying platforms.

Actually, you might think that a brand like Coca-Cola would not deeply cooperate with new retail or new platforms, but on the contrary, we were already cooperating with Xingsheng Youxuan, Shihuituan, Shixianghui, and Tongcheng Life back in 2019.

We continued until the second half of last year, when the community group buying track changed rapidly, and a batch of excellent community platform enterprises emerged. Coca-Cola also quickly entered the market in the second half of last year, connecting with Duoduo Maicai, Meituan Youxuan, Chengxin Youxuan, Jingxi Tong, and also at the Alibaba headquarters level.

These platforms have an interesting characteristic: compared to Xingsheng Youxuan and Shihuituan, national-level operating platforms have relatively weaker regional control. So, for these platforms, we need to think about what cooperation model is best.

Coca-Cola has tried both direct supply and cooperation with distributors. Currently, we are also exploring what regions, areas, and categories are suitable for what cooperation models. In this regard, Coca-Cola has always been very open and has been seeking diversified cooperation development, including better ways to cooperate with platforms.

But what I want to emphasize more is that in the past, we did B2B for many years. When we reached the terminal through B2B, we found that we could not do without the cooperation model of offline distributors. In this context, thinking about how far we can go with community group buying in the future, I think it entirely depends on the capabilities of distributors.

When doing B2B, we saw many distributors who were very smart, focusing on strengthening their logistics systems and making their logistics very strong. Of course, there were also some distributors who were very unconventional, outsourcing their logistics systems and focusing on operations, which may have given rise to today's batch of TP companies.

So, no matter how we cooperate in the future, I think the transformation and reform of distributors are indispensable in this process. I also hope everyone can think about what role distributors can play between platforms and brand owners in the future. This is our conclusion in this entire process and an area we will focus on and cultivate in the future.

**Zhang Bing, General Manager of Haoji Baijia Trading Co., Ltd.:** Haoji officially completed product launch and layout in August 2020. In the early stage of launch, we also completed many connections and cooperations with community group buying. During the process of cooperation with these platforms, we continuously explored their characteristics.

Each community group buying platform has its own characteristics, whether in its group leader mechanism or its operating system, with significant differences. At the same time, Haoji has tried many cooperation methods. Previously, we focused more on regional cooperation, but this year we will adopt headquarters-level centralized procurement cooperation, hoping to have deep cooperation with community platforms from a brand and strategic perspective.

Early last month, Haoji also reached a national strategic cooperation with Shihuituan, fully preparing for a brand-new national channel penetration in 2021.

I believe the current development stage of community group buying platforms is definitely the earliest stage. In the coming years of development, there will certainly be many changes. Manufacturers will adjust their thinking and cooperation methods accordingly. They can adopt direct-operated cooperation or choose some capable distributors with distribution capabilities. I believe we will adopt diversified methods to cooperate with these community group buying platforms, and I hope to have more sincere cooperation with them in the future.

**Wukong, Founder of Maichun E-commerce, said:** Just past Women's Day, we helped the brand Kotex achieve category first on Meituan and Chengxin, especially on Meituan, where the single brand exceeded 10 million on Women's Day. So, we can talk about how we did this from an operator's perspective.

First, it's about speed and efficiency. When we decided to enter community group buying, we signed the contract with Meituan within 3 days, and with Chengxin, we completed delivery to 108 warehouses nationwide within a week. The first thing we did was efficiency.

Second, the issue of personnel and team. We also do social e-commerce like Pinduoduo, short videos, and B2B. Comparing these tracks, we found that community group buying requires a very large number of personnel.

At that time, to do Meituan, in just over a month, we initially transferred only 3 colleagues, but in the end, we directly recruited more than 20 people. Even so, these 20+ people often had to stay up late. In terms of personnel, it may require more team members than people imagine. Even before having the budget, we had to open up the budget and keep recruiting.

Third, although operations produced many activity plans, and we also did some flash sales and 10,000-person group slots with peers, what is more important that distinguishes us from peers? Based on having so many operational staff, we conducted nationwide connections between procurement and operations in all regions. This is something we did better and more efficiently than peers who just bought slots and such.

Fourth, supply chain. Everyone knows that supply chain is a headache in community group buying. In the month before Women's Day, we conducted continuous supply drills daily and weekly to ensure the fulfillment capability on Women's Day and predict warehouse inventory.

**Summary:**

**"Is community group buying really a fit for FMCG?" This is not an undecided proposition; it already has a definite answer. However, the process of arriving at the answer is more important at this stage.** Through this forum, New Distribution hopes to open minds and discuss together.

Is community group buying a fit for FMCG? If we change our thinking, do the people who shop through community group buying need to consume FMCG? If so, why can't community group buying platforms sell FMCG?

In the early development of community group buying, some joked that it was actually fresh produce group buying. But as platforms gradually surpassed 100 and then 1,000 SKUs, such voices faded. However, there is no doubt that fresh produce has indeed been used as a traffic-driving tool for platforms. **But precisely because of the need for traffic-driving, when the gross margin of fresh produce is pressed to less than 1 point, it is destined that fresh produce is only a good card, not a trump card. The real money-making area must be in standard products.**

It is true that FMCG can make money, but who makes the money is also a question. When brand manufacturers and community platforms actually cooperate, **whether they will face "the store bullying the customer" or "the customer bullying the store" is worth pondering. Platforms and manufacturers are in a game between "promoting new products" and "hitting bestsellers."**

In addition, after the demographic dividend has disappeared, the total market size is what it is. The so-called increment is just grabbing others' existing stock. If someone is growing, someone must be passively hit. **Whether to continue resisting to protect vested interests or to try to shake hands and embrace is also a place where many enterprises need to deliberate.**

Overall, the community group buying track, up to now, is still just a child learning to crawl. It is normal for many FMCG manufacturers and platforms to have friction, price chaos, quality control issues, etc. during cooperation. This is the bill that must be paid for a track from birth to maturity.

But one thing must be clear: the cost of missing out is far, far greater than the cost of trial and error!

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