A pandemic has made community group buying even hotter, with financing, IPOs, and cross-industry entries. Since May, waves of activity have pushed community group buying to the forefront of new retail hotspots. How will Didi and Meituan's heavy cross-industry entry affect the current leading players like Xingsheng Youxuan, Tongcheng, Shihui Tuan, and Shixiang Hui? Are they late to the party, or will they reshuffle the market and bring community group buying to the eve of fierce competition? Moreover, despite the pandemic not yet subsiding, offline store traffic is gradually returning. Is Didi and Meituan's entry into community group buying a bit belated? Is it worth spending big money? -01- Pandemic Fuels Persistent Fever in Community Group Buying If in 2019, before the pandemic, community group buying was a channel for users to purchase cost-effective fresh produce and FMCG products, the pandemic has changed many users' perceptions. Its convenience and flexibility are winning trust among more community users, making it one of their preferred channels for continuous fresh produce purchases. Against this backdrop, since May, community group buying has seen frequent capital moves, with a persistent fever. First, at the end of May, Shihui Tuan announced the completion of a new C1 round, raising $81.4 million. Just over ten days later, another leading platform, Tongcheng Life, announced the completion of a $200 million C round. Data from Qichacha Capital backing clearly sees the irreplaceable commercial value of community group buying in the post-pandemic new retail landscape. IPOs have also become a strategic goal for top platforms. Earlier, media reported that the Changsha Financial Office published the list of companies planning to list in 2020, with community group buying platform Xingsheng Youxuan included, making it potentially the first listed community group buying company in China. If financing and IPOs are natural steps for existing leading platforms, then Didi, Meituan, and Cainiao's cross-industry entry can be described as "robbery." Backed by giants, their motives are far from just joining the fun. -02- Meituan, Didi, and Cainiao Enter with Heavy Capital The latest news is that Meituan, led by "killer" Wang Xing, has entered community group buying with 2 billion yuan, targeting East and North China first, with 2 billion to reshuffle the market. Meituan's first shots at Jinan and Qingdao in Shandong are both blind spots and highlands for community group buying. On one hand, these two cities are densely populated with small and medium community group buying platforms, but leading platforms like Xingsheng Youxuan have not yet given them strategic importance. Meituan's choice to open warehouses there shows thorough market research, with an air of confidence to become the leader upon entry. Just a month ago, a community group buying company named Chengxin Youxuan quietly entered Chengdu. With a registered capital of $20 million, the industry had long speculated about its powerful backers. Indeed, this company, established on May 28, is invested by Didi, with an investment exceeding 10 million yuan. Didi's community group buying layout focuses on Chengdu and Beijing, with the Chengdu market officially operating on June 15. Additionally, at the 2020 Global Smart Logistics Summit on June 23, Cainiao President Wan Lin announced that Cainiao Stations would build a digital community life center, offering group buying, laundry, recycling, and other trusted convenience services at the doorstep. Cainiao Stations have already opened community group buying in 15 large and medium-sized cities, including Shanghai, Nanjing, Suzhou, and Chengdu, and are gradually expanding nationwide. With Didi injecting $20 million, Meituan entering with 2 billion yuan, and Cainiao quietly releasing the news of opening community group buying in 15 cities, how will these giants and unicorns affect existing leading platforms like Xingsheng Youxuan, Tongcheng, Shihui Tuan, and Shixiang Hui? What changes will they bring to the overall community group buying landscape? And with offline traffic returning, are they late to the party by spending big now? -03- Giants Enter: Prepared or Late? The entry of Didi, Meituan, and Cainiao is not surprising. When a track is full of gold to be mined, it inevitably attracts giants. But these three giants face three questions:
1. Challenges in innovating community group buying models;
2. Offline traffic is returning as the pandemic eases;
3. Existing leading platforms are strengthening their foundations through financing and IPOs. How to break the pattern? Is spending big worth it? First, regarding the model, current community group buying platforms generally use a "group leader as core" approach, treating group leaders as "front warehouses" and vanguards reaching the last 100 meters to communities. The giants entering now bring different models. Meituan, leveraging its advantages in Meituan Maicai, is likely to replace group leaders with front-warehouse station managers based on a large warehouse plus small warehouse system. Moreover, compared to the next-day delivery of almost all community group buying platforms, Meituan, with its local front warehouses and rider resources, can push community group buying to same-day delivery, a new height. If executed well, this could be a revolution in delivery speed. Cainiao, on the other hand, uses the industry-standard T+1 model, where consumers order the same day and receive goods the next day after the group is formed. However, it shares a common approach with Meituan: replacing group leaders with station managers. Although not as disruptive as Meituan's same-day delivery, using station managers instead of group leaders is a consistent strategy for these two giants. Thus, the giants' entry brings changes in delivery speed and innovation with station managers as the core. While it's unclear what impact this will have on Xingsheng Youxuan and others, from a user experience perspective, same-day delivery is undoubtedly better, and fixed station managers are more likely to earn user trust. It's foreseeable that for local small and medium group buying platforms, despite being like a swarm of ants, their overall risk resistance is average. With giants entering, they will be the first to be impacted. For leading platforms like Xingsheng Youxuan, they face new players who don't follow conventional rules, though they may be late, it's not necessarily a late party. It's important to recognize that community group buying, after years of development, is still in an extensive development stage. The giants' entry will undoubtedly push the industry toward a new phase of refined development. In a competitive existing market, new entrants will force existing leading platforms to innovate. Overall, the trillion-yuan community group buying cake cannot be monopolized by one or two players. Given the future prospects in the post-pandemic era, Didi and Meituan's heavy investment is worthwhile. Moreover, in any field, only when crazier players appear can market order move to a new stage. The trillion-yuan community group buying market still deserves more players on the sidelines to enter. The ultimate winning point is always the reconstruction of people, goods, and scenes, and the improvement of efficiency, along with model innovation and gameplay fission. How Didi, Meituan, and Cainiao will affect the existing landscape of Xingsheng Youxuan and others, and how they will bring experiential changes to users, we can only wait and see. We also look forward to more capable and innovative companies entering to break through and lead the market to a new stage.