Click the image for details In 2018, from the perspective of the entire retail industry, "community group buying" was undoubtedly the hottest topic [Shared by Mr. Hu from Keke Selection]. Especially in the second half of the year, various hot follow-up reports on "community group buying" awakened many peers trapped in the FMCG dilemma. Almost everyone is looking for opportunities. "Community group buying" is the last straw that has been verified by successful cases, recognized by capital, and eagerly sought by peers. Of course, there are those who support and those who oppose. Here, I won't discuss who is right or wrong; I only know that social e-commerce is just beginning! Many people say that "community group buying" is a capital battle with "low barriers and no competitive moats." Those who say this must be bystanders who have never done it. Here, I quote a statement made by Teacher Liu Chunxiong in a speech: "Community group buying is a high-threshold operational skill." In my understanding, the threshold is not at the foot, but at the "waist." Therefore, I especially remind regional FMCG B2B platforms and distributors with operational capabilities that the protagonists of the "community group buying" battle should actually be distributors, and it must become one of the essential business methods for distributors. Community group buying can fully achieve your "regional breakthrough, channel breakthrough, category breakthrough, and profit margin breakthrough," and you will have more support from brand manufacturers' "e-commerce departments," no longer being oppressed by upstream brand manufacturers and downstream large stores, but rather becoming the controller who redistributes benefits and divides the cake. First, let me use this chart to explain the departmental structure of "community group buying" in a single city: From the organizational structure of the "community group buying" department above, it is almost the same as the B2B platform department that distributors are currently running. It requires people to develop business, be responsible for platform operations, negotiate with suppliers, be responsible for warehousing and distribution, and handle various after-sales issues. Of course, there are still many different "points" that we need to pay attention to. Below, I will share with you according to the specific work of each department. 1. For distributors doing community group buying, how much investment is needed and where does it go? First, let's list the main areas where money will be spent: personnel, office, procurement, warehousing and distribution, and loss.

  1. For distributors starting social e-commerce, the personnel needs will increase by "1 product selection and procurement person, 2 business development persons for group opening, 1 operations person, 1 warehousing and distribution manager, and 1 graphic designer/copywriter, totaling 6 additional personnel. Other positions can be filled by existing staff. The average salary in prefecture-level cities should not exceed 5,000 yuan, so 6 people cost 30,000 yuan/month.
  2. Office: Use the original office, warehouse, and equipment. Some office equipment and consumables may be added, but this is basically negligible.
  3. Procurement: Mainly for purchasing sold goods or reserving inventory. The goods themselves are profitable, so a few tens of thousands of yuan in procurement reserve funds is enough. Most goods are paid for by customers in advance, and we have credit terms with upstream suppliers, so this can also be ignored.
  4. Warehousing and distribution: These are essential basic conditions for distributors. Social e-commerce does not require much warehouse space. Most goods are received and sorted on the same day, which may temporarily increase sorting personnel costs. For distribution, distributors have vehicles. For community group buying, all goods must be delivered to the group leader's network points before 12:00 noon. A vehicle can normally deliver to 10-15 network points per trip. If the order volume is large, the number of delivery points will decrease. For now, let's uniformly calculate warehousing and distribution costs as 7% of the business turnover, which is neither high nor low, depending on business volume, regional distribution, and warehousing and distribution management capabilities.
  5. Loss is a big topic. If done well, zero loss can be achieved; if done poorly, it can eat up all your gross profit and more. This will be discussed later, so I won't elaborate here. I often joke with others that opening a standard convenience store requires an investment of about 500,000 yuan. How long would it take to achieve profitability? If you take that 500,000 yuan and open online stores covering 50 high-density residential communities, which method is faster, more economical, and more effective? 2. For distributors doing community group buying, is it better to go solo or implement a partnership with multiple shareholders? Why do I bring up this topic? Because when chatting with several distributor friends, they are hesitant and lack confidence, always thinking that they need to find several local distributors to join forces and form a strong alliance. This is actually my biggest concern, so I specifically want to discuss it. Most distributors started as mom-and-pop stores. They are used to "doing it alone, managing and spending money themselves, with a messy account book, not knowing whether they are making a profit or a loss. In short, they have the final say." If you join forces, who will submit to whom? Who listens to whom? Who trusts whom? It's easy to make friends, but partnering in business truly tests a person's breadth of mind and pattern. If things go poorly, they doubt your ability; if things go well, they start doubting your character. I'm not belittling anyone here; I just think it's unnecessary for social e-commerce. Don't create trouble for yourself. Since it doesn't require much investment, won't conflict with peers' channels, and can help peer friends sell goods, handle simple things simply. Don't complicate simple things. If you really feel that your energy might be too divided, you can find a few young people around 30 years old to work together, jointly invest and partner. You take the majority share, and let the young people take minority shares. When profitable, you give more dividends. Young people get entrepreneurial opportunities, and since they spend their own money, they will work hard. You also save worry, because at the beginning, it's hard for distributors to focus solely on social e-commerce. "Social e-commerce" is a brand-new business, and you can't carry any burdens. 3. Questions to consider when opening groups 1. Are store owners or stay-at-home moms more suitable as group leaders? What are their respective advantages and disadvantages? 2. How can group leaders quickly attract people to join the group? What kind of people are your effective customers? Based on analysis of operating scores from various places, the following conclusions are drawn: Women account for 79.27% of purchases, meaning women are our main customer group. △ Age group data analysis proportion chart Category purchase proportion analysis: The main categories are "vegetables, fruits, meat, seafood, and high-value hot products." From the above data, it is clear who should be brought into the group and who are effective customers. Distributors should spend more energy on target customers, so they must understand women's needs and pain points. 3. How to choose the most economical and effective area for opening groups? Based on past experience in opening groups and operations, the approach in first- and second-tier cities is to lock in specific areas and logistics routes, focusing on urban consumer positioning and logistics costs. Never scatter your efforts randomly, opening groups in all directions, otherwise service capabilities cannot keep up. Consumers are emotional and perceptual. If they are hurt once and not handled well, performance drops by 50%. If another mistake occurs and after-sales is not handled well, few customers will remain. Eventually, the group leader will lose hope for development, and the group will become dead. It is not easy to re-ignite the brand in that community. In third-, fourth-, and fifth-tier cities, because the city is small, the main consideration is logistics delivery timeliness. Ensure that all goods can be delivered to the group leader before 11:30 AM. 4. How can group leaders increase user stickiness and achieve fission? Many community group buying companies, upon entering a new city, immediately hire 20 salespeople to spread across the city to find group leaders. This is a typical capitalist approach. Without sufficient logistical support as a premise, such short-sightedness will inevitably lead to failure. I do not agree with this approach. In my view, when entering any new city, you should maintain a "slow first, fast later" approach and cultivate internal skills. A generally prudent approach is: first open two routes with 20 groups, focus on cultivating and serving them well, and establish several model group leaders. After these 20 groups have been stable for a month of operation, then open new groups. Some old groups will inevitably become inactive and need to be replaced with new group leaders to continue activation. In actual operations, it has been found that as long as product quality and service are good, many people who want to do this will proactively come to you. Moreover, some group leaders with "e-commerce experience" and community connections, who have been hurt by other groups and had to give up, will seek a reliable community group buying platform to cooperate with. For group leaders, the most important factors are: product quality, timely delivery, timely after-sales, rich product variety, guaranteed income, and a warm team. To promote a fission mechanism where group leaders introduce other group leaders, a group leader can be promoted to a "brigade leader" level and, in addition to their own income as a group leader, they can also enjoy extra performance commissions from the new group leaders they develop. Set the commission level: two-level model (legal, not pyramid scheme). That's all for the group opening section for now. Next, I will share with you the operations part of community group buying. 4. Operations Department 1. Which categories should be chosen at the start? What is the product selection logic? How to control gross margin? Because you are a distributor of FMCG, it is easy to fall into a misunderstanding that your own products sell well. But in social e-commerce, this is not necessarily true. People won't rush to buy just because the price is low. The most important thing is to think from the consumer's perspective, based on the family's daily consumption habits and consumption cycles. As mentioned above, the main categories are: vegetables, fruits, meat, seafood, and high-value hot products. These are the products with the highest household stickiness, almost daily necessities. We need to think more about the family's "kitchen, refrigerator, dining table, living room, and bathroom." Women love to eat and love beauty, and children's nutrition and health are important. Guide customers to pursue a quality life of "delicious, healthy, and beautiful." One of the most headache-inducing problems for me when starting operations was: how to find more new products. Here, "new products" does not mean all products in the distributor's warehouse are new; rather, they are products that meet our customers' needs, and there should not be too much overlap in products with the same function. Community group buying is not about having a rich variety of products, like a comprehensive supermarket, but about working hard on the combination of various categories, functions, and products. It should achieve "quality products, accurate positioning, reasonable specifications, and scenario marketing." In addition, every city has limitations in product availability, and consumers prefer to buy good things that they cannot usually buy locally. If distributors are confident in quality control, I suggest starting with more products in the fresh non-standard product segment, and for standard products, include daily necessities. Keep at least 30% of products changing daily, and release about 5 new products each day. If the WeChat mini-program mall has categories, the number of single products can be maintained between 50 and 100 per day. If there are no categories, it is recommended to keep it within 50 single products; otherwise, it will affect the customer's browsing and shopping experience. Here, I strongly suggest that distributors doing community group buying recruit operations personnel. They must be local women who are family-oriented, with typical characteristics: able to cook well, raise children excellently, have a meticulous personality, like to chat proactively, understand marketing and healthy living, enjoy shopping in malls and supermarkets, and can identify product quality and are price-sensitive. If they have e-commerce experience, even better. This may seem overly demanding, but this person is too important. Operations need to revolve around customers, and the company team revolves around operations. If the center deviates, the whole plate will deviate. 2. How to quickly cultivate and solve the group leader's ability to sell in the group? In community group buying, there is usually a group leader group in each city, which is a group for interaction, communication, and training between the platform and group leaders. There is usually also a "muted group" where the platform releases various images and copy materials. Group leaders need to get materials from this muted group daily and forward them to their own groups. This saves group leaders a lot of time and energy, and the product introductions and promotional copy become relatively standardized. Currently, most first-, second-, and third-tier cities should have platforms for community group buying. It is normal for a community to have 4-5 platforms. Customers are likely to have multiple similar groups in their WeChat, and the group buying groups are full of messages all day. Obviously, customers have already muted the groups, so won't the messages be unseen? Here, I want to share a simple method: group leaders should establish one-on-one relationships with customers for private chat promotion. Group leaders must be very familiar with their customers and establish private relationships. Some excellent group leaders with 300-person groups can achieve a daily order rate of 30%, selling over 3,000 yuan a day. But some group leaders only get a few orders a day. This can only be attributed to the level of dedication. We also often organize online learning exchanges and offline gatherings for group leaders, which can increase the stickiness between group leaders and the company, and also drive a group of group leaders who want to work to boost performance. For those group leaders who cannot be activated, decisively give up or find a new group leader in the community. Previously, you might think that a group leader's customers can only be people in the community, but in fact, group leaders can sell goods to relatives and friends across the city. Customers can choose their own pickup points when placing orders. In the future, group leaders may not have pickup points; dedicated pickup points will handle receiving and picking up goods. There are many small tricks in selling. Training before releasing new products is also very important; otherwise, you may face an awkward outcome. 3. How to use technology to solve the category conflict between the platform and convenience stores? Here, I want to emphasize the issue of convenience stores. Convenience stores are originally in business, and community group buying is also in business. There is complementarity but also conflict, especially in standard products. The platform has a price advantage, while convenience stores have high costs and thus require higher profit margins. At this conflict point, you can use the backend to publish different products to different types of group leader online stores, thus solving the competitive product conflict. The function can also publish different products for "different levels of communities, different populations, and different locations," such as old communities, poor communities, high-end communities, office buildings, campuses, hospitals, etc. Consumers can see products that they need and can afford. Otherwise, those who can't afford will say the products are too expensive and high-end; high-end customers with spending power will think the products are too low-end and not interested. In plain terms, it's called "identity matching." 4. Use the business mindset of opening chain stores to open online chain stores; otherwise, burning money won't retain people. When doing social e-commerce, you have to think about a question: How long can community group buying last? What will the next stage of development and evolution look like? Everyone's thinking will be biased, but one thing is certain: no matter how it evolves, families cannot do without daily necessities. I have an immature idea: in the future, excellent group leaders will become "online + offline" physical stores. As business grows, small spaces and small businesses can no longer meet demand, and they will gradually become full-time store owners. Doing community group buying can first solve the problem of basic traffic and stable income. Later, they can rent a small space on the first floor in the community and open their own community "online and offline" experience store. So my view is: when doing social e-commerce, treat the online store as a "physical store" and operate it with care, never just "shoot and run." I don't think this business will be entirely the capitalists' dish, just like the B2B platform. Everyone thought that when BAT capitalists came, the industry would be doomed. Now the facts are right in front of us: those who took big money died faster. So don't worry or be afraid. I think the spring of social e-commerce is just beginning. 5. How to stand out from competitors in the same industry? The biggest competitor is not others, but yourself! As long as you stick to the following points, you don't need to worry about even the strongest competitors:
  1. Social e-commerce is a commodity circulation transaction based on social relationships, not a simple buying and selling relationship.
  2. Do every community down-to-earth. Don't sacrifice quality for quantity; otherwise, you will lose as many as you open.
  3. Use the mindset of buying vegetables and fruits for your own family to help customers carefully select products, strictly control quality and service. Customers gained by price will be lost by price; customers who stay because of value are your true customers.
  4. Remember that any national platform has costs far higher than local startup teams. This is an inherent advantage that others cannot replicate.
  5. Treat the online store as a physical store. Because your competitors are overly bloated, they will never outlive you or outdo you. 6. Data model for the break-even point of social e-commerce The following is a model design based on data from my operating city: 5. Procurement Department 1. Do not use to B wholesale thinking for to C product procurement Previously, distributors served B-end customers. Stores selected products, stored them, and slowly sold them. The store owner was not responsible for whether they sold or not. If they didn't sell, they would ask for returns. Now, serving C-end customers, you cannot waste any limited window resources. You cannot let consumers feel that the platform's products are irrelevant to them, nor can you let customers think the platform's products are garbage. Ensure the quality of platform products. Our purpose is to help customers select satisfactory products and ensure that the product has a certain scale of sales. Therefore, the procurement department must search everywhere for suitable products, find stable and reliable suppliers, and ensure that after products are listed and sold, they can be delivered to the warehouse in time. Here, I strongly oppose: at the beginning, when product sales are uncertain, adopting a method of purchasing goods first and then selling them. This approach will cause unlimited inventory backlog in the warehouse. It is better to accept a higher purchase price than to hold inventory. For stable and good-selling products, a small amount of inventory can be appropriately stored. 2. How to achieve zero-cost inventory to play social e-commerce? Appropriate product selection method: find suitable products for listing, negotiate cooperation rules with suppliers, and after confirming the cooperation mechanism, provide photos for pre-sale. Based on group buying order volume, notify suppliers to deliver to the warehouse according to the agreed time. When negotiating with suppliers, it is best to receive a deposit and settlement cycle from the supplier. If the supplier has problems, effective fines can be imposed, and you won't be so passive. Our fresh products such as "vegetables, fruits, seafood, meat" are stocked based on sales volume. For products that are easily damaged or have non-standard specifications, I will ask suppliers to prepare 10% more to cover shortages. Never pass off inferior goods or shortchange customers. For some products where standard weight is difficult to control, mark "+ -" grams when selling to avoid unnecessary disputes. 3. For non-standard products, is it better to purchase personally or use a category contract system? On this issue, I was once very conflicted. Purchasing personally is very hard, and it may not guarantee 100% quality. The contract system seems to throw all problems to others, but contractors are profit-oriented. When quality is similar, they often pass off inferior goods, ultimately hurting customers. Put yourself in the customer's shoes: if you buy fruit at a fruit stall, would you allow the owner to pack it for you randomly? You would definitely pick products that look good, have bright colors, and taste good. On the platform, customers have no choice at all; they trust us to select the best products for them. In fact, every online purchase is a risk for customers. Think about how important it is to purchase quality products. Retaining a customer is not easy, but losing one is instantaneous. So my approach is: except for large enterprises that can achieve excellent standardization, all non-standard product suppliers cannot be fully trusted, nor can you take shortcuts. You must strictly inspect each batch in front of the supplier, making the supplier clearly aware of the platform's product selection standards. This is also a test and training for the supplier. If they pass the one-month test, you can discuss payment terms and reward and penalty clauses. Here, I especially remind you about many fruit products. Often, batches differ, and specifications vary. Suppliers or procurement may not promptly notify operations, resulting in inconsistency between the sold product specifications and the actual product. For example, pomelos are 4 jin each, sold at 6 yuan each, but the new batch in the market is 5 jin each, so you have to bear the loss. If it's just a small loss, it's okay, but what if the market only has 3 jin each? So you must maintain close daily communication with your non-standard product suppliers, discussing "sweetness and acidity, specification size, and reserved inventory." Many suppliers are salespeople who talk to you. They only consider whether they can close the supply deal. As for quality and delivery, they only say nice words, but the actual results are unknown. If you frequently experiment with uncertain products on customers, you will soon close down. I have suffered greatly in this regard. A supplier provided me with seafood airlifted from the sea to Chengdu, saying that this product cooperates with so-and-so, and the product is fresh and delicious. I am a layman, and I believed it. The operations department also introduced the product well in the group leader group, and customers had high expectations. Pre-sales were good, but when it reached customers, we all exploded. High-quality customers were extremely disappointed with our platform, and even if we tried every means to remedy it, it was useless. 6. Warehousing and Distribution Department 1. How to plan the timeliness of community group buying warehousing and distribution? 2. Quality control is one of the three core lifelines of community group buying Quality control problems are mainly found in five links. If problems occur, how can we still have a chance to remedy? 7. Customer Service Department 1. What types of problems generally appear in the group leader group?

When will the goods arrive? Or minor friction with the delivery driver;

Customer complaints due to missing items;

Customer complaints due to product quality issues;

The actual product differs greatly from the picture;

Too few products, insufficient variety, no new products, no promotions;

Hard to attract people, no interaction, poor sales performance, can't do it;

Other groups' products are so good, prices are so cheap, promotions are so big;

Seeing others do well, selling thousands a day, losing confidence;

Family matters, need to take leave. 2. How to solve various problems in the group leader group? First, there must be excellent role models in the group, so that the poor can learn from the good and see hope.

Second, there should be "shills" in the group. When problems are difficult to solve but you don't want them to spread, you need some positive energy to dilute conflicts and brush the screen.

If a relatively sensitive problem really occurs, you should immediately chat one-on-one privately to stop the problem.

If a large-scale problem occurs, admit the mistake immediately and actively solve it quickly. If problems can be solved with money, they are small problems. Give customer service enough authority to handle problems. The faster the fire is extinguished, the smaller the loss.

Record it down; the same mistake cannot be made twice.

Set up activity reward mechanisms and elimination mechanisms in the group leader group. Let those who do well get recognition and rewards. For those who consistently perform poorly, change the group or close it; otherwise, it wastes company resources. 3. How to solve various complaints in the community group? Solving community group problems is similar to solving group leader group problems. You need a few more shills. Keep negative voices in the group as low as possible. Solve problems privately, then use shills to change the topic and discuss positive content. This gives the group leader enough time to communicate effectively with the parties involved. Generally, as long as the group leader actively solves problems, there are basically no unsolvable problems. 8. What basic conditions do regional distributors need to have for community group buying? Extended reading of New Distribution's community group buying themed series articles: If you are interested in the above content, welcome to scan the code to join the New Distribution WeChat community. The community includes: FMCG B2B, community group buying e-commerce, internet transformation, marketing innovation, and other themed communities. There are also investor and CEO communities. Welcome to scan the QR code below to join the group. When adding friends, please indicate your identity and purpose. New Distribution will hold the 2019 (5th) FMCG + Internet Conference during the Chengdu Spring Sugar and Wine Fair from March 16 to March 18. This conference will focus on the topic of "Breaking the Game" and conduct in-depth discussions with many brand owners, supply chain service providers, distributors, retailers, and others. Compared to previous conferences, this summit will be fully upgraded. In addition to the original topics such as channel innovation, city distribution logistics, and distributor transformation, it will also add multiple parallel forums such as new marketing cases, IP + FMCG empowerment, community group buying, and innovative retail. Through three days of ten high-density, high-quality expert sharing and exchanges, I believe every brand owner and distributor can learn the latest business models, expert opinions, and practical methods, finding new tools and methods to break the game in 2019 and return to the track of rapid growth. **Conference time: March 16-18, 2019 Conference location: Longfeng Hall, Chengdu Longzhimeng Hotel Conference topics 2019 5th FMCG + Internet Conference Date | Time | Venue | Topic 3.16 | Morning | Main venue | B2B special session Afternoon | Main venue | Regional market digital precision cultivation Main venue | Brand channel digitalization special session 3.17 | Morning | Parallel Forum 1 | Social e-commerce Parallel Forum 2 | New logistics, new city distribution Afternoon | Parallel Forum 1 | How does community group buying reconstruct the value chain? Parallel Forum 2 | IP empowerment, helping brand growth 3.18 | Morning | Sub-venue | New marketing open class Parallel Forum 2 | How can distributors achieve iterative upgrades? Afternoon | Sub-venue | New marketing open class Registration method Registration channel is now open. Long press the QR code below or click "Read Original" to register. 66% discount early bird tickets are limited to 200 and are on hot sale...! Add the conference staff to register Click "Read Original" for more information -END-