Click to read the original article for details As a new chapter begins, 2020 has also come to its final close. Countless people who hoped the "bubble" of community group buying would burst have watched it survive year after year. At this point, we won't discuss whether community group buying is a true proposition or a false one, nor whether it carries the banner of retail revolution or feeds on bloody buns, nor speculate on how this melee will end. After the heat of public opinion subsides, everyone returns to reality and lives in the present. If you can't handle the present, looking too far ahead is meaningless. During the pandemic, distributors' sales were blocked, but costs did not follow suit. On the map, community group buying spread rapidly like the pandemic did. Incumbents seized the advantage to defend their cities, new entrants rose from the ground, and countless entrepreneurial group buying companies emerged out of thin air. As the categories of group buying continued to expand and increasingly intersected with offline, many distributor bosses watched with anxiety in their eyes and hearts. To this end, New Distribution previously invited three guests representing different voices to dissect their views on distributors and community group buying from different angles.

  1. Community group buying entrepreneur—Fan Guangchao, founder of Duomi Life From the perspective of community group buying entrepreneurship, how will the development trend of community group buying be after the intervention of giants, and how should traditional distributors choose?
  2. Second-generation distributor transitioning to community group buying—Li Bingyuan, founder of Youle Group From the dual perspective of distributor and community group buying, can distributors really do community group buying, and if so, how specifically?
  3. Distributor deeply cooperating with community group buying platforms—Gao Jingjing, founder of Beijing Guoyingjian Economic and Trade Co., Ltd. From the perspective of a traditional distributor, discuss the cooperation with community group buying and what taboos distributors must not touch. -01- What do the deep cultivators of community group buying think? 1. Converging subsidies Recently, whether it's the People's Daily commentary "Behind the controversy over community group buying, there are more expectations for internet giants' technological innovation" or the "Nine No's" for community group buying issued by the State Administration for Market Regulation and the Ministry of Commerce, the waves of public opinion have been overwhelming. There were even rumors that leading players in community group buying announced their withdrawal. So, how will the giants choose in the face of the government's "ultimatum," white-hot competition, and public pressure? No matter how big the external storm, it cannot extinguish the giants' determination to make a big impact in the community group buying track. Why say this? According to hearsay, internet giants have poured billions of yuan in funds, all real money. Having deeply cultivated the track, they cannot easily leave the table. On the other hand, for giants, the community group buying war is ultimately a battle for downstream traffic. Whoever can control the distribution of traffic will survive to the end. However, although the giants' goal of acquiring end-user traffic will not change, it is highly likely that their methods will be adjusted in the future, especially regarding excessive subsidies and price chaos. Because, first, in the face of enormous public pressure, any of these big hats being confirmed would be a "catastrophe." Second, previous subsidies were mostly used to attract traffic and open cities. Now, large platforms have basically opened one to two hundred cities, meaning the first phase of city opening is basically over. With the foundation set, large traffic has been acquired. What remains is how to acquire customers, drive repurchase, and increase daily active users. If repurchase is achieved solely through subsidies, this system will become a bottomless pit of burning money. Since traffic has come in, the rest is to find ways to retain it, after all, "it's easier to conquer a kingdom than to rule it." This leads to the third point, which is that competition in community group buying is a three-dimensional competition, not just one-sided price competition. Next, giants will spend more energy consolidating the foundation, including product procurement capabilities, quality control capabilities, backend warehouse fulfillment capabilities, and frontend team leader delivery service capabilities. 3. Distributors: Where the traffic is, that's where the business is Fresh produce is an indispensable part of the community group buying track. There was even a sarcastic saying, "No fresh produce, no group buying." In fact, platforms are generally restrained with fresh produce categories because fresh produce itself has many criticisms, and no one dares to scale it easily; expansion has been slow. On the other hand, FMCG standard products enter the track in large volumes because standardized products can be heavily subsidized. Therefore, a transformation is occurring across the entire food and beverage FMCG industry, from brand owners to distributors. Where there is transformation, there are opportunities, and this is a huge opportunity. Whether distributor or brand owner, what should you focus on in business? Where the traffic is, that's where the business is. Previously, traffic was in supermarkets, on Taobao and Tmall. Now, traffic has moved to community group buying. If you still focus on the original traffic or a place with no people, you will certainly have no business. So, whether brand owner or distributor, don't emotionally reject a new thing. Instead, seriously consider whether it has value and whether it can bring growth. If so, embrace it boldly, try it boldly, and actively chase the traffic. When going against the tide of the times doesn't work, why not go with the flow? Second, engage in in-depth communication, rather than giving up immediately after one failed attempt. After all, these community group buying buyers connect with one to two hundred suppliers a day, leaving them extremely limited time to consider your case. To make this business work, the first step is to keep a calm mindset. Finally, and most importantly, make strategic adjustments and work on your products. Not only must you control product quality, but you should also communicate deeply with community group buying to develop new products together, determine product prices and specifications. This way, you gain platform support and avoid conflicting with traditional business, achieving a win-win. Here, Mr. Fan Guangchao specifically pointed out that in the current stage, for standard products in community group buying, platforms prefer products that can be used as bestsellers to drive volume, and such products are generally small in specification and packaging. On one hand, the unit price of such small-spec products is naturally lower; on the other hand, small-spec items are easier to finish, and finishing means repurchase, which brings daily active users. This makes customers more sticky and easier to cultivate consumption habits. -02- What do second-generation distributors transitioning to community group buying think? 1. Stable income regardless of conditions Can distributors really do community group buying? Or in other words, is it the right time for distributors to do community group buying? Mr. Li Bingyuan of Youle Group also mentioned that he is a distributor of low-temperature frozen foods. When he first started community group buying, it was entirely based on the needs of distributors. He united regional franchisees and other local distributors to use community group buying for launching new products and handling old inventory. After all, in the frozen products business, although gross margins are decent, there has always been the loss of large-date recalls. At the time, the goal was more to avoid inaccurate distribution and to have products directly reach consumers. Regarding whether distributors can do community group buying, I believe not all distributors can do it, but this project for distributors is inherently a "stable income regardless of conditions" matter because the cost is sufficiently "low." For distributors, if you have good local resources, such as a relatively large warehouse, a dozen or so vehicles, core products, and an existing team, this thing can basically start. The only difference is a small program. The worst outcome is continuing to hold onto existing stock without capturing incremental growth, unlike platforms that lose millions. The opportunity far outweighs the risk. 2. Determination + Team So, since distributors can do community group buying, how to do it specifically? This can be summarized into four situations. First, distributors with the right conditions can directly supply to group buying platforms like Meituan, Didi, and Duoduo. **However, most distributors do not have the foundation for cooperation because brand manufacturers' distribution rights are generally dispersed, and these large platforms usually choose provincial capitals when opening cities, with procurement centers and warehouses naturally set there. Distributors not in provincial capitals will find that even if they want to supply, they can't because they are outside the platform's central warehouse market area. Second, give up the line of national community group buying platforms and connect with local regional groups. **Since the community group buying track heated up in 2020, almost all attention has focused on the new three groups and the old three groups, but in fact, local groups are countless. Try to contact these local groups. These platforms may have no voice nationwide, but in regional operations, they are definitely stronger than the head platforms. Third, if there is truly no group buying platform in your area, then the best way for distributors to utilize community group buying is to find team leaders, form a cooperation and profit-sharing model, turn team leaders into your available resources, and bypass the platform to have team leaders initiate group buying directly. How to find team leaders—the most direct method is to register as a Meituan team leader yourself. There will be a daily ranking of team leaders in the group. Based on the ranking, find out who the top 10 team leaders in your area are, and visit them one by one to "win them over." Fourth, if distributors have a certain level of strength, they can completely incubate their own community group buying platform. Establish a distributor alliance, make community group buying a sales channel for your own branded products, and directly reach the C-end sales platform from the distributor. Finally, it should be mentioned that whether distributor bosses can do community group buying, and whether they can do it big or successfully, depends entirely on your determination and team. Besides having the strength, community group buying must be a top leader's project. If the boss doesn't personally lead, relying on subordinates to complete this is too risky, as it involves complex situations with many vested interests. Moreover, the team's genes are also very important. If you don't have a team with the right genes, then should you find ways to send team members to good platforms for training, or simply recruit a team with community group buying experience? Only then can you leverage the main advantages. -03- What do distributors who have laid out community group buying think? 1. To resist external threats, first stabilize internally Ms. Gao Jingjing stated that distributors must cooperate with community group buying, and on a large scale. Because this cooperation will first subject the distributor's internal management to a grand review, a major inspection, and is an extreme test and challenge. Community group buying is an opportunity to connect traditional business with the internet. Only when distributors actually do it will they realize that this transformation demands extremely high standards in every aspect, from finance to docking and delivery, even service. And more distributors, whether in internal management or external operations, first fall into chaos themselves, grabbing everything at once. Now, it's a bold attempt to transition from traditional distributors to "e-commerce distributors." To resist external threats, you must first stabilize internally. 2. Discounts, not price chaos First, avoid risks. **When delivering goods, assess whether there is risk in your payment terms. Try to choose large platforms for cooperation. After all, relatively speaking, large platforms have more reliable cash flow and at least won't easily run away. Second, negotiate and protect the price system. **Without a price system, first-tier brands won't cooperate with you. It is recommended to establish a dedicated e-commerce department to monitor the price system. Promotions and discounts must be within a controllable range. Otherwise, it will definitely lead to penalties, or even goods being returned. Third, reasonable promotions. **As long as an activity can be done, it can be done, but you shouldn't let community group buying do it entirely. It's best to plan and execute it yourself. Considering the impact of online activities on retail terminals, there are two ways to avoid it: First, activities must be time-limited. Once the activity ends, it's over, not discounting all year round, which would impact offline channels. Second, avoid promotions on whole boxes or whole pieces. Break them up into two bottles at a price or three bottles at a price, so the impact on offline can be minimized. Summary: The wheel of history rolls forward. We cannot hope that by closing our eyes, the world will stop changing. Nor can we pray that others' unchanging nature will maintain our business stability. Today a big supermarket, tomorrow a Taobao or JD, the day after live streaming, and now community group buying. Facing these changes, all distributor bosses should adjust their mindset immediately and discover incremental growth in variables. Like online trolls who curse the sky, the earth, and the air, it won't solve problems and will only drive your business into a dead end. On the contrary, only change brings opportunities. If you don't change, you'll always be at the tail end of the market. Seizing these opportunities will make us bigger and stronger, forging our teams into elite forces and our businesses into iron walls. Even though the three guests represent different interests, their final views converge: "Community group buying is definitely a trend; wherever the traffic is, we must go." When you can't control external changes, you must adapt to them through internal changes. Chen Siting, CEO of New Distribution, also said during the exchange, "When winter comes, some birds will freeze to death, but all our efforts are to ensure we see next spring, rather than becoming those frozen birds." Add the author's WeChat, note namecompanyposition Important Conference Announcement! January 19-20, Jiangsu·Wuxi New Distribution will join hands with 500+ FMCG distributors from five provinces in East China to gather in Wuxi, Jiangsu, to provide brand owners and distributors with a conference aimed at product selection, cooperation, and exchange. Make arrangements before the year, start working after the year! Don't wait until after the Spring Festival to plan! Interested brand owners or distributors are welcome to contact us. Please scan the WeChat QR code below to register for the conference or exhibition. Exhibition contact: Tips will be paid 400-2000 yuan once adopted.