---
title: "Distributors Want to Try Community Group Buying? Stay Calm and Prepare for a 'Second Start-Up'!"
description: "The pandemic has reignited community group buying, prompting many distributors to enter this business. However, it's far more complex than it seems, requiring a shift from B2B to B2C thinking, daily category planning, and operational expertise. Distributors should approach it cautiously, ideally with a fresh team and a pilot project, while recognizing the broader trend of channel diversification."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-02-29"
categories: "Dealer Operations, E-commerce & Instant Retail"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/distributors-want-to-try-community-group-buying-stay-calm-and-prepare-fo-197817a3.md"
original_source: "https://mp.weixin.qq.com/s/HEUKAGaRT7K4z2yEBpu9tw"
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attribution: "New Distribution — https://xinjignxiao.com/en/articles/distributors-want-to-try-community-group-buying-stay-calm-and-prepare-fo-197817a3/"
citation: "袁来. “Distributors Want to Try Community Group Buying? Stay Calm and Prepare for a 'Second Start-Up'!.” New Distribution, 2020-02-29. https://xinjignxiao.com/en/articles/distributors-want-to-try-community-group-buying-stay-calm-and-prepare-fo-197817a3/"
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---

# Distributors Want to Try Community Group Buying? Stay Calm and Prepare for a 'Second Start-Up'!

> The pandemic has reignited community group buying, prompting many distributors to enter this business. However, it's far more complex than it seems, requiring a shift from B2B to B2C thinking, daily category planning, and operational expertise. Distributors should approach it cautiously, ideally with a fresh team and a pilot project, while recognizing the broader trend of channel diversification.

Because of the pandemic, community group buying has been reignited. In early February, following the orders of upstream manufacturers, many distributors were forced to start community home-delivery businesses.

In this process, distributors discovered that local community group buying was extremely popular. Additionally, local government prevention and control measures encouraged commercial enterprises to innovate and supported "contactless delivery" and so on. **Distributors thus set their sights on the community group buying business. With their own warehouses, distribution, and goods, it seemed like the perfect timing, place, and people—why not do it now?**

If you've already done it, you may have found yourself in a pit. In fact, community group buying is far from as simple as you think. It is understood that many distributors are currently "trapped."

Therefore, this article aims to warn distributors who are still eager to try community group buying: before entering, calmly and objectively assess it. It is far from just creating a mini-program, listing products, and offering discounts.

But I want to emphasize one point: I am not pessimistic about community group buying. I believe that because of the pandemic, the community group buying model will be reignited. Even after the pandemic ends, some mainstream consumer groups born in the 70s and 80s will retain their consumption habits due to the convenience of online home delivery. Community group buying holds enormous market opportunities.

**-01-**
**Why Can't Distributors Do Well in Community Group Buying?**

Let me first categorize simply: **The core action of a distributor's business is to distribute goods to stores, which is a small B-end business; the core action of community group buying is to sell goods to consumers, which is a C-end business.** **The different target objects of the two businesses lead to vast differences in operations.**

**1. Why Do Consumers Buy?**

Why would consumers buy from you? **Consumers' core demands are: more, faster, better, and cheaper.** Let's analyze from these four perspectives.

More: Your products cannot be as numerous as Tmall or JD.com. Faster: Delivery the next day has a slight advantage, but not significant. JD.com and Tmall's express delivery can already achieve next-day delivery in first- and second-tier cities. Additionally, walking a few more steps to nearby supermarkets can get products immediately. Better: Not as good as Tmall or JD.com's supermarkets. Cheaper: If prices are lower, consumers will flock, but unfortunately, you won't make money.

You might say, how do community group buying platforms do business then? My understanding is: **Around consumers' life scenarios, "actively trigger" consumers' consumption needs.**

Let me share two stories: **

The head of a local community group buying company asked me, "Do you know what product sold best on our platform in March?" The answer was "green plants." I was a bit confused, and he continued, "Because spring has come..."

"Do you know what products sell best on Thursdays?" The answer was "fruits and snacks for children." Why? Because consumers order on Thursday and receive on Friday, just in time for the kids' day off.

From the above two cases, you will find: **The community group buying business is actually about finding consumer needs.** **From the balcony, bathroom, living room, bedroom of the home; from spring, summer, autumn, winter, special festivals, months, weeks, and days, around the full life trajectory of consumers, to find the consumption needs of a family or female consumers aged 30-45 for a better life and quality of life.**

This is the true value of community group buying.

**2. Based on Demand, How Specifically to Do Community Group Buying?**

After understanding the demand, let's see how to do it. **Take the day as the unit, adjust the category structure daily.** In a regional market, community group buying launches anywhere from dozens to thousands of products daily, and the category structure needs to be planned in advance according to time nodes.

Suppose you sell tomatoes today; it's best to remove them tomorrow. Because as a consumer, she doesn't want the same vegetables every day. Even for ultra-high-frequency products like eggs, they should be listed at most twice a week. If listed every day, what's the difference from an online mall?

In addition to the daily scheduling of category structure, **the daily products also need scientific arrangement.** **It's not just selling tomatoes today, plus some Haitian soy sauce, plus frozen seafood. Instead, truly stand from the consumer's perspective to arrange products.**

Suppose today's main product is beef brisket; what other products are best to sell? Potatoes and carrots, because they can make a dish together. Today selling sweet potatoes; what product is best to associate? Tin foil. Because of the pandemic, children are taking online classes at home, so you can sell mental arithmetic, etc.

**A truly profitable community group buying company must achieve: single-product breakthrough and associated sales.** If you only consider selling Yili milk at a special price today, Daoxiangcun rice tomorrow, and C&S toilet paper the day after, you will never be profitable.

From the perspective of a community group buying company looking at category proportions, some companies' mass FMCG categories may account for less than 10%. **The top five core categories for sales are: fresh and frozen products, seafood and aquatic products, daily necessities and chemicals, vegetables and fruits, and condiments and sauces.**

Regarding how to make money, if it's conventional FMCG, it's hard to have more space to support the intermediate links. Let's do a simple calculation: community leaders demand a 12-point commission, warehouse sorting, distribution, and operations cost about 10 points, plus your own 3-point profit requirement, so the average gross margin for products must be at least 25 points.

Based on such profit requirements, many products with high brand concentration and rigid demand are hard to meet the operational needs of community group buying companies. At the same time, these conventional FMCG products directly conflict with the business categories of community stores.

**3. Based on Operations, How Specifically to Do Community Group Buying?**

**Trading companies focus on sales; community group buying focuses on operations.**

Generally speaking, distributors don't need to worry too much about whether products are needed by consumers. In the distribution logic, since the manufacturer launched this product, it must meet some consumer need. So **the distributor's operation is to maximize the distribution of goods to various stores, get products on shelves, seize displays, and play interest games.** **Once the above actions are done, basically it's just waiting for consumers to come.**

In the operational logic of community group buying, what products to promote to attract consumers to buy. If planned weekly, how to match fresh vegetables to ensure daily variety and daily surprises. Besides product attraction, product images, detail pages, and purchase paths must have the fewest steps and best experience, allowing consumers to place orders "unconsciously."

Frankly, comparing the two, the complexity of operations is far higher than sales. **From backend supply chain selection and organization to frontend consumer reach, purchase, and delivery, it's a complete chain.** **The distribution chain is a point-to-point business.** **Although there is after-sales, it's a certain consumer demand; as long as you find the right sales point, it's fine.**

After reading this, you might understand the business logic behind community group buying. Of course, after reading this, you might still insist on your view: regardless of the difficulties, you want to do community group buying.

**-02-**
**If You Insist, How to Do Community Group Buying?**

If distributors insist on doing it, it's recommended to completely abandon past distribution thinking and start fresh. But in fact, distributors emerged from the 90s and 2000s and have come this far, with their age basically over 45. Abandoning distribution thinking and starting fresh is no less than a second start-up for distributors.

Based on exchanges with industry insiders in community group buying, **it's recommended to let young people with ideas lead, with an empty cup mentality, and do it down-to-earth.** **Allocate a start-up fund of 500,000 yuan, find 2-3 relatively high-frequency categories to enter, and pilot a small area for entrepreneurship.** **Slowly explore, discard all past distribution experience, and start a new business.**

**-03-**
**What Enlightenment Does the Blowout of Community Group Buying Bring to Distributors?**

Returning to the main business of distributors, because of the pandemic, community group buying has blown up. I think it should make distributors realize one point: in the future, fast-moving consumer goods channels will definitely not only be offline traditional store points and online e-commerce channels like Tmall and JD.com.

**The future channels will definitely be diversified.** **Although this has been said for a long time, distributors' understanding in the past was not as profound as this pandemic has brought. Limited capacity and diversified channels will inevitably divert sales from traditional sales points. Multi-channel development is a realistic topic that every distributor must consider in 2020.**

Taking community group buying as an example, in the past, distributors may have cooperated with group buying companies simply as a supply transaction relationship. Now, distributors need to view it as an important channel, not only supplying goods but also cooperating deeply. Together with manufacturers, invest fees, resources, and do promotions.

**Only in this way can regional distributors truly take root locally, ensure their territory is not lost, and take their business to the next level!**

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## Citation metadata

- Publisher: New Distribution
- Author: 袁来
- Published: 2020-02-29
- Canonical: https://xinjignxiao.com/en/articles/distributors-want-to-try-community-group-buying-stay-calm-and-prepare-fo-197817a3/
- Original source: https://mp.weixin.qq.com/s/HEUKAGaRT7K4z2yEBpu9tw

## Copyright and AI use

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Contact: zhaobo258@gmail.com · +86 158 5481 7671