The following is the speech delivered by Mr. Dong Xu, Brand Director of Shihuituan, at the 5th FMCG + Internet Conference hosted by New Distribution, organized and published for readers. The topic of my sharing today is the future growth and development trends of community group buying as seen by Shihui. Shihuituan and Youhaodongxi are strategic development partners. Youhaodongxi's CEO, Chen Ying, volunteered in rural areas around the world while studying at a US business school, and after graduation, he remained rooted in rural areas, aspiring to bring fresh ingredients and fruits from origin to more urban families. In just two years, Youhaodongxi, with its extreme focus on products and strict quality requirements, quickly gained recognition from urban mothers. Countless urban mothers became selectors for Youhaodongxi, sharing a healthy, green, and fresh lifestyle concept. Youhaodongxi rapidly developed into a leading social e-commerce platform in China and received high favor from capital. With the development of Youhaodongxi, Chen Ying hoped to bring quality lifestyle concepts and selected products to more urban families. After visiting and surveying multiple cities, he found that the community group buying model commonly existing in second- and third-tier cities was very suitable for his development strategy. With a good project, a suitable helmsman was needed to manage the overall situation. After returning to Beijing, Chen Ying visited elites in the social new retail industry and found Wang Peng, former Senior Vice President of Aixianfeng. The two hit it off on the development model and strategic goals of Shihuituan, quickly selected Nanjing and Tianjin as pilot cities, and successfully validated the feasibility of the business model. Because I am in branding, I am accustomed to positioning my own and company projects. When I came to Shihuituan, I asked Wang Peng more than once: What is Shihuituan's positioning? Finally, we concluded that Shihuituan's initial goal is to be the community group buying that best suits urban tastes. We aim to be a pioneer linking origin to the dining table, providing fresh good products for urban families. We also want to be family scenario-based consumption consultants, improving the quality of life for urban families. We also want to empower community light entrepreneurs, thereby increasing family income. Shihuituan goes deep into product origins, links quality products with community users, builds a neighborhood group buying ecosystem based on communities, and shapes a new form of community group buying with urban communities as nodes. Currently, Shihuituan has covered 60 cities, serving 10 million urban families. As community group buying becomes a hot industry, more and more capital is paying attention to it. But community group buying is different from previous hot spots like Didi Kuaidi, Mobike ofo, Meituan Ele.me. The fundamental difference is that companies in previous hot spots were mainly doing connections, with little differentiation in products and services between competitors, leading to capital-supported subsidies to grab market share. Community group buying, however, follows retail logic, involving the entire chain of supply chain, products, warehousing, logistics, customer service, etc. There are also more differentiated experience points. Shihuituan's strategy is to maintain advantages and focus on differentiation. Taking fresh fruits and vegetables as an example, products are directly sourced from origin, with quality differing from local wholesale markets, thus gaining good reputation. But the premise is that a certain volume must be achieved in a city, for example, at least about 6 million yuan per month. So what to do before reaching that? In the early stage, many companies would source from wholesale markets or find a local tray supplier. The problem is that product differentiation is small and quality is hard to guarantee. At that time, the only option is to lower prices. Even so, it may not win praise. Shihuituan's initial explosive products in the market came from the supply chain foundation of Youhaodongxi. After the city is established, local selection is based on the characteristics of the city circle. Youhaodongxi is positioned towards quality users in first- and second-tier cities, while Shihuituan targets users in second- to fifth-tier cities who value cost performance. The selection logic is the same, but the specific products chosen are different. Shihuituan believes that rapidly expanding community group buying companies should possess three capabilities: team management capability, organizational coordination capability, and rapid iteration capability. Team management capability mainly tests whether the team can simultaneously support the rapid advancement of 50-60 cities, including management methods, management personnel capabilities, team member configuration structure, and individual quality. Organizational coordination capability focuses on coordination and cooperation between warehouses, cities, departments, and organizations. In this part, we mainly consider how to effectively use our own mechanisms to reduce losses and improve operational efficiency. Rapid iteration capability tests whether the company can quickly respond to market changes, improve itself, and also guide the industry trend. Behind the continuous iteration of business models is the fundamental change in consumer behavior. Current consumption behavior has become more scenario-based, shifting from "people looking for goods" to "goods looking for people." We will also serve a new model of daily household consumption. In this model, we put ourselves in consumers' shoes, considering what products we should find and list, observing, experiencing, and exploring their needs. Let Shihuituan's products cover the three highest-frequency scenarios in household consumption: the kitchen scenario (rice, flour, oil, grain, meat, eggs, and vegetables), the living room scenario (fresh fruits, leisure snacks), and the bedroom scenario (beauty and daily necessities). Only by understanding consumer needs can SKUs avoid being miscellaneous and not refined. For community group buying players, there are many future directions, and no one can predict the final form of community group buying. The current market division is already in full swing. Shihuituan has focused on deploying more than a dozen core cities in North China, East China, and Central China. Based on core cities, Shihuituan has established regional product centers, market centers, operations centers, and warehousing and distribution centers, radiating to "satellite cities" of tiers 4-6 within 200 kilometers. This "city circle" strategy is the basic model for Shihuituan's expansion. Currently, in three key core cities—Nanjing, Zhengzhou, and Changsha—Shihuituan has basically verified the feasibility of this model and expects to cover 200 cities nationwide by the end of the year. We believe that whether it is group buying or community group buying, in the future it must be combined with offline stores for its business to land and value to be realized. The fundamental reason is the survival and development needs of community convenience stores under the continuous erosion of new business formats, and the one-shot match between new formats' demand for community traffic. As an open format of community retail, the geographical location of community convenience stores determines their inherently stable traffic and customer base, and they can also provide relatively stable offline scenarios and standardized services. Click Read Original to see more highlights of the 2019 5th FMCG + Internet Conference... -END-