Click "Read the original text" for details As the community group buying track draws attention from new and old giants and various forces, the waters of community group buying e-commerce based on same-city retail have become increasingly murky. With this, the entry of fresh food chains, convenience store chains, and community property management—is it embracing evolution and cross-border robbery, or is it imitating blindly and seeking self-redemption? -01- Fresh Food Chains—Professionals Doing Professional Work Some say community group buying has almost been played out; it would be more accurate to call it fresh food group buying. Why? Simply put, because fresh food is the last undeveloped "virgin land" in e-commerce. E-commerce, which can sell cars, houses, airplanes, and rockets, bows before fresh food. According to industry data estimates, the fresh food market is worth trillions of yuan, but internet penetration is less than 5%. Data from the E-Commerce Research Center shows that 88% of fresh food e-commerce companies are losing money, 7% break even, and only 1% are profitable. The emergence of community group buying is an opportunity. When the business model of selling before purchasing meets the high-volume, high-frequency consumption pattern, the historic task of developing this fresh food frontier is entrusted to community group buying. First, according to the table data, why do fresh food chain stores score so high in community group buying? First, whether they previously sold vegetables or fruits, these people are indeed in their "old trade," born into the business, understanding the fresh food trade. Second, returning to the fresh food category, it is purely household consumption, essential and high-frequency. Third, they have natural front warehouses, natural supply chains, natural warehousing and distribution, and natural professional group leaders. 1. Hema After much deliberation, in mid-September 2020, Hema established an independent Hema Preferred Business Unit, marking Alibaba's official entry into the community group buying track. As a representative of new retail, Hema has always been at the forefront of the fresh food track. Hema Fresh, Hema Market, Hema Mini, Hema Box, Hema X Membership Store, and the upcoming Hema Preferred cover almost all fresh food business formats. This offline store coverage and development speed fully demonstrate Hema's advantage in seizing the fresh food community market share. Additionally, Hema's physical supply chain scale advantages are gradually emerging, with source bases and category bases, and the establishment of characteristic agricultural product Hema villages, creating a retail platform with a complete fresh food supply chain system. Hema's group leaders are directly its own employees, known in the industry as professional group leaders, completely different from social individual group leaders. 2. Qian Dama In August 2019, Qian Dama's new retail business officially launched; in October, sales exceeded 10 million; in December, daily orders exceeded 1 million. It is known as the "King of Community Vegetable Markets." Qian Dama adopts an independent business format model, incubating Qian Xiaoxian, completely separating the online group buying business, with online and offline supply chains separate, using physical stores as pickup points. With physical stores as support and natural traffic, customer acquisition costs are low, giving early traffic advantages. Compared to community group buying models, this pickup point model has the advantage of stronger user initiative to visit stores. Community group buying relies on group leader conversion, making retention and conversion more difficult. If you use community group buying fission tactics to operate pickup points, you lose the characteristic of automatic store visits. 3. Yipin Fresh Yipin's entry into community group buying can fully leverage its existing Yipin Home Delivery logistics system, just as Xingyou Preferred used Furong Xingyou stores' logistics infrastructure in its early days, to open up lower-tier markets. Therefore, Yipin gives the impression of bold development, quickly ramping up volume through group leader fission, leveraging the many stores accumulated nationwide. For example, in Nanchang, recruiting group leaders with commissions of at least 10%, targeting store owners with shops and WeChat groups, following Meituan Preferred and Shihui Tuan tactics, with different commissions for different categories. At the same time, Yipin opened grid warehouse franchises in Nanchang, building a grid logistics system, requiring grid warehouses of 500-1000 square meters, with large grid warehouses needing at least 8 vehicles on standby, and basic infrastructure like shelving fully equipped. Nanchang is a place where many competitors gather; not to mention the track leader Xingyou Preferred's heavy deployment, Duoduo is making Jiangxi its base, and Didi Orange Heart Preferred is aggressively responding, but Yipin is not afraid of price wars, fighting fiercely without losing to competitors. This is mainly due to Yipin's supply chain layout. Every time Yipin enters a city, it partners with local supply chain companies to establish a joint venture, building a vertical supply chain system through this regional cooperation. Procurement personnel are also tied to these joint regional companies, and procurement uses a horse race system and mentorship system. This system allows Yipin to have a wide range of online categories while keeping prices low. 4. Pagoda In October 2020, as China's largest fruit chain brand, Pagoda officially launched the "Panda Fresh" brand, entering the community group buying track, with the first city being Huizhou. In fact, Pagoda had already tested community group buying as early as 2019. At that time, Pagoda launched the "Baiguo Xinxiang" project, expanding from fruits to the entire fresh food field. Users ordered from the "Xinxiang Mall" mini-program and could pick up at Pagoda stores the next day. In the fresh food field, it goes back even earlier: in 2016, Pagoda strategically merged with fresh food O2O platform Yimi Fresh, starting its fresh food e-commerce business. Pagoda has natural advantages in community group buying, with 20 years of fresh food supply chain advantages. Panda Fresh started with a self-operated product system from the beginning. In 2019, Pagoda's online sales exceeded 2 billion yuan, offline sales exceeded 12 billion, with over 4,600 stores, 60 million registered members, covering more than 80 cities. With Pagoda's store base, "a tall building rises from the ground." Additionally, Pagoda has 230 contracted fruit supply bases globally and 26 large distribution centers nationwide, partnering with global brands to form a "Quality Brand Alliance." 5. Baoneng Fresh If you don't know Baoneng, you don't know capital; if you don't know Baoneng, you don't know real estate; if you don't know Baoneng, who do you know? Backed by 500 billion yuan in capital, Baoneng is synonymous with speed and passion in community group buying. Some hadn't reacted when it entered, and some didn't know when it left. Baoneng's approach is equally swift, covering nearly 50 cities in half a year, with eight cities launching simultaneously: Foshan, Jining, Lianyungang, Shenyang, Huzhou, Mianyang, Xiangyang, and Yueyang, known in the industry for its "barbaric tactics." Current news is that Baoneng has temporarily paused on the community group buying track. After nearly half a year of exploration, Baoneng Fresh has set its sights on community stores, decisively cutting its community group buying business. Now Baoneng is focused on stores, shifting from the past "Hundred Cities Plan" to a target of 10,000 stores, continuing to push forward. However, the industry generally believes that Baoneng is likely laying "pipes" first, building infrastructure, and may launch a counterattack at any time. 6. Local Single Fresh Food Stores and Regional Small Chains Especially in November this year, a golden saying circulated in the fruit circle: What defeats a fruit store is not the neighboring fruit store, but community group buying. From not seeing clearly, to resisting, to actively embracing, it reflects the interaction and interweaving of new forces and traditional forces. With time fleeting and circumstances compelling, the combination of community fruit fresh food stores + community group buying mini-programs has become the industry standard. Not only national chain brands, but many regional and small-to-medium fruit store chains across the country have also achieved business growth through community group buying models. These single stores and scattered stores, from initial resistance and disdain to active embrace, perfectly illustrate what "it smells good" means. Many traditional offline stores actually see the trend clearly, but lack capital backing or internet genes, so when developing digital business, they are directly blocked at the threshold. The rise of community group buying, with attributes like social fission, built-in traffic, low investment and high output, has become an entry point for many physical merchants to connect with mobile internet. Additionally, for offline single stores and scattered stores, since fresh food in community group buying hasn't been done well, they can add paper products, household cleaning, and daily necessities, using high-frequency to drive low-frequency, and harvest in reverse. -02- Convenience Store Chains—Begging with a Golden Rice Bowl If developing social group leaders by community group buying platforms like Xingyou Preferred is seen as new city development, then chain convenience stores doing community group buying is old city renovation. The original community group buying business will undoubtedly erode the business of traditional chain convenience stores. Rather than being passively attacked, it's better to take the initiative; rather than being robbed, it's better to rob others. In his book "The Third Retail," Lian Jie, founder of Order Rabbit, mentioned three structures that customers frequently need to purchase: The first is the immediate consumption product structure. It mainly meets customers' needs for eating and using immediately, like beverages and instant noodles. These products have small packaging, and users need them urgently, so they need to be close to users, forming the convenience store retail scenario. The second is the short-term planned consumption product structure. It mainly meets customers' weekly purchase cycle product combinations, such as rice, flour, oil, household cleaning, and daily necessities, forming the supermarket retail scenario. Users don't need these products urgently; they can be delivered the next day, but they are bulky and low-value, making express delivery costs too high. The third is the long-term planned consumption product structure. It mainly meets customers' monthly purchase cycle product combinations, such as bags, clothes, cosmetics, etc., forming offline counters and online platforms like JD.com and Alibaba. Clearly, community group buying is not about immediate consumption or long-term planned consumption, but about short-term planned consumption products, plundering comprehensive supermarket products. However, chain convenience stores face two major weaknesses when truly doing community group buying. The first major weakness is the supply chain issue. The original supply chain can be used, but some parts can be used, and some really cannot. Since it's old city renovation, during the process, you must first protect your offline business, the main business foundation cannot be shaken, and you must pay attention to complementarity with the original product structure and user choices. Another important point is that community group buying emphasizes "one fast, two lows"—fast settlement to suppliers, low purchase prices, and low markups. Community group buying leverages the market competitiveness of "sell first, purchase later." However, offline store retail generally has a 30-day payment cycle. The payment cycle is proportional to the purchase price; cash purchases are at least 15% lower than purchases with a one-month payment cycle. In community group buying, merchants directly use pre-sale funds to purchase, negotiate lower prices with suppliers, and fast settlement ensures low purchase prices. Low markup is the adjustment of retail prices by stores based on offline store costs like space and personnel. But this situation basically doesn't exist for community group buying. Therefore, reshaping the supply chain will be a major pain point for convenience store chains crossing over. However, this doesn't prevent the emergence of "top students." In community group buying version 1.0, whether platforms or group leaders, the main entities were various social forces. In version 2.0, it's the institutional direct-operated convenience store chains harvesting in reverse. Many chains in China have launched group buying businesses, but many are still in the exploratory stage. The example here is the top student in version 2.0—Aikedo Community Group Buying (later organized as Xiaoai Alliance). Aikedo is located in Jining City, Shandong Province, with 86 stores, all direct-operated. The business area is 60,000 square meters, with 1,577 employees. Stores are mainly in communities, with 34 large stores (Aikedo) over 500 square meters and 52 small stores (Aikedu) under 500 square meters. Daily store traffic reaches 75,000 people, with sales over 2 million. In 2018, sales were 620 million. In 2019, it's expected to exceed 800 million. Aikedo Chairman Fang Miao once said, "My goal is not to make the plate bigger, but to invert the future business structure, with online and offline in an 80-20 split!" Here, we quote Lian Jie's analysis of Aikedo's original group buying ecosystem:** 1. Aikedo Group Buying Data Sales: Aikedo Group Buying launched in April 2019. First month: 4.6 million; second month: 12 million; third month: 10 million; fourth month: 9.5 million; fifth month: about 20 million. Product gross margin: Most products have a markup between 6% and 10%. Some livelihood products have a markup within 5%, such as milk at only 2%; knitwear and general merchandise are slightly above 10%. Overall, it's about 7-8 points. Traffic cost: Overall 3.5%. Group leader commission is 3%, and the store manager (who is the group leader) gets 0.5%. Currently, most group leaders are Aikedo store employees. Delivery cost: Almost no additional cost. Delivery and sorting fully use existing resources and processes; warehousing and distribution do not distinguish between offline store sales and online group buying. Instead, they uniformly go from warehouse to store. No sorting by customer order. Overall, net profit is around 4%, significantly higher than offline retail's profit margin, which is 2%-3%. The biggest advantage of chain convenience stores is cheap traffic. Pulling in-store customers into WeChat groups not only provides traffic but also existing pickup points. So group buying companies typically give group leaders 10%; chain stores only need to give 3%. Chain stores should focus on supply-side infrastructure, not just traffic. Community group buying is a new shopping scenario and a new traffic source, but it's also a profound supply-side reform. To do community group buying well, chain stores must build a solid supply-side foundation, including online product capability, delivery capability, and IT capability. 2. Aikedo Group Buying Organization The group buying business was defined as a key business in 2019, directly managed by the boss. Three management departments are involved: Purchasing, E-commerce, and Planning. The heads of these departments have a coordination WeChat group. Purchasing is responsible for product organization; Planning is responsible for promotional content for some products and activities; E-commerce is responsible for the entire process. Additionally, the logistics department handles warehouse-to-store delivery. Stores handle traffic operations, receiving goods, and managing customer pickups. Currently, group buying is temporarily defined as Aikedo's online promotional business. After development, it will be upgraded to normal online retail, i.e., an online comprehensive supermarket. 3. Aikedo Group Buying Products For products planned for group buying, even if suppliers already supply offline, they are required to re-quote lower prices for group buying. The purchasing department only submits tables; images are found after deciding to go live. Aikedo's product sources: manufacturers, manufacturers' city-level general agents, and online platforms (JD New Channel). They do not purchase from wholesale markets, reflecting the chain's dominant position locally. Overall, local procurement is 70%, including local agents at 50%, Jining local products at 10%, and local services at 10%; non-local procurement (online plus non-local manufacturers) is 30%. Chain stores have lower traffic costs than group buying companies and higher product organization capabilities. Warehousing and distribution are social resources, with little difference. Overall, chain stores have a relatively large advantage in community group buying. Here, we add a note on the coordination of online and offline products:

  1. Differentiate by demographic. For example, for grains, young customers prefer small packages; older customers prefer large packages. So sell small packages online and large packages offline.
  2. Differentiate by brand within the same category. For example, Three Squirrels products are sold more online by other community group buying companies, so Aikedo puts Three Squirrels offline. Similarly, the dried fruit brand "Baicaowei" is sold less online, so Aikedo uses it for online group buying.
  3. Allow some product overlap between online and offline. The group buying price for these products must be lower than the store retail price. This reinforces the impression that "group buying is cheap." It's equivalent to offline driving traffic online. SKU count and structure of group buying products: Currently, about 15 products are offered daily, with fresh food accounting for 40%. Pure non-standard fresh food is only one or two per day; one fruit is a must, vegetables sometimes, sometimes not. The rest are pre-packaged (frozen, low-temperature, grains), bulk, etc. Aikedo's online fresh food supply chain is not fully developed, still relying on the store's existing fresh food capabilities. Durian, mangosteen, cherries, and avocado sell slowly offline but well online. (Author's note: This is a common phenomenon nationwide, reflecting the difference between online and offline consumption.) Packaged food, beverages, and condiments account for 30%. Generally, one condiment, one snack, two beverages; in summer, more beverages. General merchandise accounts for 20%. Including daily chemicals, paper products, knitwear, sofa cushions, mattresses, small appliances, air conditioners, refrigerators, etc. Recently, shoe washing machines and Bear ovens have sold well. Local life services account for 10%. Including local food, entertainment, training, tickets, etc. Currently, physical vouchers are used; after ordering, customers go to the store to collect the voucher and use it at service merchants. The biggest feature of community group buying is planned shopping. Planned shopping is most sensitive to price; immediate shopping is most sensitive to time to receive. Convenience stores generally have strong ability to organize immediate consumption products but weak ability to organize planned products. This is something convenience stores need to pay special attention to. If the purchasing department doesn't break through in organizing planned products, community group buying won't succeed. Aikedo is different from typical community convenience stores. Its stores have 4,000 SKUs, covering a considerable number of planned products. So Aikedo's planned product purchasing ability, though not as strong as RT-Mart or Walmart, is not weak. Aikedo's purchasing team handling more planned products is just an increase in workload, not a change of channel. Typical convenience stores have only 1,000-2,000 SKUs, almost all immediate consumption products. For such stores, purchasing planned products well requires a change of channel. It's recommended that such stores form a dedicated purchasing team for community group buying. Customers' mindset in community group buying is: "As long as I can use it, I'll buy it if it's cheap." The key to operation is making customers believe two things: it's useful, and it's cheap. All Aikedo group buying products are sold before purchase. For selected products, suppliers are notified to reserve inventory. After the group buying activity ends, suppliers deliver to Aikedo's logistics warehouse, then it's distributed to each store. Let's highlight the key points about the relationship between community group buying and fresh food retail:
  4. Community group buying sells household planned consumption products, not limited to fresh food, and it's not even necessary to have fresh food.
  5. Aikedo stores already have a rich fresh food category; customers can buy fresh food at the community gate. There's no need to focus online.
  6. Some fresh food that sells slowly offline can be sold online, avoiding store inventory. Durian and cherries sell well online for two reasons: first, online consumers are younger and more willing to spend; second, online pre-ordering can lower prices. However, first, cases like Aikedo are not many; second, low purchase prices and low markups can lead to selling prices lower than purchase prices, breaking through price floors, harming vested interests. This leads to the second major weakness: organizational support. In March this year, Hunan Bubugao, a listed supermarket company in Changsha, the center of the community group buying universe, officially launched its community group buying mini-program—Xiaobu Youxian. Bubugao Chairman Wang Tian has publicly stated multiple times that when traditional channels don't work, only by opening new channels can you achieve counter-trend growth, placing high hopes on innovation. But Wang Tian didn't realize that community group buying must be a top leader's project. Even if it's personally led by Bubugao's direct heir, based on later data tracking, it's clear they performed poorly. This is because it inevitably involves infringing on other departments' interests. This is not a model problem but an operational problem. Once the model encounters operational problems, efficiency immediately suffers. Super Brother sighs and comments: Oranges grow in the south as oranges, but in the north they become trifoliate oranges. -03- Community Property Management—Class Contradiction During the pandemic, some advocated for property management to do community group buying or provide group leaders, but the reality is that property management shouldn't be in the community group buying track at all. Why? This traces back to the deeper relationship between residents and property management—class contradiction. Property management appears to serve but actually bears the responsibility of management; property management and users are natural enemies. During the pandemic's closed management, did you have many conflicts with property management? Yes. When idle, would you go to property management to chat? No. When paying fees, does property management give you a friendly face? No. When they approach you, it's either for management or money. Class contradiction means it's hard to generate stickiness and warmth; it's more about conflict. Conversely, a bunch of people who sell houses and deal with large cash flows coming to sell vegetables is like a pilot suddenly driving a tractor one day. Is it because they're embarrassed or think it's beneath them? No, it's because they simply can't. Besides property management, real estate developers, who have been stumbling on the new retail path, have been launching related brands this year, laying out community supermarkets and community group buying to seize the market. 1. Baodeli Select In the early days, Baodeli followed the traditional retail route, different from community group buying. Later, with software systems, it built an online mall (mini-program) + operations backend + group leader terminal + supply chain system, a four-in-one digital approach to group buying. During the pandemic, in 18 days, Baodeli completed 141,440 food delivery orders through "zero-contact" food delivery services, a nearly 100-fold year-on-year increase. 2. Bi Youxuan On October 27, Bi Youxuan's first life supermarket opened in Guangzhou Huiqiao Xincheng. Country Garden entered community group buying, from the former "Phoenix Youxuan" to today's "Bi Youxuan," with ups and downs, growth and experience. After learning from pain, it still chooses to continue deep into the community group buying track. This supermarket covers over 800 square meters, with over 3,000 SKUs, mainly selling vegetables, fruits, meat, poultry, aquatic products, grain, oil, and daily necessities. Starting from Guangzhou, Bi Youxuan will focus on launching 300-1000m2 community stores, planning to lay out 600+ stores in the Greater Bay Area within a year. 3. Beike Zhaofang Since late October, Beike Zhaofang has been exploring community group buying in Beijing, seeking cooperation from multiple parties. It's not hard to guess that Beike Zhaofang's community group buying is also aimed at serving communities, aligning with the goals of the two real estate giants above. Comparatively, in the community group buying track, Bi Youxuan has more ambitious long-term plans, but facing the current "Hundred Regiments War," due to its genes and mission, it's difficult! Conclusion: No hottest, only hotter; the community group buying track is the hottest topic of 2020, no exceptions. Besides the old three players already on the track—Xingyou Preferred, Tongcheng Life, and Shihui Tuan—and the new three giants—Meituan, Didi (Orange Heart Preferred), and Pinduoduo—heavily entering community group buying, traditional fresh food chains and convenience store chains are using community group buying in the form of community group buying, and real estate giants and community property management are crossing borders to build a third force, further intensifying same-city e-commerce retail. Community group buying's own criticisms, even in the current 3.0 era, remain unresolved: stale goods, late delivery, severe losses, unmet expectations, etc. On the community group buying track, after thousands of troops gallop through, whether it ultimately tramples out a broad road or falls into widespread wailing, time will tell.

Chen Haichao | Chief Consultant, Mai Marketing New Retail Consulting Agency

He Nian | New Distribution Community Group Buying & New Retail Research Specialist