Click to read the original article for details In the community group buying track, among the old players, three have become two; some have gone bankrupt and left, some are shrinking their territory, and some have coughed up blood and recovered. Among the newcomers, five have become three; two are leading at the front end, one is self-financing, and the remaining two have yet to recover. Community group buying, the entire track is undergoing reshuffling, integration, and standardization. Among the old players, Tongcheng Life was forced out, Shihui followed decisively and exited. The only two old-timers left at the table still face the left-right game of adopted sons and abandoned sons. The new three groups—Meidi Duo—have not yet had anyone leave, but last year's bold ambitions of 200 billion, 150 billion, and 100 billion are now gone. The pace of this stage of the track has been much faster than outsiders predicted. In turbulent times, giants have hit walls one after another, but this does not mean that the essence of the community group buying business has problems. Recently, New Distribution had an exchange with Mr. Song Zhiming, founder of the community group buying batch project Xiamang and one of the initiators of the Group Alliance. As one of the earliest entrepreneurial veterans of the community group buying model, even under the squeeze of giants, he is still running fast. What happened to community group buying? What is the key link in community group buying? Through communication with him, we understand his entrepreneurial journey and insights, and explore the underlying logic behind community group buying. Transition from Errand to Group Buying In 2015, Song Zhiming caught the rise of the "errand" business and made an errand crowdsourcing software called "Kuaipao" in Heze, Shandong. Thanks to the strong correlation of the errand business, he quickly accumulated 50,000 sticky users. Later, by chance, he shifted from errand business to group buying. Once, while eating at a friend's house, Song Zhiming took a few photos and videos of his friend's vineyard and posted them on Moments. Immediately, a large number of friends inquired about prices. He roughly estimated a price and had the errand customer service start taking orders. In the time it took to eat a meal, by 5 p.m. that afternoon, more than 10,000 jin of grapes were sold out. According to Song Zhiming's recollection, "On the one hand, we caught the rise of WeChat, and on the other hand, we caught the transformation of WeChat business. Under these two windfalls, subsequent Moments posts, whether for seafood, fruit, frozen buns, or various other categories, almost all sold out." The earliest model of Xiamang was very simple: pre-sale on Moments, direct sourcing from the base, and then delivery to users' homes through the errand business. Later, after establishing communities, Song Zhiming became a big group leader. But this new business format developed too quickly and soon faced a problem: with a large number of potential users not yet tapped, new people couldn't enter the private traffic pool. The nearly forty communities built by his team were all full, and the customer service responsible for adding people on WeChat and taking orders was overwhelmed. Whether it was penetration into a single local community or coverage of the entire prefecture-level city, the idea of recruiting agents in various residential areas came to mind. In April 2016, Xiamang recruited its first batch of group leaders, gradually moving from legitimate errands to group buying. Group Buying Group Leader vs. Platform Group Leader Returning to Community Group Buying 1.0 As mentioned in previous articles, community group buying 1.0 is the community era that empowers group leaders, community group buying 2.0 is the community e-commerce era that weakens group leaders, and community group buying 3.0 is the "new store business" era of professionalized group leaders. These three models do not progress with time but continue to derive over time. At that time, Xiamang's model was more similar to community group buying 1.0, unlike today's community e-commerce "platform" model. It was not about having group leaders simply and mechanically forward links to communities and then giving commissions, but rather using a community relay form, where group leaders uniformly purchased from the platform and then sold to C-end users. The platform gives the group leader a purchase price, then a suggested price, and provides copy and materials. The group leader can increase the price based on the suggested price but cannot break the price. Based on the background of micro-wholesale and WeChat business wholesale, Song Zhiming called this model micro-wholesale in the early days. In 2018, to empower agricultural product upward, Song Zhiming left Heze and partnered with friends to build the community group buying platform "Xiaoqu Ren," starting from Chengdu and later expanding to nearly ten prefecture-level cities including Xi'an, Guiyang, Hefei, Zhengzhou, and Changsha. Xiaoqu Ren used the more typical "platform" model of community group buying. For Song Zhiming, who had done "micro-wholesale" group buying, he found through comparison that in community group buying 2.0, there is more of a game relationship between group leaders and the platform, and the drawbacks of the group leader side gradually become obvious. 1. Group Leader Income The most direct feedback is the return to group leaders. The output of a single group leader has increased compared to before, but the "commission" has not increased. According to past experience, when a group sells a product with a performance of over 1,000, the group leader can earn 200-300 yuan. Now, with a group leader selling 3,000 in sales, they still only earn 200-300 yuan. 2. Group Leader Enthusiasm In terms of community atmosphere, platform group leaders mechanically push copy and links into the community, lacking an overall sense of community operation, purely treating the group leader as a business. Most people still feel they are doing a part-time job, doing tasks, and earning a little is a little. Group buying group leaders are equivalent to entrepreneurs, with goods rights and pricing power, and their subjective initiative crushes platform group leaders. 3. Group Leader Persona The slogan of community group buying 1.0 is to empower group leaders, make them independent, and become KOLs in their own groups. But once group leaders push platform links, users directly establish a relationship with the platform, and over time, the group leader's personal influence will be worn away. In addition, as a link promoter for a group buying platform, neighbors never feel you are starting a business; they always feel you are working for the platform, which is completely two images: salesperson vs. entrepreneur. After thinking through these key points, in 2019, Song Zhiming began to re-establish a new project—community group batch Xiamang, returning to community group buying 1.0, empowering group leaders. Recommendation-Guided Consumption vs. Shelf-Display Sales The platform's logic is shelf-display sales, like a supermarket, putting as many SKUs as possible. As consumers continuously swipe the screen, it's like shopping in a supermarket, browsing and buying, exploratory consumption, which weakens the existence of group leaders. The sales method of community group buying that empowers group leaders to sell goods is called recommendation-guided consumption, which is a social new retail based on trust relationships between semi-acquaintances. It weakens product richness and brand endorsement, focusing mainly on two categories: first, essential products that meet family needs; second, seasonal products like mooncakes, tangyuan, and zongzi. So, the platform's logic for hitting bestsellers is based on brand, such as directly reducing the price of Nongfu Spring, which normally costs two yuan, to 0.99. But if suddenly faced with a "Nongfu Baquan," the platform is instantly helpless. Instead, group leaders actively reach out and guide, recommend more cost-effective single products, proactively plant seeds for users, popularize the core advantages behind the products, and the user experience after purchase, guiding semi-acquaintances in the circle to participate in group buying. Recommendation-guided consumption does not rely on brand output but directly outputs persona. Consumers not only know the platform behind the product but also know which residential area, which building, and which unit the group leader is in. For example, when there is an after-sales problem on the platform, such as product defects, users will feel that the platform's products have problems, but if they don't trust the platform, they naturally won't trust the group leader either, because the group leader is working for the platform. After comparing the two models, Song Zhiming found that in Xiamang's current model, group leaders are like independent retail formats. When the above problems occur, group leaders often directly take over the problem, helping users deal with defective products. At this time, it is the neighbors who feel a bit embarrassed. At this point, the group leader's identity is also shifting from platform salesperson to platform partner, starting to pay with persona and based on trust. Then trust will force group leaders to ensure quality and maintain the accumulation of their persona. If a new brand wants to debut, it either advertises overwhelmingly or floods channels. But both methods are very difficult for manufacturers. Nowadays, group leaders are a new rising channel. If community group buying platform operators are compared to new-style distributors, then the platform's power will be significantly stronger than traditional distribution business models. A platform with 1,000 group leaders is equivalent to having 1,000 salespeople. These new-style salespeople will use internet social tools to create new pre-sale sales models. Moreover, these new-style salespeople are stronger than traditional distribution models in terms of both consumer stickiness and product operation. At the same time, these 1,000 endpoints are also free to do PR output for your brand in the most efficient and down-to-earth way. Now, Song Zhiming and others have organized and united more than 100 community group buying players with similar models. In the future, if this sales method can blossom across the country and cover a large number of cities in various provinces, it will surely open a new path for commodity circulation. -END- PS: The 2021 (4th) China FMCG Conference hosted by "New Distribution" is about to open in Shanghai. Focusing on industry trends + practical cases + growth docking as the core, 3,000 FMCG practitioners will gather at the event. 10 thematic forums involve new retail O2O, community group buying, short video live e-commerce, distributor transformation, rise of new consumer brands, new wine beverage interpretation, distribution B2B supply chain, omni-channel marketing, B2B2C new technology applications, etc., with operators in various segments bringing the latest case interpretations. Some of the heavy guests confirmed so far include: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, global expert partner at Bain & Company, former vice president of marketing for Coca-Cola China; 4. Chen Xiaodong, senior vice president of Nestlé Greater China; 5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, general manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, vice president of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, general manager of Kuaishou E-commerce SKA Brand Operation Center; 10. Li De, e-commerce general manager of Gold Hongye Paper Group ..... A grand event for FMCG people, you must be there! Are you "watching" me?