---
title: "Giants Stop 'Throwing Money': Is Fresh Food E-commerce at a Turning Point?"
description: "Shihuituan, labeled with 'layoffs', 'city closures', and '90% business contraction', is temporarily exiting the market, signaling an end to the habit of fresh food e-commerce platforms splurging on user subsidies. Players in the fresh food sector seem to realize that community fresh food markets built on heavy subsidies are unreliable, and the industry is at a turning point."
author: "锌刻度"
publisher: "New Distribution"
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published: "2021-09-06"
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# Giants Stop 'Throwing Money': Is Fresh Food E-commerce at a Turning Point?

> Shihuituan, labeled with 'layoffs', 'city closures', and '90% business contraction', is temporarily exiting the market, signaling an end to the habit of fresh food e-commerce platforms splurging on user subsidies. Players in the fresh food sector seem to realize that community fresh food markets built on heavy subsidies are unreliable, and the industry is at a turning point.

**Click to read the original article for details**
Source: Zinc Scale (ID: znkedu) Author: Meng Huiyuan
Shihuituan, labeled with "layoffs", "city closures", and "90% business contraction", is temporarily exiting the market, and the habit of fresh food e-commerce platforms splurging on users is coming to an end.
Players in the fresh food track seem to finally understand that the community fresh food market built solely on huge subsidies is "unreliable".
Previously, Tongcheng Life and Shixianghui, which were in the top tier of community group buying alongside Shihuituan, "exploded" one after another, triggering a major industry earthquake. Since then, fresh food e-commerce platforms have begun strategic contraction and changed their attitude towards community group buying.
Undoubtedly, community group buying platforms are entering a reshuffling period, and the fresh food giants that once stood behind them with cash and high-profile entries have also suffered a staged major defeat.
**Community tactics out, platform strategy in**
"I was at work in the morning, and in the afternoon suddenly there was a meeting about internal integration (layoffs)" "All employees were laid off, and the city's business was completely closed and withdrawn"... Red Star Capital Bureau's report showed the farce staged by Shihuituan.
> **Of course, the internal letter titled "A Self-Reform Focusing on Users' Long-term Value" previously released by Shihuituan had already laid the groundwork for the "sudden change": "During this period, more players and capital flooded into the community group buying track, sparking subsidy wars that disrupted the development rhythm of the entire industry. To cope with competition, we also temporarily gave up profitable growth and focused on expansion."**
Giants offered heavy money to compete for the community group buying market, only seeking rapid expansion for data confrontation, but as market regulation tightened, it brought about a collapse of reputation and user abandonment.
According to the domestic online consumer dispute mediation platform Diansubao, in the first half of 2021, almost all head community group buying platforms were caught, receiving the most user complaints. Problems mainly focused on returns and refunds, product quality, false promotions, after-sales service, and online fraud.
Thus, platforms like Tongcheng Life and Shixianghui exploded, further dimming the halo of head community group buying platforms.
Against this backdrop, the community group buying craze is gradually cooling, and self-operated platforms are becoming the backbone of fresh food e-commerce growth.
According to 36Kr, during the peak period when Taobao Grocery was used as Shihuituan's traffic entry, Taobao Grocery's traffic accounted for 30% of Shihuituan's total orders; currently, this proportion has dropped to 5-8%.
Now, according to Shihuituan founder Chen Ying, Shihuituan will undergo regional integration with Alibaba's MMC business group (community e-commerce business group) in some areas.
This move is reasonable, after all, this new department, established in March this year, focuses on community group buying business, integrating Ling Shoutong's community group buying business and Hema Market business, and is called "Maicai Cai" by insiders.
Moreover, the self-operated platform Taobao Grocery has been re-endowed with community group buying functions: "Taobao Grocery mainly does community group buying business of ordering today and picking up tomorrow. Currently, business expansion in each city is limited to one community group buying operator per city."
The outside world can see that Taobao Grocery is trying to "break out of the circle", but its pace of exploring the community fresh food market is no longer as aggressive as when Shihuituan was "throwing money around".
It only made a strong presence through content placement in the hit variety show "Back to Field 5", and also created usage scenarios through segments like ingredient collection, food preparation, and tasting communication, continuously outputting Taobao Grocery's "affordable and convenient" features, emphasizing "order today, pick up tomorrow" to promote rapid user conversion through services.
**"Burning money" stops, industry reaches turning point**
The above attitude change is actually that fresh food giants, represented by Taobao Grocery, have finally learned their lesson under the irreparable decline of community group buying.
It can be said that the arrival of the reshuffling period for community group buying is caused by multiple factors. The main one is the multiple rounds of "burning money" subsidy wars launched after giants frantically entered the market.
During that period, there were overwhelming advertisements, wildly distributed coupons, suddenly appearing pickup points, swarming group leaders, and users rushing in just to "fleece wool"... However, facts have proven that relationships maintained purely with money are not reliable.
Community group buying platforms attracted users with high subsidies and low prices, but apart from price, whether it's fruits, vegetables, or daily necessities, these essential products are not exclusively sold by community group buying platforms.
And poor quality control is enough to "attract customers easily but retain them with difficulty", especially when prices fluctuate, then even the only advantage is gone.
Although group leaders can be given commissions to help with last-mile delivery, platforms find it difficult to effectively monitor the terminal link, thus cannot guarantee the quality of fresh products. Additionally, since stable commission income cannot be guaranteed long-term, it is actually difficult to retain individual group leaders.
Even competitors of community group buying platforms, offline supermarkets, have found a good way to counterattack using mini-programs in their battle of wits with community group buying platforms.
When community group buying platforms can no longer provide subsidies due to tight capital chains, it is the best time for offline supermarkets to regain the market. After all, the forced "stay-at-home" period is long gone, and the days when community group buying platforms enjoyed exclusive user "favor" are over.
(Offline supermarkets use mini-programs to "counterattack" online fresh food e-commerce)
In other words, the business tentacles of fresh food giants have not yet extended to every corner of the community, and their existing strength is insufficient to support such aggressive moves.
If they want to take shortcuts through community group buying platforms, reality will say "no" to them, just like the current widely criticized community group buying services, which can't take care of both "head" and "tail".
No matter from which angle, community group buying is not advantageous. So why do the giants responsible for funding the occupation of the community fresh food market insist on staring at "a few scallions"? This may be related to their old way of thinking from when they aggressively entered food delivery and ride-hailing.
Whenever there is a new market trend, giants entering will trigger subsidy wars. Whoever can persist to the end of the red ocean competition and form a market leader position can raise prices to harvest consumers and recoup previous investments. Looking at the community fresh food market, fresh food giants have kicked a steel plate this time.
This is a business with a relatively low threshold, almost anyone can do it. Community group buying platforms that experienced brief glory due to price advantages, the moment they lose their only price advantage, users will also shift to other consumption channels with lower or equal prices.
And if they insist on price advantages, players like Tongcheng Life and Shixianghui are typical examples of capital chain rupture.
The shift of community group buying from "hot" to "cold" declares the phased failure of fresh food e-commerce platforms in community strategy. But perhaps this collective failure is not a bad thing; instead, it may prompt fresh food e-commerce to think about the real "future" development path.
**How to reshape the barriers of fresh food e-commerce**
From the current situation, it is estimated that few fresh food e-commerce platforms entered the market based on users' actual needs and after measuring their own true strength, having thought clearly about "what to do".
The outside world can understand that platforms want to make quick money but don't want to put in effort, but if "your supply" does not match "my demand", the result is being "abandoned" by users.
In this era of material abundance, the general public does not lack purchasing channels for fruits, vegetables, eggs, milk, and daily necessities. Competing in an industry with such a low entry barrier, with the strength of fresh food e-commerce giants, the key is how to identify market gaps and fill them.
"Fresh products are difficult to form competitive barriers." An internet observer told Zinc Scale that fresh food e-commerce platforms are continuously increasing investment in supply chain, warehousing, and terminals, but they are hard to distinguish winners in the short term. This is not only a problem of long-term investment in infrastructure like supply chain, but also a problem of product selection.
Just like online community group buying, fresh food e-commerce, and offline fresh food supermarkets, street vendors, etc., the high homogeneity of products makes it difficult for them to truly widen the competitive gap. "Without unique product strength, apart from offering low prices, they are simply unable to cope with many competitions."
(Online and offline fresh products are highly homogeneous)
Those fresh products with more regional characteristics can be covered by some fresh food e-commerce platforms whose business lines span the whole country. For example, platforms like Alibaba, JD.com, and Meituan all have their own delivery departments, which can fully fill this market gap.
Furthermore, if we consider the idea of creating unique product brands along regional specialty fresh products, there may be even more surprises.
Globally, at the product brand level, the United States' "Idaho potatoes" and Japan's "Kobe beef" are world-renowned; at the national and industry brand level, Japan emphasizes precision agriculture, France manages geographical indication products, and New Zealand uses national strength to achieve the influence of the "Zespri" brand, which has gained consumer recognition in both international and domestic markets.
> **According to relevant information, currently, China's large agriculture is mainly grain-based, and large-scale production in large agriculture is relatively mature, but lacks brands; medium agriculture is mainly cash crops, which can be scaled after land transfer, but standardized management is chaotic, and trust in food safety still needs to be built.**
Due to the lack of standardization and imperfect logistics and sales channels, the potential of many high-quality agricultural products has not yet been developed.
It can be foreseen that if these problems can be solved, transforming traditional fresh products that lack standards, brands, trademarks, light packaging, and traceability into new fresh products with standardized production, brand management, information traceability, and e-commerce sales.
At that time, it will not only fill the gaps in the domestic market but also enable oneself to gain differentiated competitive advantages and establish a true fresh food barrier.
**Are you "watching" me?**


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