Click to read the original article for details Since early 2020, leading community group buying platforms have seen continuous financing waves, and the pandemic has validated the value and business model of community group buying, attracting giants like Meituan, Didi, and Alibaba to enter or increase investment. In the past, countless entrepreneurs have run on the community group buying track. Today, let's look at one entrepreneur's journey in community group buying, hoping their gameplay and thinking can bring some inspiration and reflection to practitioners who have already entered or are about to enter the field.
-01- Two years, from zero to 50 million yuan in GMV In February 2018, Youshang Community Group Buying was born in Shangqiu, Henan Province, with only two "layman" founders at its inception. Yu Cunshen, General Manager of Youshang Community Group Buying, graduated from Dalian Maritime University and worked as a marine machinery engineer for China Ocean Shipping (Group) Company before resigning to start a training education business. Zhang Qian, Product Director of Youshang, worked in the leather and apparel sales industry after graduation. In fact, both young people born in 1989 had already carved out their own niches. In 2018, they accidentally attended an annual meeting of a community group buying platform, were attracted by the model, and decided to jointly enter the community group buying track.
Before understanding the community group buying industry, they had no fresh produce experience or foundation, and were complete novices in the group buying field. At that time, the community group buying industry was still in its early stages, with little experience to reference. In the early days, apart from a few tens of thousands of yuan in savings accumulated over the years, they had no tools that could be called business aids—no office, no warehouse, no development strategy, no employees. They stumbled along, exploring step by step.
Two weeks before the 2018 Spring Festival, with support from a friend, they got their first batch of goods: a truckload of fruits worth over 90,000 yuan from Guangzhou Jiangnan Market, including rare items for the local area like longan and coconut. With products in hand, problems arose: besides the two of them, there were no group leaders. How could they sell a whole truckload of goods? They had no choice but to mobilize relatives and friends—those at home watching kids, those waiting for jobs, those with ample free time—gathered them for a temporary meeting, had them taste the products, and made these "group leaders" confident in their own products.
After much effort, the truckload of fruits was sold, and Youshang officially embarked on the community group buying business. In the early days, they recruited over ten seed group leaders through various connections, but that wasn't enough.
To accelerate development, Youshang started from other angles. First, they printed 100,000 flyers and distributed them throughout Shangqiu. By the end of April, the flyer strategy began to pay off, increasing group leaders from over ten to about 80, but subsequent promotions gradually became less effective. So Youshang sought other angles.
The turning point came on May 19, 2018, when, after meticulous preparation, Youshang held a grand launch event at a well-known local hotel, where old group leaders brought new ones, one bringing two or three, eventually attracting nearly 300 participants. The grand launch event yielded impressive results: within two weeks, Youshang's group leaders grew from 80 to over 170.
Since then, Youshang Community Group Buying has continued to develop in Shangqiu, Henan.
Two laymen, from struggling for a week to get their first order, to achieving monthly GMV of 4 million yuan and annual GMV of 50 million yuan, with a 1,000-square-meter warehouse, covering over 300 residential communities, 120,000 consumers, and over 500 group leaders, and achieving profitability—Youshang took only two years.
-02- Operational Characteristics Unlike many community group buying platforms that burn cash to grab market share, Youshang turned profitable in just two years because it has always taken an unconventional path.
1. No conventional vegetables As is well known, community group buying targeting residential communities needs to quickly open the market and build long-term relationships with consumers, so product selection is crucial. Many community group buying companies prioritize high-frequency products like fresh vegetables when entering the market.
However, in terms of category selection, Youshang's mix is: fruits and vegetables 30%, nuts and milk 10%, restaurant ingredients 30-40%, household daily necessities 10-20%, and popular snacks 10%, with no conventional vegetables as a high-frequency category. Regarding why they didn't choose high-frequency conventional vegetables as the main product, Youshang's General Manager Yu explained: First, vegetables have a low average order value, and Youshang's group leader commission is nearly 20%, making it impossible for group leaders to mark up vegetables, so they are unwilling to sell them hard; second, Henan has a large comprehensive agricultural product market locally, where residents can easily buy fresh vegetables at relatively transparent prices, making it difficult to compete with the local market without advantages.
2. No mini-program Currently, many community group buying platforms use mini-programs, but Youshang has used social groups since 2018. Customers order through group leaders, and product payments are transferred directly to group leaders via WeChat, who then report orders through internal software. After deducting commissions, group leaders transfer the product fees to the company's WeChat account. This seemingly outdated ordering method hides Youshang's clever thinking.
General Manager Yu said that using mini-programs leads to inactive terminals and poor shopping atmosphere, which is not conducive to creating hit products; the operations team also becomes lazier and doesn't proactively think about how to sell better; group leaders and the operations team only think about adding more products, which could evolve into a mall model, deviating from the core of community group buying. Additionally, once products are expanded and the warehouse can't hold them, too many categories mean no purchasing advantage, high inventory pressure, and high costs. Through social groups and group leader ordering, group leaders directly deduct commissions, seeing clearly how much they earn each day, which motivates them; group leaders and the operations team also proactively think about which products sell better and how to make products more popular, pooling wisdom for long-term development.
3. Mid-to-high-end product route Many community group buying platforms reduce product sizes and continuously lower prices to attract consumers, but Youshang has always positioned itself as mid-to-high-end, even high-end, while continuously developing products to strive for "delicious and affordable."
4. Limited to 15 products per day Many community group buying platforms, after reaching a certain scale, frantically add products to their platforms, fearing that a few products won't meet consumer demand.
Youshang, however, has maintained a product schedule planned once a week, covering six days, with 15 products per day, no repeats, for two full years. They believe that the more choices, the more hesitant consumers are to order, and community group buying is about hit product thinking; fewer but better products is the essence. Once products become abundant, it's hard to compete with e-commerce platforms. Fewer products also give better bargaining power in procurement and allow for reasonable inventory control.
5. Group leaders first The focus of the model is crucial in community group buying development. Youshang has always prioritized the core interests of group leaders. When the average commission for group leaders on community group buying platforms was 8-12%, Youshang's group leaders received an average high margin of 15-20%, ensuring they could earn money.
While other platforms struggled with group leaders leaving, Youshang had already implemented strict management systems, signing contracts with group leaders that included clauses like community resources belonging to the company and prohibiting sending unrelated information in groups.
Despite such strict management, Youshang still receives an endless stream of group leader applications, and it implements a last-place elimination system, regularly clearing out weaker group leaders to ensure survival of the fittest. Youshang's entry threshold is also very high: to start a group, a group leader must recruit 150 people into the group within two days, and if monthly sales in the same community don't reach 5,000 yuan, they risk being replaced at any time.
These unique operations distinguish Youshang from other community group buying platforms, allowing it to continuously deepen its presence in Shangqiu and grow to a scale of 50 million yuan.
-03- Youshang vs. National Platforms In industry development, competitors are never lacking. Besides regional competition, Youshang has also faced competition from national giants, but several attempts by giants to enter the region ended in failure for several reasons:
Youshang Community Group Buying: 1. Focus on group leaders Youshang has consistently adhered to a TO B model, treating group leaders as core and developing them as company employees.
2. Understanding local consumer needs Compared to national platforms, regional platforms have a geographical barrier, and they better understand local consumers' needs, taste habits, and supply chains. Based on the special geographical environment of Shangqiu, Henan, Youshang has also honed a solid product supply chain.
3. Refined operations Additionally, because the regional market is relatively small, operations can be more refined in terms of products and group leaders, allowing for timely adjustments to operational direction and greater flexibility.
National platforms: In recent years, national giants like Niwonin and Squirrel Pinduoduo have tried to enter the Shangqiu market but failed to develop as hoped, withdrawing within days. This is because those who go down to the local level are generally franchisees of the giants, not directly operated, so platform resources do not sink accordingly, and the headquarters' advantages cannot be leveraged. Franchisees also lack the boldness to burn cash to grab market share, so they ultimately have to withdraw.
Secondly, many national platforms, after reaching a certain scale, gradually deviate from their main line and develop TO C businesses like drop-shipping, with products increasing from dozens to hundreds or thousands.
Drop-shipping means it's difficult to achieve the next-day delivery promised by community group buying platforms. At the same time, while product proliferation benefits consumers, it's fatal for platforms. When there were only dozens of products, consumers concentrated orders on these products, with a single product generating hundreds, thousands, or even tens of thousands of orders, giving platforms strong bargaining power with supply chain service providers.
Now with more products, a single product might only get a few orders, and platforms lose their bargaining advantage with suppliers. With fewer products, they may also face high logistics costs, leading to a vicious cycle over time.
Moreover, with the listing of multiple products and the shift toward TO C business, giants are no longer benchmarking against community group buying peers but against e-commerce platforms like Alibaba and JD.com, which have abundant product resources. However, Alibaba and JD.com have extremely strong and comprehensive product supply chains, making it difficult for community group buying giants to compete.
Without the pressure of giant competition and capital investment, Youshang continues to optimize. Around December 2019, Youshang first tried community comprehensive service convenience stores, attempting to combine offline and online business for better development models.
In fact, Youshang's success stems from several unique internal development models, avoiding direct competition with giants, and gradually adopting a TO B model during development, making the entire development model more rational.
Youshang's success also demonstrates that even in seemingly crowded tracks, finding niche segments others haven't discovered, continuously deepening the market, honing the supply chain, and empowering group leaders can lead to success.
Youshang's attempt at offline stores validates that community group buying is not purely an online business; it will inevitably move offline, toward community fresh food stores, with online driving offline traffic and offline empowering online. The linkage between online and offline is the more long-term, stable, and healthy development model.