Click the image for details. In 2019, several hot retail topics (new retail, borderless retail, unmanned retail) have gone quiet, and everyone is quietly testing and cultivating. The focus that remains hot is on the community group buying model. News reports of companies raising hundreds of millions in just a few months keep coming. There's no choice—there aren't many new topics, so naturally people pay more attention. Recently, many traditional retail enterprises have been communicating with me, asking whether they should start community group buying, how to do it, and whether there are any directional issues. My personal observation and analysis lead to a clear conclusion: It's feasible, and you can do it. Below are some viewpoints from these exchanges, which traditional retail enterprises may find useful. Guide:

  1. The value of physical retail engaging in community group buying
  2. Inventory of action-takers
  3. Case interviews
  4. Future trends Conclusion first: Why do it? • Optimistic and proactive: Community group buying and offline physical chain retail are a perfect combination. Whether large or small stores, connecting users through community group buying expands online orders and gains incremental business. It brings the O2O business dream to life in a particularly down-to-earth form, actively expanding the online market. • Conservative and steady: If we don't do it, our users will be divided up by other community group buying platforms, continuously siphoning off the purchasing power of users around our stores—first fresh produce, then FMCG. This is a battle to defend users that we must fight. Pain points have long existed: The retail industry, especially small-format retail, self-deprecatingly says, "We worry like we're selling drugs, but earn like we're selling cabbage!" It's a typical long-cycle, operation-heavy format. The return cycle is long, and growth is typically linear. There's no room for exaggeration; you must be solid to survive. Now, several challenges lie ahead: labor shortages, high rents, and low gross margins. None are easy to solve. Whether increasing revenue or cutting costs, we need new approaches. We've tried self-built e-commerce, WeChat official account stores, value-added services, cross-industry integration, home delivery, unmanned retail, B2B... We've spent no small amount of money and paid no small tuition, but results are scarce. It's more reliable to focus on franchising and squeezing supplier payment terms. So when facing this new wave of community group buying, the more companies have tried O2O and new retail before, the more cautious they are, quietly observing and researching. I. The value of community group buying to physical retail chains 1. Category expansion (mainly for chain convenience stores and community supermarkets) Fully utilize the current community group buying format of pre-sale plus in-store pickup. Due to its category characteristics, it avoids the core difficulty of in-store fresh produce short-shelf-life product loss, making fresh produce an online SKU in this form, expanding valuable new categories. Similarly, as user habits gradually form, including service products and other categories that can't be regularly stocked in stores, it truly broadens the category operation line.

Phase 1 - Add fresh produce: Expand categories while attracting customers to the store.

Phase 2 - Add new products: The logic of new products is based on the user profile around your store. It can be high-margin gift sets, the most popular IP products, or high-margin health foods—it varies.

Phase 3 - Add services: Financial products, community home services—everything is a commodity. This is the community group buying 2.0 model. A breakdown of community consumption types in a first-tier city: Core competitiveness: Why would users buy these categories from your WeChat group? Besides price, it's because there's store and brand endorsement, and the store is close enough to consumers. In the winter in Northeast China, if delivery doesn't come to your door, you have to go downstairs to pick it up. Stopping by the small store on your way home from work to pick up yesterday's order—that logic works. 2. Traffic game: two-way traffic between online and offline Why does Suning Xiaodian dare to sprint recklessly? Essentially, it's a "traffic story." Currently, traditional e-commerce like Vipshop and JD.com have customer acquisition costs exceeding 200 yuan, and Miss Fresh exceeds 250 yuan. So Suning, having transformed into China's fourth-largest e-commerce platform, lays out various types of physical chains nationwide to achieve low-cost customer acquisition and expand online sales. For physical retail stores, it's obvious that user pickup brings customers to the door, turning opportunities into offline shopping. The logic of "display is sales" is nothing more than this. Because small store sales are fundamentally based on immediacy, urgency, and impulse, not planned shopping like hypermarkets. So every customer who enters the store is our most precious transaction opportunity, and the pickup users that community group buying brings to the store daily are the most valuable incremental traffic. 3. Managing people: improving store manager compensation Today, the hardest part of store operations is people. On one hand, frontline staff costs are rising; on the other, it's hard to recruit suitable employees, and turnover rates remain above 30% year-round. Without stable employees, you can't conduct stable professional training and improvement, can't serve users better, and ultimately fall into a vicious cycle. Store staff treat retail jobs as temporary stops. What if the store manager becomes the group leader, and the incremental income from community group buying is shared with the store manager? What would that look like? A large group of 400+ people, with 30+ natural orders per day, and a well-operated community can achieve daily sales of over 3,000 yuan. Sales largely depend on the group leader's operation. A quality group leader can earn nearly 10,000 yuan per month in additional online profit sharing. Add their regular salary, and I think such income can inspire excellent retail talent to stay. This natural amoeba-style, results-oriented model—where the company provides the platform and employee capabilities directly convert into income—is very suitable for traditional retail talent development. With talent, you can operate users well through communities, and these users are precisely the regular residents in the community—gossip, daily necessities. Through the group, they get to know each other, and in the store, they see each other often. "Auntie Zhang, new rice arrived today; I saved a bag for you. I'll bring it to your home when I'm free. Eggs are on sale today; order directly in the group!" Such a store is vibrant and competitive, and such a community is warm. 4. Strengthen member data acquisition and operation service capabilities, deeply understand the value of members and fans The membership system has always been the core of retail terminals. Hypermarket stored-value cards firmly lock in corporate group purchases and employee benefits, while chain convenience stores have been unable to expand stored-value card business due to limited SKUs, especially lacking fresh produce, rice, flour, and oil. Using community group buying and mini-programs, you can effectively acquire and accumulate user consumption data, thereby mastering precise user profiles. In future business battles, members are the most important enterprise operational data. By gradually converting members into fans through operations, you build the core foundation for channel branding. • In the past, the most valuable thing was store location.

• Now, the most valuable thing is traffic.

• In the future, the most valuable thing is fans. 5. The shortest path for new product trial sales Some community group buying platforms have already cooperated with brand owners to conduct targeted new product trial sales in suitable community groups, achieving very good results. Through promotions, buy-one-get-one, and other means, they launch new products, get immediate consumer feedback, and judge acceptance based on repurchase rates. It evolves from "people finding goods" to "goods finding people." The entire path is clear and simple, with little pressure on everyone. Once there's good feedback, promotion is immediately strengthened. This model, which directly reaches consumers without requiring extensive display or promotional costs, has already attracted active attention from participants. 6. A new channel for selling near-expiry products Previously, stores feared near-expiry products the most. They either returned them to distributors or manufacturers, or discounted them with no takers. Community group buying offers a new model: large-pack discounted sales. Some platforms cooperate with merchants to launch special discount group buys: genuine products, clearly marked expiry dates, discounted prices, large packs not sold individually, attracting a group of community consumers. The benefits are obvious: consumers clearly understand why it's cheap, and they know what they're buying—a typical user segmentation logic. Handling surplus stock is a big market. Besides professional surplus platforms, community group buying is also a good channel model. II. Inventory of action-takers In community group buying, both pioneers and latecomers are precisely physical retail enterprises. At the beginning of 2018, the first to fire the shot at scale was Xingyou Preferred, incubated by the veteran chain franchise convenience store brand Furong Xingcheng. Similarly, Xingaoqiao, with the same genes, incubated Koala Select. At once, a batch of retail enterprises began to lay out community group buying businesses. But each enterprise's starting point, purpose, and operational approach differ. Broadly, they fall into two categories, representing two mainstream future strategies: First, incubate new brands, with the group buying platform business independently financed and developed, not only relying on the original business market, rapidly expanding nationwide. The most typical is Furong Xingcheng's Xingyou Preferred. The latest news says monthly GMV has exceeded 300 million yuan. With Hunan as its base, it's expanding nationwide, mainly recruiting small store owners as franchise group leaders. The franchise system of over 10,000 stores and supply chain laid a solid foundation for the Xingyou Preferred project. Similarly, Koala Select, with franchise chain and B2B genes, is rapidly expanding its group buying territory through direct operation plus regional franchising, even reaching down to village and county markets. Originating from Suzhou, the fruit chain brand had a modest base, but Linlinyi, which went all-in on communities, quickly raised funds and sprinted, with monthly GMV exceeding 100 million yuan, becoming a leading community group buying platform recently. For group leader selection, it mainly focuses on mothers, while also considering small store owners. Second, the more steady approach, basically revolving around existing stores, treating community group buying as a member marketing system, more like a collaborative department. In this list, we see a group of well-known retail brands: Yonghui, Pagoda, Suguo, Qindama, Fresh Legend, Dmall, and others. At this stage, small formats are following closely. Chain convenience stores, fruit stores, and community fresh supermarkets have all launched their own community group buying businesses, actively trying. The reason, as we analyzed earlier, is that small formats have limited offline SKUs, making it very suitable to add new products online and drive offline sales. III. Case interview I specially interviewed an old friend from a traditional chain convenience store in Putian, Fujian—Wenxian Convenience. Starting retail in 1996, by 2018 it had nearly 300 directly operated stores, and its Kuaichao B2B platform served nearly 500 small stores, with expected 2018 performance exceeding 500 million yuan. Its store density in Putian is very high, forming a good location pattern and competitive barriers. Such regional monopoly local brands operate very solidly and are highly representative among chain store brands in many third- and fourth-tier cities nationwide. Chen Fusen (Mr. Woniu), as the head of Wenxian Convenience, how does he view the community group buying model? Q: Wenxian Convenience's new retail exploration has never stopped: unmanned retail, B2B, etc. What are the plans for 2019?

A: For unmanned retail, we just play with self-service vending machines. Currently, Kuaichao B2B ordering is just to gain more market share on the premise of not losing money.

In 2019, B2B will introduce loose policies for Kuaichao franchise and rebranded stores, benchmarking JD Convenience, also to protect the regional market.

We're more focused on scaling up the store manager direct management model from 2018, leading fellow villagers to expand direct-managed stores (Bianli Chao) into fourth-tier counties in other cities.

Q: Do you plan to try community group buying? Is it for offense or defense? What are the specific operational ideas?

A: We're launching (in internal testing) a community group buying-like project: Wenxian Meipin, which I call social e-commerce:

  1. Integrate with our physical store membership system. All stores will launch face-scanning interactive systems within the year, integrated with the membership system, enriching member tags for precise marketing based on the company's brand strength and image.

  2. Help employees enhance personal brands and networks from top down, guiding them to provide good offline service every time. This is also an opportunity to build networks and gain social recognition. Use employee personal recognition and networks for sharing marketing. Of course, building community groups is one way; we need to help employees improve their ability to be good group leaders.

Q: I see. On one hand, you're going down-market with store franchising; on the other, you're using store-based community groups to operate users and train store managers. How do you position the entire business model?

A: "Aim high, stand firm" and "an important supplement to the convenience store chain entity format" are my positioning for this social e-commerce "Wenxian Meipin"! We will be steady and sure. The current priority: building the supply chain for social e-commerce and cultivating employee group leader capabilities! There are at least 70 regional chain convenience store brands in China with over 100 stores in local cities. Most are observing and learning, and a considerable number have quietly started trial operations. IV. Future development trends A not-too-bold prediction: In 2019, all chain convenience stores, fruit stores, and a considerable number of community supermarkets and hypermarket retail systems will start community group buying-like businesses. For retail stores, this is an enhanced member management + marketing tool. Solidly serve your users; service is the foundation of physical retail. As Mr. Chen said, be solid and steady. The pioneers, with more ambition and financing ability, will sprint recklessly on this track, betting on a big opportunity. The most interesting future lies with traditional hypermarkets. At this stage, they've chosen to observe, or even invest in some small community group buying platforms for business testing. But large stores themselves are not suited to the current model of community-based pickup points; they're better suited to combining with home delivery, and the front-warehouse model offers greater imagination. Advantages of large stores: • Massive SKUs and in-store shelf inventory

• Strong centralized procurement capabilities

• Large in-store customer base with low acquisition costs Disadvantages are also obvious: • Limited locations in a city

• High fulfillment costs for home delivery

• Organizational structure and hardware/software systems need systematic transformation Once community group buying establishes a dense network of community pickup points, and a small number of front warehouses are developed, the large store model can transform into a more flexible retail combat matrix. RT-Mart's B2B business development follows this logic and is currently growing relatively fast. For B2C business, whether pickup or home delivery, large stores seem to have multiple possibilities, but adopting only one is not cost-optimized. So I suggest an overall plan: member-centric, providing a comprehensive new marketing approach across three dimensions (in-store, home delivery, community). As consumer consumption scenarios become increasingly fragmented and stratified, whether through IP marketing to build channel private brands or fan marketing to build core user groups, retail enterprises must always pay attention. Community group buying is just the surface; new models will continue to iterate. The essence behind it is the constant of change. Wang Jun: Famous new retail expert. Chief retail analysis expert and special columnist for New Distribution. Previously worked at: Quanshi Convenience Group, HNA Zhanghe Cloud Warehouse, and Radio and Television Group. Has rich practical experience in FMCG supply chain and new retail channels. Has conducted in-depth research on innovative fields such as community group buying, unmanned retail, and IP commercialization. Extended reading from the author's community group buying column: If you're interested in the above content, feel free to scan the QR code to follow the Community E-commerce Observer public account. For more questions on how to do community group buying, welcome to the "2019 (5th) FMCG + Internet Conference"—Community Group Buying Theme Summit Forum to discuss with industry leaders! New Distribution will hold a grand community group buying theme summit forum on March 17 at Chengdu Longzhi Dream Hotel. We will conduct in-depth communication with brand owners, startup platforms, supply chain enterprises, and senior industry experts on the topic "Community Group Buying: The Third Pole of Chinese Retail." We hope that through high-quality sharing and discussion, brand owners, distributors, and retail enterprises will gain a clearer understanding and deeper awareness of community group buying e-commerce. In addition, on the evening of March 17, we will invite leading domestic investment institutions, community group buying entrepreneurs, and supply chain service enterprises to hold a high-end networking dinner. We hope that through our connections, we can help enterprises achieve new performance growth and bring more development possibilities to participants in various industries. ★ Confirmed speakers (as of now) ★ Li Botao Vice President of Niwoni Supply Chain In 2011, Niwoni early on conducted group buying activities by residential community. In September 2016, the Niwoni platform was officially established, pioneering the classic community WeChat group buying approach in Changsha. In March 2017, Niwoni's annual net profit reached 10 million yuan. In January 2018, Niwoni became the first community group buying platform to launch a mini-program tool; the mini-program launch drove a 40% month-on-month increase in platform sales. In June 2018, Niwoni received tens of millions in investment from GGV Capital, becoming one of the earliest community group buying teams to receive venture capital. Lu Zhihan Co-founder of Shixianghui Shixianghui was founded in December 2017. Starting in 2016, it promoted the community group model at Benlai Life, experiencing several rounds of model iteration and exploration in fresh e-commerce B2C, O2O, and new retail. In May 2018, it received angel investment from Xinyuan Capital. In August 2018, it completed a 100 million yuan A-round financing led by Xianfeng Qiyun Fund, with Xinyuan Capital following. In December, it completed a $30 million B-round financing. To date, Shixianghui has covered more than 50 cities, with dense coverage in provinces including Zhejiang, Jiangsu, and Jiangxi. Monthly sales exceed 100 million yuan, with nearly 20,000 platform group leaders. Lian Jie Founder of Dingdantu Founded in 2016, Dingdantu is a "group procurement" platform serving community group buying retailers, providing SaaS systems for small and medium-sized community group buying companies or traditional offline stores in third- and fourth-tier cities. Dingdantu has spread to 1,200 counties, with nearly 10,000 active group leaders. In April 2017, it completed a 5 million yuan angel round. Tang Guangliang Founder of Koala Select Koala Select is a community group buying project incubated by the FMCG B2B platform "Xingaoqiao," launched in May and officially launched in Changsha in July. Koala Select's special feature is using convenience store owners as group leaders. Within 30 days of launch, it covered over 1,300 group leaders, with average daily sales reaching 120,000 yuan. In September 2018, it completed a 20 million yuan angel round led by Galaxy Creation Ventures. Xiao Zhilong CEO of Linlinyi Linlinyi originated from Xianguo Yihao Community Group, founded in 2015 as a fruit new retail brand combining online and offline, currently with 18 chain stores and annual sales of 200 million yuan. Linlinyi Community Group was established in October 2017 and officially launched in March 2018. In October 2018, Linlinyi announced completion of a $10 million A-round financing, co-led by Source Code Capital and Hillhouse Capital, with Sequoia Capital China following. More guests are being invited... Learn more about the main venue Review of previous conferences Click "Read Original" to register enthusiastically...