Giants increase their stakes, capital competes, how far can the revitalized community group buying go? As epidemic prevention enters a critical phase, community group buying has not only become an important channel for consumers to buy groceries but is also regarded by the industry as one of the most promising trends of 2020, attracting a wave of entrants to compete. In the past month, whether it's e-commerce giants like Hema, JD.com, and Suning, or traditional supermarkets such as Yonghui, Better Life, and Walmart, all have been actively developing community group buying models. With giants increasing their stakes and capital competing, how far can the revitalized community group buying go? **-01- Location advantages highlighted, booming under closed management Due to closed management and other prevention measures, ordering online and receiving goods by residential community has become a way for residents to purchase daily necessities. During the epidemic, orders for community group buying merchants surged, and such service platforms also entered a window period for accumulating users. Data from WeChat Mini Programs shows that from New Year's Eve to the seventh day of the new year, the number of transactions for fresh produce and fruit mini programs increased by 149% year-on-year, and community e-commerce transactions increased by 322%. As of February 14, visits to fresh produce mini programs increased by 168% year-on-year, and community e-commerce increased by 83%. It is understood that during the Spring Festival, the leading community group buying company, Xingsheng Youxuan, relied on physical convenience stores and used a "pre-sale + self-pickup" model to provide users with services for vegetables, fruits, meat, poultry, and aquatic products. The average daily order volume per store increased by more than 100%. In Wuhan, Xingsheng Youxuan's self-pickup stores resumed work early, and many stores saw daily orders exceed 3,000, with the Wuhan Vanke Jinyu Lanwan Central Garden store reaching 6,300 orders in a single day. In addition, major supermarkets with offline stores have also launched community group buying services, taking this opportunity to develop online. According to the Wuhan Commerce Bureau, 16 supermarket companies, including Wushang Liangfan, Zhongbai Warehouse, Zhongbai Lawson, Walmart, and Carrefour, have started community group buying models to provide local residents with delivery of daily necessities. On February 27, Better Life invested to establish Xiaobu Youxian Commercial Company, officially entering the community group buying track. Wang Tian, chairman of Better Life Group, believes that "group buying" is an opportunity for physical retailers to develop online. He said: "Community group buying is traffic at the very front end—the community within the last 100 meters—traffic that supermarkets usually cannot reach. Based on high-frequency and strong demand for daily household groceries, it ensures high repurchase and stickiness. Later, it can be used for membership product monetization and conversion." It is reported that in January this year, Better Life supermarket sales revenue increased by 43% year-on-year, online home delivery business grew 3 times month-on-month, with an average order value exceeding 120 yuan. An analyst at China Merchants Securities pointed out that due to epidemic control, people find it hard to go out, and combined with the development of community group buying over the past two years, mature conditions have accumulated: customer acquisition costs are almost zero, logistics and distribution systems are developed, and social e-commerce is mature. These have prepared the conditions for community group buying to regain vitality. **-02- Giants compete, industry accelerates reshuffling Catalyzed by the epidemic, community group buying has not only become a main channel for residents to buy groceries but is also regarded as one of the most promising trends of 2020, attracting many entrants. On February 15, Hema CEO Hou Yi posted: "Snow in Beijing and closed districts in Wuhan bring huge challenges to delivery. Hema insists on innovation, breaking the original model, and switching to community group buying to still provide consumers with quality service." Although Hema officials stated that community group buying is just an innovative attempt during the epidemic, Alibaba's increased investment in community group buying is an indisputable fact. On January 9, Shihuituan completed a new round of financing of $88.3 million, with Alibaba as one of the investors. Almost at the same time, JD.com also re-entered the community group buying track. Under JD 7FRESH, Youjia Puzi, Qixian Supermarket, Qixian Life, and other formats launched group buying services like "Xiaoqi Pin" to meet the special needs of community residents during the epidemic. In addition to the two giants Hema and JD.com, various other merchants have entered the fray. These include not only traditional supermarkets like Yonghui, Walmart, and Better Life, but also companies such as Zhou Hei Ya, Guolian Aquatic, and Yunji. With giants increasing their stakes and more challengers flooding in, competition in the community group buying track is becoming increasingly fierce, and industry reshuffling is intensifying. On the one hand, community group buying companies that originally expanded by burning cash can only rely on their book funds to survive without new financing; companies with capital support take this opportunity to acquire users and expand their influence, further accelerating the differentiation of leading companies. On the other hand, e-commerce giants, with their strong supply chain systems, are rapidly dividing market share. According to the person in charge of JD Youjia Puzi, after launching community group buying activities in Wuhan, the first round opened 58 groups, and inventory was sold out in 9 hours; in the second round, within 9 hours, 40,000 jin of vegetables, 10,000 jin of meat, and 10,000 jin of fruit were sold. Industry insiders believe that for small and medium-sized community group buying companies, the epidemic may only give them a breather. When the epidemic dividend disappears, how to retain customers will be the challenge. After the epidemic, the landscape of leading players will be further confirmed. **-03- Crisis and opportunity: Can they run fast and hold on? Under the epidemic, both opportunities and shortcomings of community group buying have emerged. On one hand, consumer purchase demand has surged; on the other, the supply chain for community group buying is severely insufficient. Since February 3, community group buying companies such as New Shihuituan, Xingsheng Youxuan, Shixianghui, and Tongcheng Life have resumed work nationwide. In actual operations, these companies face difficulties such as loss of group leaders, insufficient delivery personnel, and product shortages. The supply chain of community group buying consists of suppliers, platforms, logistics, group leaders, and consumers. If any link has a problem, it affects the entire community group buying. A person in charge of a community group buying company said that because employees who went home for the holiday could not return on time and outsourced logistics companies suspended operations, there were often cases of refunds due to inability to deliver, and the platform lost profits from these orders. In addition, due to changing epidemic prevention policies in various places, delivery timeliness could not be guaranteed, leading to some orders being canceled. In response to issues such as product shortages and insufficient transportation capacity, a person in charge of Shihuituan said that adjustments have been made to the cities where work has resumed, as well as to product portfolios and delivery strategies, adjusting the proportion of fresh produce to meet people's needs. Liu Hui, senior analyst at Beijing Huiyi Retailer Management Consulting Company, said: "Community commerce under the epidemic is not as glamorous as everyone imagines, because the business model is not yet mature. The most typical is community fresh produce. When the short-term dividend brought by the epidemic fades, only meticulous cultivation can retain customers." Looking back at the development history, community group buying emerged in 2018 and was favored by capital for its efficient and low-cost fulfillment model. However, after a year of rapid development, difficulties such as supply chain integration, group leader management, and fresh produce quality control gradually became prominent. In the second half of 2019, many companies went bankrupt due to continuous cash-burning expansion and inability to profit. A capital founder said that after the baptism of the market winter, community group buying has regained vitality, indicating that this model has certain value. For internet companies, it complements the sinking market and community scenarios, while physical enterprises can use it to accelerate online transformation. Although there are many problems at present, the more important consideration is how to consolidate the supply chain system, retain and attract users, and complete the upgrade and transformation. Chen Ying believes that with the outbreak, subsidence, and disappearance of the epidemic, people's living habits will gradually change, and community group buying may become the mainstream consumption channel for people's daily lives in the future. Source: Blue Whale Industry and Economics