---
title: "Large Supermarkets Entering Community Group Buying: Prepared or Desperate?"
description: "“All local retail enterprises must be ruthlessly ground down by the internet several times before they wake up.” This was the frustrated assessment of industry insiders at the rise of community group buying. According to industry media Lingshou, nearly 10 listed supermarket chains reported that their overall performance fluctuated from high growth to slowdown and then to a sharp decline, with their secondary market performance also experiencing doubling, flattening, and halving, showing a “ice and fire” phenomenon between the beginning and end of the year, a timeline that coincidentally aligns with the trajectory of community group buying."
author: "李彬  何年"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-05-06"
language: "en"
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---

# Large Supermarkets Entering Community Group Buying: Prepared or Desperate?

> “All local retail enterprises must be ruthlessly ground down by the internet several times before they wake up.” This was the frustrated assessment of industry insiders at the rise of community group buying. According to industry media Lingshou, nearly 10 listed supermarket chains reported that their overall performance fluctuated from high growth to slowdown and then to a sharp decline, with their secondary market performance also experiencing doubling, flattening, and halving, showing a “ice and fire” phenomenon between the beginning and end of the year, a timeline that coincidentally aligns with the trajectory of community group buying.

**“All local retail enterprises must be ruthlessly ground down by the internet several times before they wake up.”** This was the frustrated assessment of industry insiders at the rise of community group buying.
According to industry media Lingshou, “Nearly 10 listed supermarket chains reported that their overall performance fluctuated from high growth to slowdown and then to a sharp decline, with their secondary market performance also experiencing doubling, flattening, and halving, showing a ‘ice and fire’ phenomenon between the beginning and end of the year, a timeline that coincidentally aligns with the trajectory of community group buying.”
Originally, it was thought that with the black swan event of the Year of the Rat, large supermarkets could rely on their supply capabilities, which are far stronger than online and small stores, to forge ahead during the pandemic. Unexpectedly, they were intercepted by community group buying, which had been transformed by the pandemic.
Recently, I visited some representative local supermarket chains, and they all reported a serious decline in sales, with annual total sales generally falling by around 20%. **According to local supermarket staff, the most severe declines were in fresh produce (vegetables, fruits, frozen products), grains, oils, dairy, and alcoholic beverages—precisely the categories that drive supermarket GMV.**
Under the shadow of community group buying, sensitive terms like “30% closures,” “closure wave,” and “life-or-death situation” for supermarkets have been constantly raised. At this time, news of large supermarkets’ “transformation and experimentation” has also emerged. After all, supermarkets now face far more competitors than just community group buying, including front-warehouse models like Miss Fresh and Meituan Maicai, as well as comprehensive e-commerce platforms like Tmall and JD.com.
**Therefore, more and more traditional supermarket companies are actively exploring and embarking on the path of combining online and offline operations.**
**-01-**
**Traditional Supermarkets: No Room to Retreat**
Some supermarkets have already taken the lead in community group buying. Better Life (Bugao) revealed in its annual report that its community group buying segment grew by as much as 42.5% compared to the previous year. Recently, Guangzhou Daily reported that Walmart has been piloting its community group buying business nationwide and has developed 10,000 employee team leaders. Internal sources at Yonghui Superstores indicate that Super Species is exploring community group buying and has launched in cities such as Shanghai, Beijing, Fuzhou, Hefei, and Chongqing.
**So, is the entry of large supermarkets into community group buying a whim under the current trend, or a retreat forced by heavy pressure?**
The logic of community group buying is: supermarket SKUs minus community store SKUs equals community group buying SKUs. In other words, the expansion of giants and the competition among local players ultimately hit the turf of large supermarkets. Immediate consumption business has been taken over by community convenience stores, while the remaining stock is being divided by community group buying. Being ground down by “new retail” formats once is enough!
The decline in supermarket foot traffic has long been an open secret. Recently, I took time out of my busy schedule to visit a supermarket, and after leaving, I gained a deeper understanding of the word “pain point.”
**“Chinese people waste at least thirty minutes when going to a large supermarket.”** Driving from home to the mall takes about ten minutes, which is acceptable, but when parking, the short stretch outside the underground parking lot can be congested for at least half an hour.
If you don’t drive, going there “empty-handed” is carefree, but the moment you leave the supermarket with your purchases is the start of a nightmare: several kilograms of laundry detergent, twenty kilograms of rice, a few kilograms of toilet paper—totaling about thirty kilograms in various bags, heavy and cumbersome, leaving your wrists sore and the experience extremely poor.
But what is community group buying doing now? It’s bringing all the SKUs from large supermarkets (except those in community stores) to the doorstep of residential communities, **saving consumers time, shortening physical distance, and solving the problem of heavy goods—hitting the pain points of large supermarkets with precision.** The problems that have long plagued large supermarkets are being revolutionized one by one. If large supermarkets don’t revolutionize themselves now, they are simply waiting to be beaten.
There has been much discussion about “internet giants rushing into community group buying for traffic.” Is it just for traffic? Not necessarily. It’s hard to say how much monetization value the “wool party” or loyal fans developed in lower-tier markets truly have.
Additionally, according to calculations by China Merchants Securities based on current market data, “the entire community group buying track is likely to achieve a market size of 400 billion to 500 billion yuan this year.” Even so, compared to the 40 trillion yuan scale of offline physical retail, it’s still not enough.
So, while it’s often said that offline physical retail should use community group buying to catch the last train of the internet, why can’t online internet companies also use community group buying to truly enter the retail industry?
It can be seen that since October last year, Chengxin Youxuan officially opened “Chengxin Youxuan Supermarket,” moving from online subsidies to offline, and developing millions of “Chengxin Small Stores.” In March this year, benchmarking against warehouse membership stores like Sam’s Club and Hema X, Chengxin Youxuan opened its first warehouse-style bulk store in Wenzhou.
**If internet companies entering community group buying is still an erosion of existing stock for large supermarkets, then entering offline physical retail is a direct plunder of their livelihood. Physical supermarkets have long had no room to retreat.**
**-02-**
**Holding a Golden Rice Bowl While Begging**
In the past ten to twenty years, supermarkets have held the knife handle of good quality and low prices, occupying the high ground of low prices. But after the rise of e-commerce, large supermarkets have faced low-price challenges from all directions, especially with the rise of social e-commerce, where the entire internet is searching for the “lowest price on the web.” Now, traditional large supermarkets are retreating under the attack of community group buying. It’s a pity, and frustrating that they don’t fight back.
Traditional large supermarkets each hold mountains of gold and silver, yet they go out begging. In fact, supermarkets have unique advantages in doing community group buying:
**First, strong brand.** Most local chain supermarkets have at least 10 years of reputation and brand accumulation, holding a strong local brand super traffic entrance with powerful brand endorsement effects. Not only do consumers recognize local supermarket brands, but suppliers and manufacturers also give policy support to local supermarkets. Why?
For example, **assume a first-tier brand manufacturer enters a market; the first thing they assess in a region is the exposure rate of local supermarkets, not whether they are listed on local community group buying platforms.** Because local large supermarkets have strong brand appeal and influence. Although supermarket shelves are limited, they provide continuous exposure for brands; as long as the product is on the shelf, it can continuously speak to consumers.
During my market visits, the general manager of a subsidiary of Hebei local food brand “Shuangge” complained, “The price given to local supermarkets by headquarters is even lower than the price given to our subsidiary, **but the company wants brand display and channel endorsement, and sustainable exposure.** If a local enterprise doesn’t sell your product in local supermarkets, people might think there’s an internal problem.”
**Second, strong supply chain.** Whether traditional retail or new retail, everything revolves around products and experience.
When community group buying platforms exceeded 1,000 SKUs, everyone marveled at how quickly they grew, but they didn’t consider that a 1,000-square-meter supermarket needs at least 10,000 SKUs to meet one-stop shopping needs. This has driven supermarkets to accumulate strong supply chain capabilities over more than a decade, with ample suppliers, manufacturers, and other resources. These resources cannot be organized by platforms like Duoduo Maicai or Meituan in the short term.
**In the future, local supermarkets have their own warehouses, logistics, terminals, platforms, and consumers. They just need to move the store from “ground” to “cloud,” promoting the combination of e-commerce and store retail.**
**Third, strong service.** Most large supermarkets have survived locally for 20 years, and their service capabilities are far stronger than those of community group buying internet platforms. Without service, large supermarkets would have become “leeks” long ago under the invasion of “new retail” formats from all directions.
Another example: everyone knows that supermarkets have longer payment terms than community group buying platforms. Supermarkets typically have 40-day payment terms, while community group buying platforms usually control theirs within 10 days. Coincidentally, a Meituan supplier complained to me a couple of days ago, saying, “When working with internet platforms, they say the payment term is only 7 days, but I supply to Meituan, and the accounts have never been settled clearly. I don’t know how fines are calculated, and after-sales issues average 2-3% of sales. The procurement staff just muddle through with you. Isn’t that infuriating?”
Interestingly, I also visited the headquarters of some local chain supermarkets. **The supplier settlement counters are like bank windows, with over ten windows for different categories, settled separately and clearly.** Then, their internal staff pointed to a room full of dozens of people and said, “This room is full of finance staff, all elites among elites. With annual turnover of over ten billion, if we don’t keep the accounts clear, it would be a joke!”
**Fourth, strong endurance.** Why do brand manufacturers willingly give policy preferences to supermarkets, while community group buying platforms actively seek brand days but manufacturers hesitate? Because the FMCG industry requires a marathon business, not a 100-meter sprint like internet platforms.
**Supermarket channels are more durable and stable. Every local large supermarket chain deploys its stores strategically on the local map, with dozens of chain stores radiating to firmly occupy every area within the third ring road.** This asset-heavy model is something internet companies disdain.
And why haven’t large supermarkets been harvested by waves of traditional e-commerce, social e-commerce, and live-stream e-commerce? It’s not because their operations are particularly strong; in fact, their institutional structure causes internal sluggishness. **But large supermarkets can endure. If you can’t kill me, I can outlast you. Burning money can only last for a while, not forever. No matter how you plunder, a starved camel is still bigger than a horse.**
**Fifth, strong operations.** Before entering community group buying, large supermarkets had already made some progress in online business. Within the third ring road, the most developed business is one-hour delivery for home services. The O2O home delivery business of several supermarkets I know grew from less than 10 million yuan in revenue the year before last to 200-300 million yuan last year.
**Most large supermarkets now have mature e-commerce teams and complete B2C operational capabilities.** They have established an independent department to manage e-commerce, with an average age of post-90s, a very young department with strong execution. Traditional enterprises focus more on training and continuous learning, while internet companies may simply poach talent with several times the salary.
**-03-**
**If Not Now, When? Large Supermarkets Should Enter Community Group Buying**
After giants entered community group buying, they mostly focused on lower-tier markets, using a four-level warehousing model: “supplier—shared warehouse—central warehouse—grid warehouse—team leader.” But two links are changing: the team leader end and the grid warehouse end.
**Now, the expansion of major community group buying giants has slowed, and platforms are lowering team leader commission rates, from a peak of 10% per order last year to 3-6% now.** The reduction in commission rates for internet giants’ team leaders will bring new opportunities for supermarkets to do community group buying.
Because when supermarkets do community group buying, they develop their own employees as team leaders, with commissions mostly around 3%, far lower than the 10%+ commissions of internet platforms, which makes it difficult to incentivize and promote supermarket community group buying. Now that internet platform team leader commissions are being cut, supermarket community group buying can more easily achieve scale.
As for grid warehouses, they have had limited profitability since their inception, relying mostly on platform subsidies. The major platforms are likely to develop grid warehouses into warehouse-store integrated models to solve the current dilemma. **But for large supermarkets, they can directly take this step ahead of the platforms—chain supermarkets are embedded within the third ring road, using their stores as grid warehouses to perform sorting and delivery functions.**
With the store as the center and a 3-5 kilometer radius for developing network points, the planned goods that large supermarkets sell are the same as the planned goods that community group buying offers with next-day delivery. This means the goods are already in the grid warehouse, saving the logistics cost of suppliers delivering to the central warehouse. Alternatively, it can be understood as large supermarkets gaining another promotional tool to increase sales per square meter.
**In essence, it’s moving the promotional goods from large supermarkets to community group buying, and finally delivering them to community stores, meeting consumers’ planned purchase needs.** The prices of these promotional goods in supermarkets are often cheaper than those on existing community group buying platforms. Combined with other products and integrated with the existing ERP system, this operation effectively brings the supermarket to the consumer’s doorstep.
Now is the best time for large supermarkets to enter the community group buying track. Although the track looks extremely crowded, when giants are expanding, it’s a “dog-eat-dog” situation. Once the track stabilizes and is monopolized by a few leading platforms, supermarkets will completely lose the chance to enter, because by then users’ consumption habits will have been cultivated by the giants. But now, consumers are still in a state of comparing prices even for a pound of cabbage.
**Summary:**
In recent years, the wave of mergers and closures among supermarkets has been incessant, while the entire community group buying track is being jointly besieged by various forces. The “New Three Groups + Old Three Groups + Hema Market + Jingxi Business Group” are like the “Eight-Power Allied Forces,” sweeping everything in their path. Players who barely survived the entire 2019 have suddenly become grassroots guerrillas, with local groups avoiding direct confrontation with giants. “If I can’t fight, I can hide.” **But for large supermarkets, with money, people, products, and stores, entering community group buying is like a regular army with guns and artillery.**
More importantly, large supermarkets in every region bear social responsibilities. Every local retail enterprise is a major taxpayer, every local hypermarket provides employment for 5,000 people, and every local supermarket is responsible for ensuring supply.
Looking back at internet community platforms, have they paid taxes? Where are their taxes paid? They are paid in tax havens. For example, community group buying’s sorting personnel, logistics personnel, and team leaders are all hired through third-party human resources companies, reasonably avoiding social security and commission taxes, but without providing security for the bottom-level workers.
So, if community group buying wants to eliminate local supermarkets, the local government will be the first to object. And local supermarkets entering community group buying is imperative!
**Li Bin:** Currently provides community group buying technical services to national top-100 chain regional leading supermarket chains. Former co-founder of a regional community group buying platform with annual GMV of 200 million yuan, leading distributor digital transformation, with rich practical experience.
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