The merger of B2B and community group buying will create a conflict between pursuing growth and preserving existing business. In March this year, Alibaba internally announced the integration of Retail Link's community group buying business and Hema Market to form the MMC business group, focusing on community group buying. The head of the business group is Dai Shan, Alibaba partner and president of Alibaba's B2B business group. At the meeting announcing the business adjustment, Dai Shan stated that "investment in community group buying will have no upper limit." Previously, according to multiple industry media reports, Alibaba aimed to accelerate the development of this business, with an internal target of expanding to 22 provinces by July 1 and surpassing Pinduoduo and Meituan in order volume to become the industry leader. At the time, industry insiders remarked, "On this trillion-yuan track of community group buying, after internal horse racing trials, Alibaba is finally getting serious." However, some pointed out that "apart from external investments, the community group buying business most closely associated with Alibaba is Hema Market, and Hema has actually been under B2B's control for a while," because Dai Shan is primarily responsible for ICBU, 1688, Rural Taobao, Retail Link, AliExpress, and other B-series businesses. In the organizational restructuring at the end of 2019, Dai Shan, in addition to the above responsibilities, began to oversee the Hema business group on behalf of the group, fully responsible for integrating Hema, Village Taobao, Smart Agriculture, and other businesses. Hema President Hou Yi (Lao Cai), who previously reported directly to Daniel Zhang, now reports to Dai Shan. When the news of merging Hema Market and Retail Link's community group buying business first came out, even internal B2B staff thought that the MMC business group was likely just a new business group under Alibaba's B-series. But looking back, even Alibaba Retail Link, which carries the banner for Alibaba's B2B business, has seen its competitiveness greatly weakened in the face of the community group buying war. Group buying giants, in pursuit of order volume, specifically list large items, and B-side merchants take advantage of subsidies to hoard goods. This approach has significantly undermined Retail Link's competitive edge. At the same time, when community group buying rose and used mainstream categories like alcohol and beverages as tools to drive orders, the B2B channel suffered a huge impact. In other words, the group buying giants used Retail Link's core categories as freebies to boost orders, and new logistics models like grid warehouses disrupted traditional logistics channels, leaving Retail Link exhausted in the subsidy war. Now, Chengxin Youxuan has even opened offline Chengxin warehouse-style bulk stores and Chengxin small shops for integrated sales and distribution, further encroaching on Retail Link's B2B business. From this perspective, whether Alibaba integrates B2B with community group buying, and whichever overlays the other, the first challenge is the left hand fighting the right hand, struggling between pursuing growth and preserving existing business. -01- Alibaba Retail Link: The Disappeared 2020 In November last year, a WeChat post by Lin Xiaohai, Alibaba Group Vice President and General Manager of Retail Link, went viral in the industry: "Meet in the world, look at each other from afar," marking his official departure from Retail Link. At the same time, multiple senior executives at Alibaba Group, including those in RT-Mart, experienced changes at the vice president level or above. Earlier, in mid-2020, media reported that Lin Xiaohai would take over RT-Mart as CEO, reporting directly to Alibaba CEO Daniel Zhang. Huang Mingduan would remain as CEO of Sun Art Retail and Chairman of RT-Mart China. At the time, a mid-level Sun Art employee commented on Lin Xiaohai's appointment as RT-Mart CEO, saying, "This position is actually the number two in Sun Art Retail." Sure enough, recently Sun Art Retail announced a CEO and director change: 66-year-old Huang Mingduan retired due to age, resigning as CEO but remaining as Chairman, and Lin Xiaohai was appointed as CEO of Sun Art Retail. However, while everyone focused on whether Sun Art Retail's "dynastic change" into the Alibaba era and whether Lin Xiaohai could renovate RT-Mart, According to New Distribution, the entire Alibaba Retail Link is now essentially leaderless. Meanwhile, community group buying is integrating B and C ends, already eroding a significant portion of the 2B small store supply business. Previously, New Distribution interviewed a senior insider at Retail Link who said, "Alibaba Retail Link's B2B business has been hovering between profit and loss, and now it's facing losses, so there are no extra resources or energy to touch the community group buying sector." Thus, it's not hard to judge that in mid-July last year, multiple industry media reported that "Retail Link officially entered community group buying, with the Retail Link business unit preparing a new community group buying department and building a dedicated team." But as the largest B2B platform in China, the establishment of a community group buying department was all thunder and no rain, and the news faded away, likely because the project was shelved. -02- Alibaba's Strategic Confusion When mentioning Alibaba's layout in community group buying, people instinctively think "missed the boat," but in fact, as a global e-commerce giant, Alibaba's layout was not late; it even came earlier than Meituan, Didi, and Pinduoduo. As early as early 2019, the "Station Group Buy" module quietly launched in the Taobao Cainiao Post message account, but the entry point was convoluted, clearly for testing purposes. In April of the following year, after Cainiao Network fully acquired the instant delivery company Dianwoda, it partnered with Sun Art Retail to launch the community group buying business "Yifagou." Yifagou used Cainiao Post stations as pickup points, with SKUs provided by Sun Art Retail's RT-Mart, Auchan, and other chain supermarkets. In other words, Alibaba had already entered the community group buying field as early as the first half of 2019. Additionally, after fully acquiring RT-Mart, Alibaba launched the community group buying brand "Feiniu Group Buy" in 2019, which has entered cities including Shanghai, Wuxi, and Kunming. In August last year, shortly after Meituan Youxuan was established, Alibaba's Ele.me announced its entry into community group buying, with the first city being Zhengzhou, Henan. Industry commentary said that in the same-city retail field, Meituan and Ele.me used the community group buying track as a battlefield, continuing the fierce subsidy war seen in food delivery. However, these businesses, after some exploration, stopped large-scale expansion. Ele.me opened in Wuhan and Zhengzhou but never did large-scale promotion. Yifagou, based on Cainiao Post stations and reusing RT-Mart's supply chain, covered over 2,000 express points in 15 cities by mid-2020, but the pace slowed thereafter. As for Feiniu Group Buy, according to internal employees, as of February this year, 80% of its Shanghai BD team had transferred to operations, focusing on increasing GMV and driving sales. During the 2020 pandemic, Duoduo Maicai and Chengxin Youxuan entered the community group buying track aggressively to grab territory. It wasn't until September, more than half a year later, that Hema announced the formation of its community group buying business, Hema Youxuan. When Meituan Youxuan's daily order volume exceeded 20 million and Duoduo Maicai's exceeded 10 million, Hema Market's daily order volume was just approaching 3 million. There were also rumors that within Hema, its leader Hou Yi did not support community group buying. He reportedly said at an internal meeting, "I think this business model will be forgotten in half a year because it doesn't create real commercial value. As a marketing tool, it's really good, and we're doing it too—running activities and attracting new users is fine—but it doesn't create value." In November of the same year, Alibaba led a $196 million Series C round in Shihuituan, which was not only Shihuituan's third public financing in 11 months but also Alibaba's third public investment in Shihuituan, and it directly connected the Taobao Maicai entry point with Shihuituan. This shows that Alibaba realized the window of opportunity for community group buying was closing. But as the e-commerce leader, Alibaba's layout in this track, though not late, was indeed slow to turn around. It witnessed Duoduo Maicai, Meituan Youxuan, and Chengxin Youxuan—three small giants—rapidly scale up using traffic and capital, moving ahead and squeezing into the top three. Although Alibaba internally claimed that multiple armies were racing simultaneously to stir the waters of community group buying, and then the group would concentrate resources to increase its bargaining power, externally it appeared as strategic chaos, with platforms operating independently, no linkage between businesses, and a scattered mess, each working within its own system, so that to this day no segment has truly stood out. -03- MMC Enters: What Are Its Chances? In terms of daily order volume, Meituan Youxuan ranks first, Xingsheng Youxuan third, Chengxin Youxuan second, and Duoduo Maicai fourth. In terms of monthly active users, Chengxin Youxuan ranks first, Meituan Youxuan second, Duoduo Maicai third, and Xingsheng Youxuan fourth. Although Dai Shan made bold statements at the MMC meeting that investment in the new business segment would have no upper limit, Alibaba is far from the only one making such claims. As early as November last year, Didi CEO Cheng Wei publicly mentioned Chengxin Youxuan for the first time at a company-wide meeting, vowing "Didi's investment in Chengxin Youxuan will have no upper limit, and we will strive to take the number one position in the market." Pinduoduo Chairman Huang Zheng said at the company's fifth anniversary celebration: "We were the originators of community group buying. We started with agricultural products. At the beginning of our venture, we created Pinxiaozhan and proposed concepts like community stations and front warehouses. This grocery buying business aligns highly with our long-term agricultural commitment, and we are willing to make heavy investments and deep innovations." Additionally, Meituan has internally designated "community group buying" as a top strategic project. Founder Wang Xing said at the Q2 2020 earnings call: "Fresh food retail has always been a strategically important new business area for Meituan." However, although Alibaba's winning hand has been broken apart, there are generally two voices regarding the integration of Retail Link and Hema: 1. Positive First, Retail Link has inherent advantages in community group buying, as its business covers over one million mom-and-pop stores nationwide. Store owners are group leaders, and B2B can undertake community group buying to deeply empower stores. Once these millions of small stores are linked and scaled, the supply chain benefits would be immense. Second, MMC is incubated by Alibaba itself, backed by the group's 1688, Taobao, Tmall, Retail Link, and Hema, with strong supply chain resources. Community group buying will inevitably rise with group leaders and end with supply chains, an advantage other platforms cannot match. Third, although Alibaba, unlike JD.com, does not have a comprehensive self-built logistics system, it has tens of thousands of Cainiao Post stations nationwide. The stations' parcel collection and delivery functions can well integrate the logistics systems of the three major express companies (STO, YTO, ZTO) and Yunda. Moreover, these tens of thousands of stations themselves can serve as group points. 2. Negative First, Alibaba has never had social genes, but community group buying has relied on social interactions from the start. Community group buying cannot do without communities. Group leaders are the bridge of trust between ordinary users and the platform. They must manage and engage users through communities, and users must obtain coupons and product information through social apps. This is clearly Alibaba's weakness. Users cannot use DingTalk to buy groceries, and if Alibaba relies too much on WeChat, it might be restricted. Second, the landscape is not yet set, but the trend is clear: the window for community group buying has basically passed. The "pot" of community group buying is only so big; if some are full, others are destined to go hungry. With cross-industry raids by giants, community group buying has become a game with many players and heavy investment. The vigorous city expansions across the country are nearing their end. The focus of each company has shifted from pursuing speed to pursuing quality. However, resources such as warehouses and suppliers are limited. The major players have already occupied key cities. What the first movers did for 1 yuan, latecomers may need to spend 3 yuan. More importantly, two giants are already showing signs of standing out. As Alibaba goes all in on community group buying, let's wait and see whether it will be praised or criticized. Welcome to leave comments below! Scan the QR code to add the author for discussion