On May 31, the Ministry of Commerce and 11 other departments issued guidelines on advancing the construction of 15-minute convenient living circles in cities (hereinafter referred to as the "Guidelines"). The Guidelines state that the 15-minute convenient living circle (hereinafter referred to as the "convenience living circle") targets community residents, with a service radius of about 15 minutes on foot, aiming to meet residents' basic daily consumption and quality consumption needs, forming a community business circle through the agglomeration of multiple business formats. In recent years, convenient living circles have developed rapidly across regions, but there are also problems such as uneven distribution of commercial outlets, outdated facilities, and unbalanced and insufficient development under the iteration of new business formats, new technologies, and new models, which urgently need targeted solutions.
Coincidentally, on June 25, People's Daily published an article on page 17 titled "Digital and Intelligent Transformation of Physical Commercial Enterprises Accelerates - Digital Retail Experience Upgrades," emphasizing the need to vigorously develop new business formats and models in circulation and create a one-stop digital commercial service package for traditional stores and community small shops.
Undoubtedly, community commerce has become a focus of attention after the pandemic. As the smallest granularity in the retail chain, traditional grocery stores are vividly called the "capillaries" of social retail. However, this business format has been working hard in its own way for decades, serving over 200 million consumers nationwide while contributing 40% of the FMCG industry's shipment volume.
At the same time, because most grocery stores are individually operated, with family-based organizations as their basic characteristic, low operational efficiency and weak risk resistance have become the biggest challenges in their development. In recent years, with the accelerated penetration of digital technology and large platform resources across various industries and fields, this traditional retail format has begun to change quietly.
Post-pandemic era: The value of community commerce is being reassessed
The core of community commerce lies in the community, being closest to consumers, and providing neighborly service that can efficiently meet residents' daily consumption needs in the shortest time. This is the advantage and positioning of community commerce.
So, what changes will community commerce undergo after the pandemic? How will community retail develop in the future?
Recently, at a salon themed "Post-pandemic Era: Is Community Retail Still a Rigid Demand?", Li Yongjian, Director of the Internet Economy Research Center at the Chinese Academy of Social Sciences; Chen Liping, Professor at Capital University of Economics and Business; Liu Yi, Co-founder and President of Analysys; and Nian Gui, Head of Business Analysis at Alibaba Group's MMC Business Unit, discussed community commerce topics.
"The pandemic has brought many new opportunities to community commerce. In the next 20 to 30 years, the main soil for the development of China's retail industry will be in communities, and the commercial opportunities in communities are far from being fully tapped," said Chen Liping.
Communities have shown good development prospects, but many community resources have not been well integrated. For example, the 15-minute living service circle we just mentioned is divided into a 5-minute living circle, a 10-minute living circle, and a 15-minute living circle.
The 5-minute living circle refers to residential community commerce, dominated by mom-and-pop stores. This market has not been integrated at all and remains in a state of survival, but it plays an important role in neighborly interactions.
The 10-minute business circle refers to the community fresh supermarkets and convenience stores we are familiar with. These formats develop within the 10-minute business circle and have huge development space.
The 15-minute business circle includes education, sports, small shopping centers, small lifestyle complexes, and especially neighborhood centers, basically within the 15-minute living circle.
"In future development, community commerce will continue to maintain high growth. In terms of development models, the evolution direction of community commerce will become increasingly diverse. Essentially, future changes in community commerce formats will evolve around changes in people's lifestyles and consumption behaviors," added Liu Yi, Co-founder and President of Analysys.
Community commerce: Changes are happening
Community commerce is not only a business but also related to people's livelihoods. Especially during the pandemic, community commerce formats took active actions to "ensure supply, stabilize prices, and maintain continuous operation," fully playing an important role in safeguarding people's livelihoods and promoting stability.
The granularity of social management under abnormal conditions like the pandemic reaches the community level, which precisely matches the service targets of community commerce. From a global perspective, community commerce will be one of the measures for the country to respond to abnormal social supply guarantees.
However, changes in community consumer demand and the consumption environment have also brought new challenges to the development of community commerce.
In this transformation of community commerce, Alibaba naturally will not be absent. Since 2016, Alibaba has been involved in this difficult but significant transformation of community commerce through its Retail Link business, which provides digital supply chain services to community small shops.
In 2016, Alibaba Retail Link was officially established, starting to empower mom-and-pop stores, giving millions of traditional grocery stores more product capabilities, digital capabilities, standardization, normalization, and even storefront decoration capabilities, enabling these traditional small shops to better serve their families in each community, "Serving every store, for every family." To date, Retail Link has covered more than 1.5 million mom-and-pop stores nationwide.
"When other commercial forms and crowd-gathering forms cannot be used under extreme pandemic conditions, community retail is the closest to consumers' lives and best meets their needs. Based on this, Alibaba quickly responded and established the MMC Business Unit."
(Mr. Nian Gui, Head of Business Analysis at Alibaba Group's MMC Business Unit)
Nian Gui, Assistant to the President of Alibaba Group's MMC Business Unit, said at the salon, "MMC is based on Retail Link and Hema Market, which are our attempts at near-field e-commerce community retail. By combining the capabilities of Retail Link and Hema Market, and adding Alibaba's previous output of various supply capabilities in traditional e-commerce and digital analysis capabilities, we formed a new business unit to explore near-field e-commerce. "
Near-field e-commerce: Reconstructing the FMCG industry chain
With Alibaba's entry, "near-field e-commerce" has become a hot industry term.
Conceptually, near-field e-commerce is the opposite of far-field e-commerce. Far-field e-commerce solves cross-regional resource allocation and supply-demand matching problems, with Taobao as a typical representative; near-field e-commerce provides services based on geographic location, closer to consumers, revitalizing resources within a region, and further improving the efficiency of commodity circulation.
To make it easier to understand, Nian Gui compared far-field e-commerce to a unit cafeteria, while near-field e-commerce is like the dishes cooked by a mother at home.
"Traditional e-commerce is like a cafeteria, treating platform consumers as employees of a company. If the company has employees from 28 provinces and 56 ethnic groups, how can the cafeteria meet their needs? Of course, it needs a wide variety of dishes and rich flavors. Only by being as diverse as possible can consumers from all over find what they like," Nian Gui said.
"Near-field e-commerce is a bit like the dishes cooked by a mother at home. Mom lives with you, very close to your life, knows what you like to eat, and recommends what you should eat today. You have a warm sense of trust, having grown up eating it."
The innovative significance of near-field community e-commerce is to shape a digital supply chain system and achieve precise matching of people, goods, and places offline: aggregating deterministic demand through small shops, pushing back to ensure deterministic supply at the source production end, and improving efficiency, reducing costs, reducing losses, and enhancing value through the "four flows in one" (logistics, commerce, information, and capital flows), promoting the "four chain reconstruction" of the industry chain, value chain, supply chain, and benefit chain.
For Alibaba, the value and significance of near-field e-commerce lie in that, at the front end, Alibaba MMC can place community pickup points mainly in more than 1 million mom-and-pop stores, based on Alibaba Retail Link's business foundation.
At the back end, Alibaba MMC has a richer supply chain foundation compared to peers: in agricultural products, Alibaba Digital Agriculture, Hema Fresh, and RT-Mart's direct procurement bases are fully connected to MMC; in industrial products, 1688 and Taote's customized goods supply chains are also connected to MMC.
Community commerce: A promising future
So, what changes and impacts will community commerce bring to the entire industry?
(Professor Chen Liping)
Professor Chen Liping believes there are mainly two points:
First, accelerate the upgrade of traditional mom-and-pop stores. If millions of mom-and-pop stores nationwide cannot be effectively organized and managed uniformly, they will face increasing impacts in the future, and their development prospects are not optimistic.
Second, in community commerce, in addition to product sales, related extended services should also be provided. Taking residential areas within the Third Ring Road in Beijing as an example, "Almost all these communities are aging communities. Young people can't get in because they can't afford the houses, and elderly people can't get out. This is a real problem we face. Supermarkets and convenience stores in Xicheng District have too high rents, so only these mom-and-pop stores can truly fulfill many functions of community commerce."
The biggest problem in an aging society in the future will be basic care. Mom-and-pop stores have natural advantages in this regard because their establishment is based on relationships. Especially mom-and-pop stores in residential areas can be called neighborhood information centers and bulletin boards. They not only understand residents' living needs but also their emotional needs, which can effectively avoid the social problem of "lonely death" as seen in Japan.
"Community retail will have a significant impact on the entire industry chain and supply chain. Originally, community retail had a very long supply chain, from production factories to industrial belts, wholesale markets, and then to retail small shops. Both the supply chain and marketing chain were very long.
Through community retail, Alibaba MMC can gather suppliers and directly transport goods from suppliers to stores, which is highly efficient and time-saving.
Normal FMCG marketing costs account for about one-third or more of the final price. Through platforms like Alibaba MMC, the operating costs of community retail stores will be greatly reduced, and profits will be significantly increased," added Li Yongjian, Director of the Internet Economy Research Office.
It is not difficult to see that the sudden pandemic has profoundly changed people's lives and consumption patterns.
The improvement of e-commerce infrastructure allows people to buy any product they want without leaving home, but community commerce still undertakes indispensable functions such as last-mile delivery, emotional maintenance, and life services.
However, low digitalization, weak risk resistance, and low operational efficiency have become the main reasons hindering the development of community commerce and the long-term sustainable operation of millions of mom-and-pop stores.
In this context, Alibaba MMC's near-field community e-commerce relies on Alibaba's unique supply chain integration capabilities, strong digital capabilities, and comprehensive ecosystem layout to effectively connect upstream manufacturers with downstream loose small community retail formats, helping manufacturers quickly distribute products from the circulation end and helping millions of community grocery stores reduce operating costs from the supply end.
More importantly, Alibaba MMC, through unified operating standards and digital capability output, effectively integrates inefficient stores, uses big data for digital transformation of stores, and effectively improves store operational efficiency.
In the FMCG circulation field, with the gradual improvement of MMC's layout, FMCG companies will no longer need to spend the high costs and invest huge human and material resources as in the past to complete product market layout and distribution in circulation stores, truly helping FMCG companies achieve "making it easy to do business anywhere in the world."
Review: Asher
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