---
title: "Struggling Community Group Buying: Wild Groups Thrive, Giants Retreat"
description: "In the community group buying sector, after the retreat of the giants, community group buying has not disappeared but has survived in a new model. Large groups are retreating while wild groups are springing up everywhere."
author: "十里"
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published: "2023-05-01"
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# Struggling Community Group Buying: Wild Groups Thrive, Giants Retreat

> In the community group buying sector, after the retreat of the giants, community group buying has not disappeared but has survived in a new model. Large groups are retreating while wild groups are springing up everywhere.

In the community group buying sector, after the retreat of the giants, community group buying has not disappeared but has survived in a new model.
**Large Groups Retreat, Wild Groups Spring Up** After the influx of capital, the "burning money" war, and policy restrictions, community group buying has diverged: on one hand, some platforms have gone bankrupt, and those backed by internet giants have contracted; on the other hand, wild groups are springing up in various regions. Four years ago, the community group buying market was fiercely competitive, with capital pouring in. However, the "burning money" war did not last long; policies were introduced, and news of platform closures emerged endlessly. Many predicted that, similar to the early e-commerce industry, only Duoduo Maicai and Meituan Youxuan would remain as the two giants, while others would disappear from the market. Recently, Xingsheng Youxuan confirmed its withdrawal from the Fujian market. In response to the reason for the city withdrawal, Xingsheng Youxuan officially stated that the move was mainly to reduce costs and improve efficiency. Notably, this is the twelfth city Xingsheng Youxuan has exited in recent years. Currently, Xingsheng Youxuan only covers six provinces nationwide: Hunan, Hubei, Jiangxi, Shaanxi, Guangxi, and Guangdong, but the official website data has not been updated accordingly. Additionally, according to a report by LatePost, Meituan's community group buying business "Meituan Youxuan" has begun a major management adjustment, canceling the Customer Experience Department. At the same time, the heads of four departments directly related to operations (regional operations, logistics, product operations, and business analysis) have been adjusted. Over the past three years, Meituan Youxuan has faced enormous performance pressure. In 2022, both Meituan Youxuan and Duoduo Maicai set a transaction target of 250 billion yuan; ultimately, Duoduo Maicai completed about 180 billion yuan, while Meituan Youxuan only completed about half of its target. In fact, the current situation of the aforementioned community group buying giants also reflects the true state of the entire market. In the past two years, among the "old three groups," Tongcheng Life declared bankruptcy in 2021, and Shihui Tuan shut down its business in 2022, leaving only Xingsheng Youxuan, which is also contracting. The "new three groups," which had previously aggressively expanded, also began to contract after 2021. Whether it is Meituan Youxuan, Duoduo Maicai, or Taocaicai, they all face difficult survival challenges in the current market environment. In this smokeless battle, no one can be called a winner. However, in the community group buying sector, after the retreat of the giants, community group buying has not disappeared but has survived in a new model. Wang Wei, founder of Fresh Legend, once publicly stated that "wild groups" without significant price advantages are quietly rising, with order volumes equivalent to the total of all local supermarket chains. Wang Wei cited an example: a community group buying group purchased 208 boxes of oyster mushrooms in one day, each box weighing about 8-9 jin, priced at 15 yuan. However, he learned from Fresh Legend's procurement department that the purchase price of oyster mushrooms that day was only 1.3 yuan per jin, with a retail price of 1.99 yuan per jin. This means that customers buying oyster mushrooms at retail were not more expensive than participating in group buying. Clearly, Fresh Legend had a competitive advantage in purchase price, but with 200 stores, it sold at most 380 boxes of oyster mushrooms per day. Wang Wei reflected: Why does group buying seem more cost-effective? Moreover, this sales method goes against human needs. Because customers buy 8-9 jin of oyster mushrooms at once, and they all live in the same residential area, do they have to eat mushrooms for a week? "This situation is an exception. Community group buying, because it deals with acquaintance business, places more emphasis on neighborly trust and reputation, and has higher stickiness. However, some categories of goods in community group buying may indeed be more expensive than offline," an industry insider focused on supply chain in Hefei told Ling Shou. According to him, a residential area in Hefei with 3,666 households has about 11 independent group leaders, with daily online transaction volume exceeding 50,000 yuan. The city has approximately 3,000 to 5,000 independent group leaders, with daily sales of about 15 million yuan, which may exceed 30 million by the end of this year. The "wild groups" mentioned by Wang Wei and the Hefei supply chain insider refer to group leaders who independently organize supply sources and provide group buying services to users without relying on any platform. Independent group leaders purchase goods from various group wholesale channels, carefully select them, and then conduct sales through group chats. Over the past three years, the nationwide COVID-19 outbreak imposed mandatory controls on the movement of people and goods, giving rise to a large number of group leaders. When policies were introduced and internet giants reduced commissions, group leaders with resources "found their own way out," thus giving rise to a large number of group wholesalers as upstream suppliers. Group wholesalers specifically serve group leaders and emerged as a business model following the capital groups' move to de-leaderize.
**Why Can Hefei's "Wild Groups" Succeed?** In the five-year development of the community group buying sector, capital groups achieved nationwide market coverage in 2020. However, in 2021 and 2022, due to various factors, the eight major capital groups gradually withdrew from more than 280 cities nationwide and closed warehouses. Now, only four major capital groups—Meituan Youxuan, Duoduo Maicai, Taocaicai, and Xingsheng Youxuan—remain. After the turmoil of 2022, they are expected to continue contracting in 2023, withdrawing from some cities, closing central warehouses, and returning to strategic and advantageous markets. This trend has become an inevitable reality. Therefore, national community group buying platforms are exiting the historical stage. At the same time, wild groups are becoming increasingly common in various regions. Especially in Changsha, Hangzhou, Wuhan, and Chongqing, community group buying has already shifted to wild groups, with each residential area having one or two independent group buying groups. In contrast, Hefei's wild groups are larger in scale. The aforementioned supply chain professional told Ling Shou that unlike Changsha and Hangzhou, which have many large wholesale markets, Hefei's situation is slightly different. Although Hefei also has fresh food wholesale markets, they are relatively small with limited customer flow, and many products still need to be transported from surrounding cities, creating more operational opportunities for group leaders. Additionally, due to the uniqueness of the Hefei market, some local group buying platforms did emerge in the past. However, under the impact of capital, these platforms could not survive. As large platforms gradually receded, group leaders with resources sought out group wholesalers for supply sources. After the role reversal, group leaders also gained pricing power, giving them a competitive advantage in price, and order volumes gradually increased. This phenomenon has continued to cycle, attracting more group leaders to join, leading to the formation of wild groups. The participation of group leaders is only the first step; making customers dependent on wild groups is the biggest difference between capital groups and wild groups. As Wang Wei's example shows, although offline store prices may be lower than community group buying, sales are not as good as group buying. "Price is not the most important factor for group buying users; blindly pursuing price wars is not a sustainable strategy. The group buying market emphasizes trust, and consumers pay for trust. This trust includes both recognition of the group leader and confidence in their product selection ability," an industry insider told Ling Shou. The overall prices of wild groups are not necessarily lower than e-commerce promotional events, and sometimes even higher than offline, but they still have user stickiness. In contrast, capital groups have a relatively single model and weaker user stickiness. Taking Xingsheng Youxuan as an example, its main business is offline chain convenience stores, and in the e-commerce arena of community group buying, user stickiness is not strong. Consumers cultivated by the market are more willing to pay for trust. However, this does not mean that all products can be sold at higher prices. In fact, many group leaders insist on providing competitive prices to ensure the healthy development of group buying business. This balance between trust and price helps the group buying market stand out in a competitive environment. Secondly, capital groups have weak online operational experience, high costs, and lack flexibility. They rely on large subsidies, promotional activities, sharing for new customers, and other mature internet tactics, but fail to solve efficiency issues. "Taking the Hefei market as an example, a group wholesale leader can achieve an annual turnover of 100 million yuan by saving costs and improving efficiency," the aforementioned supply chain insider said. In the community group buying process, there is a supply chain delivery cost. Due to the scattered nature of group leaders, the cost is high, with an extra 1 yuan per item. His approach is not to deliver but to have group leaders pick up goods themselves, reducing the delivery cost to zero. Because the product prices are extremely low, large group leaders can save hundreds of yuan per group buying event by reducing the price by 1 yuan per item. This strategy also attracts group leaders with strong sales capabilities, who are willing to take on the task of picking up goods in exchange for higher profit margins. From this perspective, compared to the loyalty and coordination issues between group leaders and platforms due to profit distribution, the cooperation between group wholesalers and group leaders in the wild group market is more harmonious. This harmonious relationship gives them unique advantages in cost control and development space.
**The Way Out for Group Wholesalers?** Despite the prevalence of wild groups in Hefei, only a few group wholesalers actually make money. The logic of group wholesaling can be understood as redoing the original B2B e-commerce, connecting brands and manufacturers on one side, and downstream group leaders or community stores on the other. The aforementioned insider told Ling Shou that the unique nature of the group wholesale market leads to different development characteristics at different stages. Specifically, in the early stage, it mainly relies on channel alliances and collective procurement; in the middle stage, it gradually evolves into building a production-supply-marketing highway to achieve joint marketing; in the later stage, it develops into a company focused on incubating large single products, becoming a hit product factory. This series of developments aims to stimulate and support a strong supply chain through demand, thereby improving the efficiency of the entire industry. To successfully operate a group wholesale business, merchants need to have a strong channel sales company as the main body and the ability to support a market scale of 10 to 20 billion yuan. At the same time, the operation of the group wholesale market cannot be separated from regional density and the fulfillment of regional group leaders. The density of distribution points determines market penetration, and low-cost fulfillment is key to the group wholesale market. If the fulfillment cost is higher than 3.5%-5.5%, it indicates insufficient regional density and untapped market potential. Therefore, the success of the group wholesale industry depends on two prerequisites: group leaders who sell goods and cooperative supermarkets. Group leaders, as key figures in the group wholesale industry, need to have good organizational skills, communication skills, and market sensitivity to remain competitive in the fierce market competition. Cooperation with large B-end supermarkets is also an important support. Through cooperation with supermarkets, the group wholesale market can better meet consumer needs and expand market share. In the Hefei market, group wholesale competition has entered a fierce involution stage. Upstream price competition is extremely brutal, with some merchants even selling at a loss to pursue sales volume. This has led to shrinking profit margins for many group wholesale merchants, putting them in a difficult situation. The aforementioned insider told Ling Shou that facing this dilemma, Hefei's group wholesale merchants have to make a choice: either switch industries, bear losses and exit the market, or seek new profit models and market space by exporting supply chains to other provinces. In Hefei, where wild groups are rampant, not all participants in the chain enjoy dividends; instead, the entire industry is facing severe challenges. At this critical juncture, group wholesale merchants need to seek transformation and innovation to adapt to market changes and competitive pressure. Group leaders also need to maintain customer trust relationships and select high-quality products to last long. Every participant in the chain is struggling to survive, because in the current environment, as Wang Wei said, "Your business is quietly being taken away, and you don't even know it."


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