---
title: "Suning Xiaodian Enters Community Group Buying: Following the Trend or Going All In?"
description: "Suning Xiaodian has entered community group buying, planning to recruit 25,000 group leaders within three months. The author believes this is not a blind move but a well-planned strategy, given Suning's capital operation expertise and the necessity to defend its offline retail territory."
author: "王军"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-01-10"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/suning-xiaodian-enters-community-group-buying-following-the-trend-or-goi-4d634d08/"
markdown: "https://xinjignxiao.com/en/articles/suning-xiaodian-enters-community-group-buying-following-the-trend-or-goi-4d634d08.md"
original_source: "https://mp.weixin.qq.com/s/XZel0h612KQiCEZ3aAConw"
translation: "https://xinjignxiao.com/zh/articles/%E8%8B%8F%E5%AE%81%E5%B0%8F%E5%BA%97%E5%85%A5%E5%B1%80%E7%A4%BE%E5%8C%BA%E5%9B%A2%E8%B4%AD-%E8%B7%9F%E9%A3%8E%E8%BF%98%E6%98%AFall-in-4d634d08.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/suning-xiaodian-enters-community-group-buying-following-the-trend-or-goi-4d634d08/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Suning Xiaodian Enters Community Group Buying: Following the Trend or Going All In?

> Suning Xiaodian has entered community group buying, planning to recruit 25,000 group leaders within three months. The author believes this is not a blind move but a well-planned strategy, given Suning's capital operation expertise and the necessity to defend its offline retail territory.

Suning Xiaodian has entered community group buying, planning to recruit 25,000 group leaders within three months. Is this a blind move or a long-planned strategy? The author tends to believe the latter.

Undoubtedly, community group buying has become the hottest startup project in 2018, with continuous investment and financing events in the industry, attracting countless entrepreneurs to flock to this track. Recently, a heavyweight player has joined this track—Suning.

On December 27, at the 2019 New Year Shopping Festival, Suning announced a new goal for Suning Xiaodian: "**Open 4,000 stores within the year**". The community group buying project will officially launch on January 18, with plans to recruit 100,000 group leaders nationwide. To achieve this goal, **Suning Xiaodian will recruit 25,000 group leaders in the first quarter alone.** Thus, the three driving forces of Suning's offline retail format have officially taken shape: Suning Xiaodian, Suning Pin Gou, and Suning Retail Cloud. The latest community group buying business has been handed over to the rapidly expanding Suning Xiaodian, which plans to recruit 25,000 group leaders within the next three months. Is this ambitious plan a pipe dream or does it have a logical path to realization?

1
Suning Xiaodian: Running at Full Speed

The rapid expansion of Suning's retail format portfolio. Public data shows that as of November 9, 2018, Suning had laid out over 4,000 Suning.com county-town stores, over 2,300 Suning Xiaodian stores, over 1,600 Suning.com Cloud Stores, and over 400 Suning.com Auchan stores across the country.

Suning Xiaodian, launched in 2018, has expanded through a combination of opening new stores and acquisitions (in April, it acquired 100% equity of Dia Tian Tian China, which had over 400 stores in Shanghai, with over 300 densely located in the main urban area, mostly in community business districts; in December, it acquired 31 stores of Xi'an Guoan convenience stores, all of which are subway station convenience stores). In July alone, Suning Xiaodian opened 878 convenience stores. After nearly a year of development, Suning Xiaodian now covers 70 cities, 20,000 communities, 60 million users, and 15,000 social groups. Taking Beijing as an example, in less than a year, 500 Suning Xiaodian stores have been opened, visible on every street corner. The numbers are 540 in Shanghai and 428 in Nanjing.

Although there is no official figure for the total number of Suning Xiaodian stores (all 2,300+ are directly operated), its development plan of "**reaching 15,500 stores in 2019 and 20,000 stores in 2020**" has amazed the industry with its rapid expansion. Undoubtedly, this store opening speed is already the fastest in the domestic convenience store industry.

**The entire team is running at full speed under high pressure, but those who have opened chain convenience stores know that at this speed of site selection and store opening, serious problems may arise in the subsequent development:**

> 1. Rapid store opening will cause abnormal increases in store rents in the city, raising the overall rent level for convenience stores in that city;
>
> 2. Inadequate site selection validation and inaccurate judgment of store profitability cycles;
>
> 3. Rapid expansion of personnel recruitment lacks training cycles, leading to overall low operational standards.
>
> 4. When renewing store leases the following year, the cost of closing loss-making stores is high.

Suning, a giant that started from offline home appliance retail chains, knows the ins and outs of the offline retail industry well. Why would it be so aggressive and ignore the objective laws of operations? There must be a logic behind it, likely "**secure the position first, then deepen operations later**." At this point, Suning is no longer the home appliance chain retailer that fought with Gome; it is a new-generation internet retail giant, coordinating online and offline operations and well-versed in capital operation tactics.

**1. Suning, the Capital Operation Expert**

**First, let's look at the main profit sources disclosed in Suning's financial reports over the past year or two:**

> During the Double 12 promotion in 2017, Suning.com completed its first sale of a portion of its Alibaba shares, approximately 5.5 million shares, accounting for 0.22% of Alibaba's total shares, generating $940 million and realizing a net profit of approximately 3.285 billion yuan;
>
> On May 30, 2018, Suning sold 0.3% of Alibaba's equity (7.66 million shares), generating $1.504 billion, with an expected net profit of approximately 5.601 billion yuan;
>
> On the evening of December 28, 2018, Suning sold 13.1647 million Alibaba shares, receiving $1.8627 billion in proceeds, with an expected net profit of approximately 5.205 billion yuan;

In one year, by selling its Alibaba shares, Suning.com has earned a net profit of over 14 billion yuan. Achieving such profit scale through its main business would be unimaginably difficult. And this is just the tip of the iceberg of Suning's external investments. Currently, Suning's business scope spans e-commerce, culture, real estate, supermarkets, finance, and sports. Rather than positioning it as a retail enterprise, Suning's achievements in capital operation may be more noteworthy.

In Suning's overall business portfolio, the business logic of Suning Xiaodian is perhaps the most difficult for the retail industry to understand. During the rapid expansion period from **January to July 2018, Suning Xiaodian's operating revenue was 140 million yuan, net assets were -310 million yuan, net loss was 296 million yuan, and debt reached 653 million yuan.**

But from an internet perspective, with the rising cost of online traffic, Suning Xiaodian serves as the vanguard and foothold of Suning's overall community O2O strategy, telling a story of low-cost customer acquisition. From this perspective, the logic behind Suning Xiaodian's aggressive expansion becomes more understandable.

Of course, all this is based on the assumption that cash flow is not an issue, as for a considerable period, Suning Xiaodian's store expansion will require substantial capital investment.

2
Suning Xiaodian's Store Operations and Product Logic

**Let's analyze the operational logic of Suning Xiaodian's store operations and product categories:**

**1. Store image: Those who have visited Suning Xiaodian stores will recall that the overall decoration cost is not high, and the design style is simple and standardized, facilitating faster store opening.**

**2. Food counter: Stores in Beijing have set up heated food areas, very similar to 7-Eleven and Bianli Feng's store structure, focusing on short-shelf-life food supply. However, many stores, due to their deep community location, have installed equipment but have not immediately started operations.**

**3. Fresh produce: Each store has a set of fresh produce island counters, specifically selling vegetables and fruits.**

Other categories are similar to common chain convenience stores.

We can see that Beijing Suning Xiaodian's initial positioning and starting point are very high!

They started with standard food and fresh produce categories.

The industry consensus is that these two categories either have high gross margins or good customer traffic, but they are difficult to operate! For example, Bianli Feng Beijing took five years of continuous effort to control food loss below 4%. And the former convenience store leader in Beijing, "Good Neighbor," until it was acquired, only had some stores trying food, and vegetables and fruits never successfully stayed on the shelves.

The problem here is that the fresh produce category has no large-scale successful case in 24-hour chain convenience stores. Whether it's 7-Eleven or domestic local chains, convenience stores cannot achieve mountains of fresh produce with rich variety. Chain convenience store companies basically try for a while and then give up on scale, ultimately choosing a small display model, such as Bianli Feng, which only displays a small amount of pre-packaged fruit in air-cooled display cabinets. The extremely high product loss cannot be sustained even with strong capital. And food is closely related to the surrounding user base; stores located near residential areas find it difficult to drive sales.

The operational difficulty of these two categories will continue to amplify as the store scale expands.

3
Suning Xiaodian's Logic for Launching Community Group Buying

**How can stores better operate the fresh produce category and expand more SKUs? Therefore, whether it's Suning Xiaodian or any offline chain convenience store, in 2019, they will definitely participate in the community group buying market. The reasons are as follows:**

**1. Offensive—Breaking into the fresh produce category**

Fresh produce is a high-frequency, rigid demand for community users. The pre-sale and self-pickup model can greatly reduce loss and lower costs, thereby providing users with lower-priced products to attract and retain them, achieving a C2B2F model where people find products;

**2. Defensive—Preventing user segmentation**

Emerging community group buying platforms, also based on community users, highly overlap with convenience store users. It is foreseeable that when community group buying platforms hit SKU bottlenecks in fresh produce, FMCG and other standard products will become the preferred categories for product line expansion, inevitably segmenting some convenience store users. From this perspective, entering community group buying e-commerce has become a necessary choice for offline retail enterprises.

Moreover, entering community group buying, using stores as pickup points, drives consumers into the store, which also increases store traffic and product sales—a win-win.

**3. There are already pioneers in offline retail entering community group buying**

Recently, China's largest light franchise chain convenience store brand—Meiyijia—has launched, and the second-largest, Furong Xing Sheng, has become a leading platform through a year and a half of development. In addition, retail enterprises such as Qian Da Ma, Su Guo, and Wu Mei have also entered the community group buying business. With precedents, Suning's entry into community group buying is natural.

**The key question is: What approach will Suning take to maintain competitiveness?**

> **Customer acquisition:** Each store will have several QR codes for its WeChat groups; when users check out, staff will recommend scanning to join the group. The store manager becomes the group leader, and the 10% commission becomes a smaller incentive.
>
> **Fulfillment:** The store naturally serves as a pickup point, and self-pickup customers also drive store sales.
>
> **Expansion:** The store also serves as a forward warehouse, so one store can cover its own community users while also serving surrounding communities, achieving a 1+N model. Recruit mothers in surrounding communities as group leaders and set up pickup points, while also recruiting husband-and-wife small stores as group leaders, with excellent small stores potentially joining Suning Xiaodian in the future.
>
> **Investment:** As a capital-rich company, Suning investing in or acquiring other community group buying platforms is highly likely.

**This may be the logic behind Suning Xiaodian's plan to recruit 25,000 group leaders in three months for community group buying.**

Final Thoughts:

Whether it's to attack and expand traffic-driving categories or to defend against continuous user segmentation, traditional offline retail chain enterprises must think about and practice how to use WeChat for community group buying. This is inevitable. But how should physical stores do it? What method is most suitable? Each offline chain convenience store will have its own choice.

In 2019, will community group buying become the third pole of new retail? How will the 1.0 version, starting with fresh produce, quickly iterate and evolve? With more offline retail enterprises like Suning Xiaodian joining, the battle will become even more unpredictable. Whether this WeChat-based traffic monetization model can maintain freshness and continuously increase market share remains to be seen.

Wang Jun: Famous new retail expert. Chief retail analysis expert and special columnist for New Distribution. Previously worked at: Bianli Feng Group, HNA Zhanghe Cloud Warehouse, and Radio and Television Group. Has rich practical experience in FMCG supply chain and new retail channels. Has conducted in-depth research on innovative fields such as community group buying, unmanned retail, and IP commercialization.

**Extended reading from the author's community group buying column:**

If you are interested in the above content, feel free to scan the code to join the New Distribution WeChat community.

The community includes: FMCG B2B, community group buying e-commerce, internet transformation, marketing innovation, and other themed communities, as well as investor, CEO, and marketing expert communities. Please scan the QR code below to join the group, and when adding friends, please indicate your identity and purpose.

**-END-**


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671