---
title: "Survival Strategies for Traditional Channel Practitioners Amid Community Group Buying"
description: "A recent article argued that while community group buying disrupts channel pricing and affects sales, it shouldn't be blamed for all declines. The real danger is traditional FMCG practitioners becoming 'lying flat' and passive; instead, they should adapt and learn from growing businesses."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-06-18"
language: "en"
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---

# Survival Strategies for Traditional Channel Practitioners Amid Community Group Buying

> A recent article argued that while community group buying disrupts channel pricing and affects sales, it shouldn't be blamed for all declines. The real danger is traditional FMCG practitioners becoming 'lying flat' and passive; instead, they should adapt and learn from growing businesses.

## A few days ago, I wrote an article titled "Don't Let Community Group Buying Be the 'Scapegoat' for Declining Sales," which argued:
##  _**Community group buying does disrupt channel pricing, and companies need to coordinate with channel partners to mitigate this. I also believe it does have some impact on sales, but the reasons for declining sales shouldn't be reflexively blamed on community group buying.**_
##  The most terrifying aspect of community group buying is that many traditional FMCG practitioners have become 'lying flat' youths. If you can't change the situation, you need to find a way out. Even in the same market conditions, there are still growing companies and distributors; learn from them.
##  The article stirred a hornet's nest, with extreme feedback. Some positive views: **Community group buying exists, and what exists is reasonable (capital can burn money as it pleases; that's their right).**
##  Since we can't eliminate it, **we must adapt by continuously optimizing ourselves and our market to outpace competitors**. We face difficulties, but so do our competitors. Like B2B, capital will eventually run out. When the tide recedes, it'll be clear who's swimming naked, especially since we still need to make a living in the FMCG industry.
##  Of course, many expressed negative realities, such as:
>  _1. Price chaos and no profits, forcing price cuts;_
>
>  _2. Despair beyond grief; agents no longer want to cultivate the market;_
>
>  _3. No one dares to tell the truth; even during the pandemic, they claimed no impact, piling up mountain-like inventory;_
>
>  _4. No overall strategy; channel chaos and multi-channel complexity can't be handled; professionals only care about their positions for a few years._
##  These descriptions are correct from their own perspectives.
**1. Why do platforms burn money?**
Reason: They want traffic, monopoly, and ultimately profits to return to investors.
**2. Why do brands push inventory and compete for market share?**
Reason: To survive, develop, and ultimately profit.
**3. Why do distributors push inventory to terminals and require payment before shipping?**
Reason: To seek benefits and avoid harm; they also want to survive.
**4. Why do professionals only focus on the short term?**
Reason: They have families to feed; without performance, how can they eat?
**5. Why do small terminal shops not stock up and instead buy from platforms?**
Reason: Business is tough; they want to earn more and live better.
Upon reflection, no link is wrong. If you were in charge of any of these roles, you'd do the same. But isn't it moral kidnapping to criticize others from your own role?
For example, distributors and grassroots staff blame community group buying for hurting their business and complain about companies supplying platforms. The platform is innocent; they didn't beg for supply—companies or some distributors are eager to supply them.
Companies are also innocent; if they don't supply, they might lose consumers, and without sales, no profits, and without profits, they can't pay market expenses and salaries to distributors and staff. Thus, a new round of complaints is born.
**So, constant complaining is useless; it's a primitive human instinct. Observing the phenomenon is the initial stage, changing yourself is the intermediate stage, and changing the status quo to adapt and live better is the advanced stage.**
Below is a transcript of my conversation with a traditional distributor in Wuhan, which might inspire you.
****
 _PS: The distributor's business background: represents Xiang Piao Piao, Mondelez, Strong Group jelly, Lay's potato chips, a local beverage, etc., with annual sales of 50 million RMB._
** _Q: This year, everyone says offline business is tough. What's your experience? How are you handling offline channels?_**
**A** : No year is easy; every year we say it's hard but still do it. This year, we're indeed affected by online, not just community group buying but also livestream e-commerce and 2C e-commerce. However, overall profits are comparable to last year. As for offline channels, my strategy this year is: **Focus on special channels, supplement with CVS, and also cover general distribution.**
Focusing on special channels: At the beginning of the year, I laid out many closed campus channels, KTVs and bars, foot massage and bath centers, especially with significant growth in foodservice channels.
One night market stall sold over 1,000 cases of beverages in May (foodservice business rests during the day, works 17:00-24:00). My team rewards 200 RMB for developing a special channel outlet that meets purchase targets. So far, special channel outlets have nearly tripled compared to last year.
Supplementing with CVS: I believe chain convenience stores are a market trend. It's hard to enter now with high fees, but we can't give up. We maintain contact and wait for opportunities. Currently, we've entered a few chains with only 10-20 stores, and sales are decent.
Covering general distribution: We have many existing outlets. We still focus on serving the top 30% of quality outlets. Our investment in display fees, channel policies, and high-quality after-sales service is unmatched by online, so I'm not worried about them buying from platforms.
Moreover, there's still room for immediate consumption products. Our main competitors are still fighting with us. As for poorer outlets, just having stock is enough; we maintain contact and wait for opportunities.
** _Q: What's your view on community group buying?_**
**A** : I was initially against it and refused to cooperate. But I represent big brands, and Wuhan is too big for exclusive distribution. If I don't supply, others will, which affects me. Rather than being passively beaten, I'd rather proactively accept it.
After half a year of cooperation, I've gradually figured out its patterns. It's a good thing to 'fleece the wool.' For example, a platform recently started community group buying late and is heavily subsidizing. My employees are all group leaders.
A product is quoted at 300 RMB, the platform sells at 280, the group leader places fake orders to get the subsidy, and I buy at 290. Everyone profits; the platform's procurement meets their KPIs and is happier, and our relationship tightens. Also, the huge traffic does drive some real sales.
In principle, products past one-third of their shelf life can't be listed on the platform. But with this relationship with procurement, I now help companies handle large-date products: I get them at 40-50% off, sell at 70%, and the margins are decent.
Those who complain about community group buying are those who don't understand its operational details. Capital has thrown so much money, and you haven't gotten a cent—that's wrong. Being self-righteous is even more wrong.
 _**Q: How are the profits from community group buying?**_
**A** : It depends on the product. Some products have minimum price requirements from brands with strict penalties, so supply prices are high, and profits are higher. For products not monitored by brands, channel partners face pressure, and price undercutting is inevitable, so profits are low, even as low as 3-5 points.
Let's do the math: For example, if a product's profit margin is only 5%, but the platform pays back quickly, and the capital can turn over several times a month, the overall ROI is over 20 points.
Of course, the condition for cooperating with community group buying is that I handle after-sales. Generally, platform procurement gives me three chances: For example, if a product is priced at 10 RMB and sells poorly, I return it and relist at 9 RMB; if still poor, return and relist at 8 RMB; if still no improvement, it means the product isn't attractive enough or isn't suitable for community group buying. The platform must promise to accept returns, and I bear the return shipping costs.
Of course, platform procurement also has KPIs. I don't try products I'm not confident about, to avoid damaging the harmonious relationship with procurement.
** _Q: Based on your experience with community group buying, what would you like to say to peers?_**
**A** : I used to complain about its impact, but complaining only made me feel worse and did nothing.
When Didi first came out, the taxi industry fiercely resisted, even went on strike. But Didi made our lives more convenient. Before, people waited for taxis; now, taxis wait for people. Because it improved efficiency, it was accepted by consumers, and all taxi drivers had to install the Didi app.
In FMCG, the rise of supermarkets squeezed mom-and-pop shops; online shopping squeezed supermarkets. Sometimes, the times abandon you, even without you.
**It depends on whether you go with the flow or against it in the river of business.**
I don't advocate embracing or rejecting community group buying. But since it's a product of the times, you need to understand it. Even if you don't participate, for survival, you should at least 'fleece some wool.'
**Final thoughts:**
Every technological advance brings massive unemployment. Shared bikes put many motorcycle taxi drivers out of work; automation put many laborers out of work. Community group buying is just one example.
**If you can't stop change, adapt to it. Don't always put yourself in the victim's seat.**
Of course, I still hold my view: current community group buying has deviated from the norm. Businesses that deviate from basic commercial laws won't last long, but it'll be a while before it cools down. If you continue to be a 'lying flat' youth, even if community group buying takes the blame, what then?
You'll just lie flatter with a clearer conscience. Capital won't give you half a bun. Can you survive the darkness before dawn?
Review: Asher
Tips for exclusive news: 400-2000 RMB


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