---
title: "The Biggest \"Pitfall\" in Community Group Buying Shared Warehouses"
description: "This article discusses the development and challenges of shared warehouses in community group buying, highlighting the \"3+1\" market structure and the three-tier warehouse distribution system. It identifies key pitfalls such as demand-supply imbalance, platform dominance, internal competition, and potential platform entry, while predicting future trends like franchising and specialized warehouses."
author: "满满哥"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-11-16"
language: "en"
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# The Biggest "Pitfall" in Community Group Buying Shared Warehouses

> This article discusses the development and challenges of shared warehouses in community group buying, highlighting the "3+1" market structure and the three-tier warehouse distribution system. It identifies key pitfalls such as demand-supply imbalance, platform dominance, internal competition, and potential platform entry, while predicting future trends like franchising and specialized warehouses.

Source: Fengcang Technology (ID: FengCangKeJi)
Regarding the business model of community group buying, despite some lingering doubts, since capital groups rushed in in 2020, a "3+1" pattern has quickly formed.
The growth of community group buying has been accompanied by strict government regulation, and even amid a chorus of boos, the drama is already half over. In the first half, some seemingly leading characters unexpectedly exited stage left, with all sorts of players coming and going. The climax continues, but from the perspective of all parties involved, this drama was never destined to be a TV series but rather a blockbuster movie with no dull moments.
As we know, the core competitiveness of community group buying is concentrated in three major areas: front-end traffic, mid-end warehouse and distribution fulfillment, and back-end supply chain capabilities.
As order volumes gradually increase, community group buying platforms have basically formed a three-tier warehouse and distribution fulfillment system consisting of shared warehouses (collaborative warehouses), central warehouses, and grid warehouses, in order to balance losses, timeliness, and costs. This is also the model adopted by mainstream platforms in the industry, such as Duoduo Maicai and Meituan Youxuan.
Shared warehouses have emerged alongside the development of community group buying. Just as community group buying was born amid boos, the growth path of shared warehouses is destined to be bumpy.
**********The Three-Tier Warehouse and Distribution Fulfillment System of Community Group Buying**
Community group buying adopts the "211" model, where customers place orders on the platform before 23:00 the same day, and can pick up goods at the community store (the group leader's place) as early as around 11:00 the next day, with the latest pickup time being no later than 16:00.
Obviously, it is impossible for the platform's massive number of suppliers and thousands of SKUs to be shipped from factories or channel warehouses to the platform's national central warehouses in a timely manner.
Therefore, suppliers choose to store goods in advance in shared warehouses near the central warehouse (or even in the same park or same warehouse).
From the evening to before 2:00 the next morning, goods are delivered to the central warehouse in batches; before 4:00 the next morning, the central warehouse processes orders centrally, sorting and transporting goods from suppliers to grid warehouses; from 3:00 to 8:00 the next morning, grid warehouses receive goods, sort them according to the pickup points they cover, and deliver them to group leaders; from 8:00 to 11:00 the next morning, group leaders receive goods, sort and organize them by user, and notify users in the group to pick up; after 11:00 the next day, users can pick up goods as early as around 11:00, and if there are many orders or delivery delays, the latest pickup time is no later than 16:00.
In terms of coverage, a central warehouse typically has 3-5 shared warehouses around it, covering 40-70 grid warehouses, and a grid warehouse can cover 300-500 pickup points. That is, a central warehouse indirectly covers 12,000-35,000 pickup points. To ensure rapid delivery to the central warehouse, shared warehouses where suppliers store goods are mostly close to the central warehouse, and sometimes they share the same park or even the same warehouse.
The central warehouse has a coverage radius of about 100 kilometers, mainly covering one province or multiple cities, while the grid warehouse has a coverage radius of 15-20 kilometers, mainly covering districts, counties, towns, and villages.
"Shared warehouse + central warehouse + grid warehouse" are interlocked and work together to achieve cost reduction and efficiency improvement.
Shared warehouses enable timeliness to be advanced, central warehouses serve as the centralized transfer center for all goods, and intensive sorting and processing methods improve operational efficiency. Grid warehouses, as the last link in platform fulfillment, use collective ordering and delivery, which is an important factor in reducing fulfillment costs. This is the three-tier warehouse and distribution fulfillment system of community group buying.
******Development Landscape of Community Group Buying Shared Warehouses**
Where there are people, there are conflicts; where there are interests, there are competitions.
The general industry view is that grid warehouses find it difficult to be profitable, simply because platforms allocate orders intensively and cost control is extremely tight. In contrast, shared warehouse customers are platform suppliers, and during rapid development, suppliers focus more on the speed and volume of product sales. Therefore, in the shared warehouse niche, more and more "wolves" are attracted by the "scent."
Because community group buying platforms change too quickly, shared warehouses are also running fast with the platforms. Participants in this competition are like encountering an unprepared battle, meeting opponents unexpectedly and suddenly opening fire.
As a result, the level of participants in the shared warehouse arena varies greatly, and the scale and management level of shared warehouses also differ widely.
**From the perspective of participating groups, they can be roughly divided into four types:**
**1) Warehousing and logistics or supply chain enterprises, such as large ones like Anneng and Yuehai; 2) Operators of first-generation e-commerce cloud warehouses, such as Fawang; 3) Practitioners in express delivery and express freight networks, such as ZTO Cloud Warehouse; 4) Platform suppliers or FMCG channel distributors, which are numerous.**
**From the perspective of scale and region, shared warehouses come in three forms:**
**1) National network shared cloud warehouses, such as Fengcang; 2) Regional shared cloud warehouses, such as Gaosheng in Shandong; 3) Small-scale single warehouses in a certain area, commonly referred to as "wild warehouses" in the industry.**
In terms of current development scale and trends, the leading shared warehouses include Anneng Cloud Warehouse, Qianhai Fengcang, Fawang Cloud Warehouse, and Yuehai Cloud Warehouse. Their common feature is that they are all network cloud warehouses, with more than 100 cloud warehouses nationwide.
The differences are that Anneng, relying on Midea's strong background, has developed into a comprehensive supply chain enterprise; Fawang focuses on e-commerce warehouse and distribution for B2B/B2C omni-channel; Yuehai is a comprehensive supply chain enterprise with global layout both domestically and internationally; while Fengcang focuses solely on community group buying shared cloud warehouses.
**********Potential "Pitfalls" Facing Community Group Buying Shared Warehouses**
In fact, in terms of the nature of enterprises participating in shared warehouses (collaborative warehouses), there are both private and state-owned enterprises, but private enterprises seem more dynamic.
Regardless of the identity, participants in this field must face powerful near-monopoly platforms and a massive number of suppliers, especially the fast-developing and complex community e-commerce environment. Those who follow community e-commerce development can feel this rapid change: in April and May, a giant was valued at billions of dollars, and within less than a month, it became crocodile meat stewed and eaten.
In the unpredictable community e-commerce environment, what "pitfalls" do shared warehouses (collaborative warehouses) face?
**First, the contradiction between the rapidly growing demand of community groups and the coordination balance of the warehouse and distribution network. The author believes this is the first "pitfall" in the development of shared warehouses.**
We all know that shared warehouses serve the central warehouse and platform suppliers. For example, if the demand in March is 5,000 square meters, and considering development, you rent 6,000 square meters, there may be a few months of 1,000 square meters of idle cost.
But by August, demand suddenly exceeds 7,000 square meters. If you change warehouses, you lose the deposit; if you add another warehouse, you face increased operating costs. Almost all network cloud warehouses will go through this "pitfall," especially large network cloud warehouses.
**Second, the strong "urban management logic" of the platform's central warehouse.**
Although shared warehouses serve suppliers and charge merchants, their delivery fulfillment revolves around the platform's central warehouse. They face the warehouse managers of the platform's central warehouse every day. These managers are very assertive and have the power to fine or even "block" shared warehouses for issues in the delivery process.
In their view, if goods are not delivered according to platform requirements, or if delivery personnel have attitude problems, they will issue fines on the spot. The on-site warehouse manager can decide fines of 10,000 or 20,000 yuan, causing shared warehouses great distress.
**Third, "second-generation shared warehouse participants" causing disruption.**
Some managers in relatively large shared cloud warehouse enterprises see the space for rapid development and profit, so they leave to start their own businesses, poaching supplier customers, or engaging in underhanded activities while still working at the company.
**Fourth, some experts say that direct platform involvement in shared warehouses may be the biggest "pitfall" for third-party shared cloud warehouses.**
Indeed, if shared warehouses are sustainably profitable, why wouldn't platforms participate? Platforms are not short of money. If central warehouse capacity is not saturated, they can allocate part of the central warehouse as a shared warehouse; if capacity is saturated, they can build independent shared warehouses.
In fact, it's not just in the future; several major platforms are already involved in shared warehouses. Meituan and Duoduo have built shared warehouses in some regional central warehouses, and Xingsheng even operates self-operated shared warehouses. Does that mean there is no market for third-party shared warehouses?
The author has a slightly different view, for two reasons:
1. On the one hand, the number of suppliers is huge and growing rapidly; on the other hand, land resources are tight, so warehouse space everywhere is always limited, and platforms may be restricted in acquiring land or renting warehouses;
2. In recent years, community group buying platforms still face enormous competition and pressure. Platforms will focus more on front-end user acquisition and market expansion. Professionals should do professional work, and handing warehouse and distribution fulfillment to third parties is not a bad thing.
**********Development Trends of Community Group Buying Shared Warehouses**
Shared warehouses, as a key link to ensure fulfillment timeliness and improve processing, packaging, and sorting efficiency, will receive increasing attention. Four major trends may emerge in the future:
**First, the franchise model may become mainstream.**
As is well known, the franchise model made China's express delivery industry successful. Although SF Express and JD.com's direct-operated models have great advantages, the high costs involved trouble these two giants. In contrast, franchise-based ZTO and Yunda have established solid reputations and market positions, and the recently disruptive "J&T" is even more flourishing.
The logic of franchising for shared cloud warehouses is actually the same. Compared with direct operation, franchising has two major characteristics: first, "speed," which matches the "speed" of community group buying development; second, low cost, which is highly consistent with the cost requirements of community group buying development.
**Second, service upgrades and increased volume may lead to "breaking up into smaller pieces" for specialized shared warehouses.**
In the future, shared warehouse services will become more diversified and specialized. In addition to basic warehousing services, loading and unloading, processing, packaging, sorting, and return and exchange services will become more diverse, requiring multi-faceted satisfaction of supplier requirements.
Given the platform's increasingly high requirements for supplier timeliness, and with business scale and shared warehouse volume increasing but warehouse resources limited, there may be "breaking up into smaller pieces" for more professional specialized shared warehouses, such as seasoning and non-staple food warehouses, daily chemical warehouses, etc.
**Third, proprietary information systems become standard, and automation becomes possible.**
At present, system technology specifically for community group buying shared cloud warehouses is not yet mature. Mainstream WMS systems cannot adapt to the shared warehouse scenario of community group buying. Participants in shared warehouses are all feeling their way forward. The massive supplier business scenarios make proprietary information systems a must-have standard.
Currently, due to diverse categories and insufficient volume to support costs, machinery is more expensive than labor. However, with the rapid development of community e-commerce, and when business volume is large and stable, more machines may be introduced for sorting and processing specific SKUs to achieve automation.
**Fourth, leading shared warehouse enterprises may become the largest suppliers to platforms in the future.**
Leading shared warehouse enterprises have cost advantages and network advantages in warehouse and distribution fulfillment. By extending upward to participate in agency operations and downward to participate in supply chain integration, with the help of capital, they may well become suppliers that platforms cannot ignore.
Community group buying is a new business and new model based on both consumer internet and industrial internet logic. However, the warehouse and distribution network infrastructure for community group buying delivery is not yet mature, which is precisely the huge opportunity for all participants, including shared warehouses (collaborative warehouses).
**Community group buying is by no means just a business of a few pounds of pork or a few cabbages. It demonstrates a big logic for the future and is forming a new foundation that can drive local life in the digital intelligence era. Heroes from all walks of life, who will rise and fall? Let's wait and see!**
**Are you "watching" me?**


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