---
title: "The Consumption Efficiency Formula and Consumption Utility Indicators of Community Group Buying, Livestream E-commerce, and Same-City Retail"
description: "Regardless of how the business models in the retail e-commerce industry evolve, the core lies in balancing the three dimensions of 'experience, efficiency, and cost.' These dimensions correspond to the roles of merchants and consumers, meaning all retailer efforts and innovations aim to improve experience, efficiency, and cost for both parties. If any retailer could excel in all three dimensions, no competitor could match them. In reality, this is highly unlikely; generally, excelling in one or two dimensions already makes a great retail enterprise."
author: "我是庄帅"
publisher: "New Distribution"
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published: "2022-02-21"
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# The Consumption Efficiency Formula and Consumption Utility Indicators of Community Group Buying, Livestream E-commerce, and Same-City Retail

> Regardless of how the business models in the retail e-commerce industry evolve, the core lies in balancing the three dimensions of 'experience, efficiency, and cost.' These dimensions correspond to the roles of merchants and consumers, meaning all retailer efforts and innovations aim to improve experience, efficiency, and cost for both parties. If any retailer could excel in all three dimensions, no competitor could match them. In reality, this is highly unlikely; generally, excelling in one or two dimensions already makes a great retail enterprise.

Regardless of how the business models in the retail e-commerce industry evolve, the core lies in balancing the three dimensions of **'experience, efficiency, and cost.'**
These three dimensions correspond to the roles of merchants and consumers, meaning all retailer efforts and innovations aim to improve experience, efficiency, and cost for both parties. If any retailer could excel in all three dimensions, no competitor could match them. In reality, this is highly unlikely; generally, excelling in one or two dimensions already makes a great retail enterprise.
**Consumption Efficiency Formula and Consumption Utility Indicators**
**Consumption efficiency refers to the size of consumption outcomes generated by a certain input of consumption resources.** Simply put, similar to production efficiency or work efficiency, it is the amount of goods you, as a consumer, purchase given the time and physical effort invested in shopping. The formula for consumption efficiency is also simple:
**Consumption Efficiency = Consumption Utility / Consumption Expenditure** Here, consumption utility is mainly divided into objective utility and subjective utility. I have further broken down these two utilities into six indicators, including **platform attributes, number of touchpoints, consumption chain, frequency of reach, number of decision-makers, and influencing factors.** Among them, platform attributes, number of touchpoints, and consumption chain are objective utility; frequency of reach, number of decision-makers, and influencing factors are subjective utility. From the perspective of the three innovative retail e-commerce models—community group buying, livestream e-commerce, and same-city retail—platform attributes are divided into social, content, e-commerce, and physical stores. **Community group buying is primarily based on WeChat, with obvious social attributes; livestream e-commerce is represented by Taobao Live, Kuaishou, and Douyin, so it is mainly content and e-commerce; same-city retail currently uses platform e-commerce and physical stores as main carriers, with physical store and e-commerce attributes dominating.** Different platform attributes have significant differences in their impact on consumer psychology and behavior, leading to different efficiencies; secondly, different platform attributes have different product forms and operation methods, and the differences in the 'consumption chain' are also quite obvious. The consumption chain includes specific shopping processes and personal operations. Different platform attributes also determine consumers' subjective behavior, making the consumption chain complex and diverse. Therefore, the consumption chain actually has dual properties of 'objective utility' and 'subjective utility,' and is also closely related to the number of decision-makers and influencing factors. **Platform attributes also have a strong correlation with 'number of touchpoints' and 'frequency of reach.'** According to public statistics, in the WeChat scenario, there are a total of 29 primary and secondary touchpoints. The number of touchpoints and the frequency of reach are not entirely positively correlated, meaning more touchpoints do not necessarily lead to higher frequency of reach. In addition to 'objective utility' affecting consumption efficiency by requiring different time and physical effort in the shopping process, consumers' own 'subjective utility' also has a significant impact on consumption efficiency. **The three indicators of subjective utility are: frequency of reach, number of decision-makers, and influencing factors.** Frequency of reach is related to users' habits and lifestyle: users who like watching short videos have a higher frequency of reach than those on social platforms. Frequency of reach is positively correlated with the number of active users and usage time on internet platforms. The number of decision-makers refers to how many people participate in decision-making during the consumption process, which is related to platform attributes and product categories. For example, centralized e-commerce platforms are mostly individual decisions, while private domain e-commerce on social platforms and livestream e-commerce on content platforms involve multiple people in decision-making or mutual influence. FMCG categories are usually individual decisions, while home/furniture and home appliance categories often involve multiple family members in decision-making. Influencing factors are factors that affect the 'consumption chain,' including objective factors such as weather, distance, and others; subjective factors such as financial status and emotions. The following three small cases can provide a more intuitive understanding of the relationships among the indicators of 'consumption utility' in the three innovative retail e-commerce models: community group buying, livestream e-commerce, and same-city retail:
_Case 1: Consumer A likes WeChat group chats. Through a product link shared by the group owner (team leader) in the group, she can directly select products in the group chat list and purchase them directly._ _
_In this process, she does not need to register as a user, and payment is convenient. Since she has already bound her bank card for WeChat red packets, she directly uses WeChat Pay. However, she still needs to fill in delivery information and then wait for the goods to be delivered to the group owner's (team leader's) small store near the community. The next day, she picks them up herself and takes the opportunity to see if there is anything else she needs or any promotions._ _
_While browsing products in the group, A will @ the group owner to ask questions, and other group members will also give opinions and communicate, giving her a feeling of shopping with friends. However, sometimes she leaves the shopping group because of red packet grabs or gossip in neighboring groups, and then forgets what she wanted to buy..._
In the first case, the platform attributes are clearly social and physical store. The user's number of touchpoints is mainly three: WeChat group, group owner (team leader), and physical store. The consumption chain mainly includes joining the group, the shopping process in the mini-program, and offline pickup; the WeChat group has the highest frequency of reach for consumers; the number of decision-makers ranges from individual to multiple, and these decision-makers are also influencing factors. Information from WeChat group chats and personal chats also serves as influencing factors.
_Case 2: Consumer B likes watching short videos and spends two to three hours every night after work scrolling through Douyin. Sometimes she sees products being sold in livestreams and, if she likes and needs them, she places an order and waits for delivery. Of course, she also schedules Taobao Live sessions at fixed times to shop in Taobao livestreams, but sometimes she forgets because she is busy watching short videos. Recently, she discovered that WeChat Channels also has brand merchants starting livestream commerce, so she has followed brand Channels and made reservations for her favorite brand livestreams to shop._
In the second case, the platform attributes are content, social, and e-commerce. The user's touchpoints include short videos, e-commerce apps, and WeChat Channels. Shopping is done through Douyin's small store, WeChat mini-programs, and Taobao's shopping process. The consumption chains are: from short video content to livestream; from independent e-commerce apps to livestream; from Channels to mini-program livestream. All are delivered by express to the door. Short video content and message notifications form high reach for consumers and are also factors influencing shopping; the number of decision-makers is mainly individual.
_Case 3: Consumer C never trusted online shopping and always walked or drove to physical stores to shop. Although his shopping purpose was strong, he was still influenced by friends, family, and salespeople. Sometimes he changed his mind due to store decoration and bought brands and products not planned. After hearing that JD.com launched the 'Nearby' channel during last year's Double 11, allowing him to choose and purchase products from physical stores with express delivery, he now rarely goes to physical stores. Through JD.com's 'Nearby' channel, he can almost buy all the products he could previously buy in physical stores. Now he often shops at home with his family through JD.com's 'Nearby' channel and waits for express delivery._
The third case is a typical same-city retail model. The platform attributes are physical store and e-commerce. The number of touchpoints is two: e-commerce app and physical store. The consumption chain shifts from the physical store shopping process to the e-commerce shopping process; the frequency of reach depends on shopping needs; the number of decision-makers is multiple; influencing factors shift from weather, distance, friends, family, and salespeople to family. Through these three small cases, one should be able to better understand the relationships among the six indicators of consumption utility to a certain extent. In addition, although community group buying, livestream e-commerce, and same-city retail differ in consumption efficiency, they can coexist because they maximize consumption efficiency based on conforming to existing consumption habits, lifestyles, and behavioral habits. Of course, in addition to consumption efficiency, a comprehensive evaluation of consumption experience and consumption cost is also needed to further clarify whether an innovative retail e-commerce model can achieve scale, long-term existence, and sustained growth.
Source: Zhuang Shuai Retail E-commerce Channel (ID: zhuangshuaiec) Author: I am Zhuang Shuai
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