Community group buying is no longer a small-scale business. On August 26, Pinduoduo's community group buying project "Duoduo Maicai" was launched. To compete for top group leaders, Pinduoduo will invest 1 billion yuan in subsidies and provide 1-on-1 support through growth plans. In mid-October, Meituan upgraded its "Meituan Youxuan" business, established on July 7, to an internal top-level strategic project, tasked with driving Meituan's next revenue growth. In May, Didi launched "Chengxin Youxuan," claiming to invest 10 billion yuan in products, partners, and group leaders. In mid-September, at Alibaba Group's president meeting, Chairman and CEO Zhang Yong announced that the Hema business unit would form the Hema Youxuan division, marking Hema's official entry into the community group buying track. In July, Xingsheng Youxuan secured $800 million in Series C+ funding, with a post-investment valuation exceeding $4 billion; the same month, Shihuituan announced completion of $80 million in Series C+ funding. Looking at the changes over the past few months, with billions and tens of billions of capital flooding into community group buying, this is another internet war following ride-hailing and food delivery. This is a spectacle worth everyone's attention! -01- Not Watching, But Participating! Although the show is entertaining, FMCG manufacturers cannot simply be bystanders this time. This round of community group buying war is not just a battle among giants; it is also a war to transform traditional retail. With retail formats changing, can FMCG manufacturers afford to sit still? 1. Categories Directly Impact Consumer Goods According to internal data obtained by New Distribution, on a leading community group buying platform, FMCG standard products rank among the top 10 categories. Among them, fruits and vegetables account for 17%, meat, poultry, eggs, and aquatic products 14%, beverages, dairy, and instant drinks 12%, rice, flour, oil, and seasonings 12%, snacks 11%, apparel and home textiles 7%, and household cleaning and kitchen supplies 7%. From the above categories, comprehensive FMCG products far exceed fruits and vegetables. This alone demands attention from all FMCG manufacturers. Regardless of whether it's existing or incremental volume, from a sales scale perspective, they cannot afford to wait. If it's existing volume, competitors entering means your sales will naturally decline; if it's incremental volume, the essence of business is growth, and with new incremental channels emerging, shouldn't you follow up immediately? If past ride-hailing and food delivery wars had nothing to do with FMCG, manufacturers could watch as bystanders, but this time is different. Because your products are on the platform, your prices are on the platform, and your competitors are on the platform. Of course, participating doesn't mean you should also do community group buying, but rather stay alert to changes. How to monitor and follow up will be discussed below. 2. Community Group Buying Is Just the Appetizer Community group buying is just a business model innovation. Whether it's current community group buying, various O2O models, or self-operated new retail platforms, they all essentially involve either renovating or developing new traditional retail formats. Current community group buying, O2O home delivery, and self-operated new retail may ultimately converge, as business models are constantly evolving. The ultimate goal of these new business models is to meet increasingly better, faster, cheaper, and more diverse consumer demands. And these demands directly point to the food, beverage, and daily necessities sector. With this in mind, let's consider the current hundred-billion war in community group buying and the influx of various O2O platforms. What will the future look like? If it's like ride-hailing and food delivery, with a quick resolution and one dominant player, it would be relatively easier for FMCG manufacturers: just partner with the leader. But this battle will not result in a monopoly in the short term. As industry expert Mr. Chen Weilong predicts, this will be a regional stalemate and a protracted war. Fresh vegetables, fruits, poultry, and eggs are highly localized and region-specific, so this is not a nationwide one-size-fits-all business. Consequently, the prolonged "thousand-group war" will place higher demands on FMCG manufacturers. Suppose there's one format in North China, another in South China, and another in Southwest China, with different situations in first- to fifth-tier cities. How should FMCG manufacturers organize their national operations, allocate human resources, and decide whether to adopt one strategy per region or multiple strategies? In the past, FMCG business primarily relied on retail stores, which were fragmented and widespread but small, giving manufacturers relative control. But with internet giants entering, control is no longer in their hands. These community group buying and O2O new retail platforms could become the next "mega KA" stores. Without control, manufacturers must adapt to different policies in each region and change with the times. 3. Consumer Goods Growth Depends on Channels FMCG is an industry with severe product homogeneity and low consumer involvement. In today's era, having a good product may win consumer favor, but switching costs are too low. If I can't get Coca-Cola today, I'll settle for Pepsi. If I can't buy Arawana, I'll buy Fulinmen. If Master Kong instant noodles have a promotion, I'll stock up... The key issue FMCG must solve is how to sell. We've seen many innovative consumer brands launch with great fanfare, but frankly, few truly enter the offline market and compete in the red ocean. What to sell and how to sell are always the core of the FMCG industry. Focusing only on what to sell will never build a moat for FMCG companies. If I had to choose which is more important, I'd say both are equally important, each accounting for 50%. I once exchanged views with Mr. Pan Lihua of Coca-Cola. Externally, Coca-Cola is seen as a brand company because of its century-old brand, but he believes Coca-Cola is actually an operations company; the brand is the result, and the process is operations. Genki Forest is popular now, but if operations are poor, even the best product and brand will be short-lived without overall operational excellence. The key path to "how to sell" is channels. When channels are undergoing rapid evolution and upheaval, if you don't personally engage and participate, you'll lose your growth lever in the future. 4. If You Missed Tmall and JD.com, Don't Miss New Retail This statement is not a slogan but a prophecy that may well come true. I believe many FMCG manufacturers currently criticize new retail for disrupting the market and prices. The demand behind new retail is mainly consumer restocking and stockpiling, which they think isn't worth investing in. First, about pricing: every new business model emerges and changes using price as a tool. Without low prices, attracting consumers is impossible, which is understandable. Price chaos is unavoidable for any manufacturer. In the past, traditional retail stores were small and fragmented, with brand owners holding the upper hand and establishing a stable pricing ecosystem. Even if there were channel conflicts and price chaos, you could crack down on typical cases. Traditional e-commerce price chaos was relatively parallel to offline markets, but today we are in the vortex of retail transformation—no longer two parallel lines but a crisscrossing network. Since we can't avoid it, we must embrace it! Second, about demand: whether consumers are currently drawn by low prices or temporary stockpiling, I believe it's temporary. Once consumer habits mature and shift online, all types of demand will be online. Whether exploratory or impulsive, except for immediate consumption that can't wait 20-30 minutes, everything else will be online. Therefore, looking at community group buying and new retail O2O from the end, they are not just sales venues but also promotion and communication venues. These are the reasons why FMCG manufacturers must participate in the thousand-group war. The war is just the beginning, a process; the transformation of traditional retail is the key. FMCG manufacturers cannot just watch! -02- How to Participate? Specifically, I believe there are two core aspects: first, organization; second, product. 1. Organizational Structure Alignment At an O2O workshop organized by New Distribution, a brand president said to the general managers of sales units: "You may be thinking about how to do O2O well, product listing, brand exposure, and sales conversion, but I'm thinking about how our organization should change. With the market changing so fast, what organizational structure should we adopt to meet these changes..." At this stage, whether community group buying or new retail O2O, the volume is still limited, but they are subtly and gradually transforming traditional retail. An industry expert told me that when home delivery business accounts for about 30% of sales, that's the tipping point for structural changes in physical retail. We must not wait until 30% to start planning. For leading brands, the issue isn't capability but that the existing organizational system cannot cope with the rapidly changing retail landscape. Master Kong has 42,000 people distributing nationwide, Coca-Cola has 21,000, and Tsingtao Beer has 12,000 distributors. These people are spread across provinces, cities, counties, and even towns. Changing the established capabilities of "distribution, customer visits, and display" is no easy task! Of course, these are for beverage and alcohol categories where offline sales account for over 95%; for daily chemical and laundry categories, offline sales may be around 60%; for personal care and cosmetics, the offline share is even smaller. How FMCG manufacturers participate depends first on their category. As the saying goes, "sales determine status." If past sales were in physical retail stores, where will future sales come from? It's uncertain. Therefore, organizational structure must be adaptively adjusted—this is the first step. In the past, online and offline were two separate lines, with VP1 and VP2 each managing one. What about the future? In the short term (1-3 years), it's foreseeable that KA channels are rapidly digitizing. With JD.com, Tencent, and Alibaba investing in and acquiring offline KA chain stores, it's clear that KA stores are integrating with traditional B2C e-commerce. Additionally, the timeline for digitizing TT channels is unknown and likely lengthy, but the online transformation of KA chain stores is already in full swing, which is why KA is being incorporated into B2C departments. Organizational adjustment means model adjustment, which is a major project. The above organizational structure is just for reference. But in the near future, the B2C e-commerce department will not only manage Tmall, JD.com, and Pinduoduo but also unify community group buying, O2O, and KA store businesses. 2. Product Differentiation and Adaptation What products should be sold? The era of blockbuster products is over. Product innovation is not just about catering to young consumers on a single dimension but matching different products to different people in different scenarios. A friend from a leading O2O platform told me, "Internally, they compared and found that the overlap between offline KA supermarket shoppers and platform users is only 20%-30%. This means offline and online are two different consumer groups." Obviously, we cannot use the same product to satisfy different consumer groups. Extending this, even the same consumer group has different shopping needs in community group buying, O2O, KA, and TT channels, posing a huge challenge for FMCG companies. Behind channel fragmentation is scenario differentiation, which leads to demand differentiation. Whether it's flash sales, splash screen exposure, or buy-more-save-more bundles, these are just tactical moves. The strategy is to understand consumers' shopping needs and motivations and match them with corresponding products—this is what requires deep thought. As a company, you can't just sell bestsellers; innovation is inevitable. Before launching new products, besides considering the people, you must also consider the scenario. We've always said that the past was an era of people finding goods, but now it's an era of goods finding people. Goods not only find individual people but also need corresponding scenarios. Therefore, major innovations look at demand trends, such as sugar-free or no-additive; minor innovations look at person-product matching, such as specifications, packaging, and flavors. Major innovations are for positioning, minor innovations are for sales. Thus, the transformation of traditional retail formats also requires us to continuously change products and make adaptive adjustments. Summary: Returning to the "thousand-group war," regardless of the final outcome of community group buying, we must believe that it is just a process, not the ultimate form. If we combine community group buying and various O2O new retail, the endgame becomes simpler: transforming traditional retail formats to better meet consumer needs by providing more scenarios—ubiquitous scenarios. With retail formats changing, FMCG manufacturers certainly cannot sit idly by! The transformation of retail formats begins with thinking about organization and products, and changing the "vested interests and legacy thinking" within the company. The second step is marketing layout. The core direction of retail transformation is to increase digital touchpoints, improve connection efficiency with consumers, and better meet consumer needs. How should FMCG manufacturers do this? Through digital marketing layout, full-chain digital capabilities, and full-scenario consumer reach. Regarding how to plan: On December 3-4, New Distribution will hold the 3rd "2021 China FMCG Marketing Digitalization New Year Course" in Hangzhou, themed "Methods, Tools, and Practice." This event not only provides the latest marketing digitalization insights but also features excellent digital software tool service providers sharing their experiences, combined with actionable, executable, and replicable customer cases, truly helping FMCG companies find the second growth engine for 2021 business breakthroughs. Interested friends should not miss it! Tips will be paid 400-2000 yuan upon adoption. If you like this article, click [Watching] and share it with friends.