---
title: "What Are the New Three Groups—Didi, Duoduo, and Meituan—Really After with Their 'Hundred-Billion Subsidies'?"
description: "In mid-June, Meituan reportedly invested 2 billion yuan to enter community group buying, targeting East and North China. Didi's Orange Heart优选 and Pinduoduo's Duoduo Maicai followed with massive subsidies, sparking questions about the true motives behind these capital-intensive moves."
author: "李保林  何年"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-11-26"
language: "en"
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---

# What Are the New Three Groups—Didi, Duoduo, and Meituan—Really After with Their 'Hundred-Billion Subsidies'?

> In mid-June, Meituan reportedly invested 2 billion yuan to enter community group buying, targeting East and North China. Didi's Orange Heart优选 and Pinduoduo's Duoduo Maicai followed with massive subsidies, sparking questions about the true motives behind these capital-intensive moves.

****Click 'Read the original' for details****
In mid-June this year, multiple industry media reported that Meituan would enter the community group buying track with **2 billion yuan**, first targeting East and North China, vowing to 'bloodbath' these two markets.
Also in June, it was revealed that Orange Heart优选 (Chengxin Youxuan) chose to continue Didi Chuxing's crazy subsidy strategy, **spending a whopping 10 billion yuan** on products, partners, and group leaders.
In August, Pinduoduo launched 'Duoduo Maicai', claiming to **spend 1 billion yuan in heavy subsidies** to snatch top group leader resources, and formulated a 1v1 growth plan for group leaders.
With such capital agitation in the track, one can't help but ask: after wave after wave of silver flows like water, what will be left? Not long ago, the Luckin Coffee scandal burned through billions in subsidies, turning from a positive case to a negative example overnight.
**Looking at China's history of subsidy wars, it's always that the scar hasn't healed before forgetting the pain.**
Reviewing the past decade of internet giants' ups and downs, starting from 2011, the 'Thousand Group War' that still echoes today, followed almost year by year—'E-commerce Subsidy War', 'Ride-hailing Subsidy War', 'Food Delivery Subsidy War', 'Shared Bike War', 'New Retail Money-burning War', and 'Down-market 'Hundred-billion Subsidy' War'.
**Looking back now, the new three groups' profligate behavior is just a few waves in the big wave of money-burning. So, what is behind the high subsidies of the new three groups?**
**1. Money for Time**
Here I quote a philosophical saying: What you see is always what others want you to see. When we think we've grasped the trends of big companies, it's often when others have already finalized their plans.
Many see the new three groups' entry as a reckless charge, trying to beat the 'old masters' with 'wild punches'. But internet giants are not acting on a whim; they've been eyeing this for a long time, waiting for the old three groups to flatten the road, then driving in their brand-new 'cars'.
**But advantages come with disadvantages: entering late, following others' footsteps avoids pitfalls but certainly loses the first-mover advantage.** At this point, they need to use money to buy time to regain the lead. Facing the track's original residents, their capital accumulation is nothing compared to the new three groups; they can just crush them and seize the increment they haven't developed.
And facing competitors who are also internet giants, the task is to get ahead of rivals, using money to grab enough market share. This naturally leads to the next point.
**2. If Competitors Do It, Do It Too, Right or Wrong**
**A common line in movies is, 'Don't let your enemy get what he wants.' So, some big players in the track are essentially passive entrants; the hundred-billion subsidy money-burning is the same—if competitors do it, do it regardless of right or wrong.**
If you don't do it and others do, setting aside whether they actually take your market share, when they're busy at work, their voice will completely overshadow yours. The fight between JDB and Wanglaoji killed off the third player in the herbal tea track, Heqizheng, is the best example.
**3. A Traffic Battle, Not a Community War**
Regional communities do community group buying; giants enter to do social e-commerce. Internet giants know well that 'those who gain traffic gain the world'. From the start, they launch a traffic battle, not a community war.
So, the new three groups enter by attacking a point with a surface, using their entire ecosystem to encircle community group buying. Their goal is to break through the traffic carried by this point; **survival and profit are not within the new three groups' consideration, so investing billions in subsidies is 'necessary'.**
Conversely, regional communities use a point to attack a surface; they only have this one point, but hope to enter the entire local life through this entry point. They carry many burdens; profit is important, but survival is more important.
**4. User Retention, Not the Community Itself**
As mentioned, internet giants enter to compete for traffic. The ultimate goal of the new three groups' high subsidies is user retention, not the project or the community itself—'the drunkard's heart is not in the cup'.
That is, **the new three groups essentially value users themselves, not just burning money in the community business.** This is why there's a logic of full refunds for orders placed on the parent companies' apps.
On the other hand, it also explains why the call to de-group-leader-ize has always come from internet giants. Giants pursue user retention on their platforms, so they don't mind subsidizing, but since ancient times, 'birds are shot when they're gone, and dogs are cooked when rabbits are dead'—who can say? After all, according to the current situation, heavy rewards indeed bring about various high-efficiency events.
**5. Absorbing the Advantageous Genes of Third-Generation E-commerce**
Recently, I read an article saying that the new e-commerce era has shifted from 'tao' (search) to 'pin' (group), meaning e-commerce is transforming from traditional search-based to recommendation-based. Simply put, in the past, you bought what you lacked online, similar to planned consumption; now, social + algorithms fill the gaps in traditional e-commerce scenarios.
**Now, community group buying is a new retail format; you can understand it as the third type of retail or the third generation of e-commerce.** Centralized e-commerce represented by Taobao and JD is 1.0, social e-commerce represented by Pinduoduo is 2.0, and community group buying, a distributed e-commerce with sales-determined procurement and centralized distribution, is e-commerce 3.0.
Internet giants burn money to enter, partly to replicate the supply chain efficiency and low customer acquisition costs of third-generation e-commerce. But because communities are born in WeChat's ecosystem, and other giants, though participating, are not willing to live under Tencent's direct rule, especially since they have their own product, payment, and delivery systems, why put their heads in someone else's noose?
**6. Building the Nth Business Growth Curve**
The full meaning of the subtitle is that internet giants attempt to use community group buying to build the imagination space for the Nth business growth curve, adding weight to the parent company's overall value.
The most typical example is Didi. As the big brother in ride-hailing, Didi is a 'one general's success over ten thousand bones'. Back then, subsidies were so crazy that taking a ride was cheaper than taking a bus. It merged with Kuaidi, absorbed Uber, intercepted Huang Dafeng, and went all the way to disruption. In the same-city travel track, Didi successfully dominated, and after that, cheap rides, like low-priced food delivery, were gone forever.
But after deeply cultivating a field to the top, it's not always good. Didi's valuation is now stuck at 50-80 billion, which is not Didi's fault but the industry ceiling. So, Didi's IPO strategic goal has not yet been officially realized.
**Now, urgently entering the community group buying track and shouting, 'No cap on investment, take market first', one wonders if it can successfully establish a second growth curve.**
**Summary:**
The money-burning war is definitely double-edged, with pros and cons, which I won't expand on here. As for what the new three groups' high subsidies seek, on one hand, they want to retain existing users; on the other, they want to capture new traffic, and then, setting aside others' ecosystem binding, build their own closed loop.
So, regarding the money-burning behavior of internet giants, I can only say that any project launch or marketing action has its strict background and stance. One cannot just look at surface actions and expressions but must dig into the logic behind them, and never blindly follow.
> **Li Baolin | Community Group Buying Veteran, Founder of Central Plains Community E-commerce Club**
>
> **He Nian | New Distribution Community Group Buying & New Retail Research Specialist**
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