Click for details Recently, I have intensively visited some community group buying entrepreneurs, SaaS software service providers, suppliers, group leaders, etc., and have generated some new ideas that I hope to share with you. Overall, the basic model of this track is very clear. The speech "11 Questions on Community E-commerce" released by the New Distribution research team in Changsha in October was recognized by many investment institutions and practitioners. I believe that community group buying as a whole has passed the stage from 0 to 0.5, the track is hot, and a large amount of capital has entered. Many people also say that this is the last entrepreneurial opportunity left for entrepreneurs born in the 1970s and 1980s. It is common to see some entrepreneurs who, at the drop of a hat, claim this is a hundred-billion-yuan business, proud beyond measure, very much like the early B2B e-commerce era, where everyone thought they were a disruptive big business. But through this round of intensive communication, as a deep observer of industrial internet, I have a few points to discuss with you. 1 From sales-place supply chain to origin supply chain From the current situation I have learned, most community group buying companies have not cultivated their buyer system, but rely heavily on local suppliers, using them as their buyers. However, most local suppliers do not have much product marketing capability; they are just middlemen. They can cooperate with any community e-commerce platform. Once they cooperate, all platforms are essentially competing in homogenization. Platforms that get money naturally fall into price wars and subsidy wars. It is said that in 2019, 5-10 billion yuan of capital will come in. Some busybodies calculated that the biggest beneficiaries are actually the group leaders, which is the same logic as when B2B e-commerce subsidized small shops. Brother Dong (the author) previously invented a term to explain this effect, called the "brothel theory." So, from this perspective, 80% of platforms relying on sales-place supply chains will not go far or last long. Essentially, community e-commerce is a business model driven by demand chains that drive supply chains. Therefore, the construction and optimization of the supply chain system is the key to the long-term development of community group buying e-commerce, and the ones that can represent the future defense line of community group buying are not those flashy community e-commerce companies supported by sales-place supply chains, but those with origin supply chain advantages. 2 Vertical and horizontal alliances vs. blind rapid expansion Currently, I observe many companies expanding regionally, which can be described as blind rapid expansion. This is like a teenager whose body has not yet developed, but you insist on giving him a woman to carry on the family line; the result is predictable. Those who boast about conquering a city in a month are basically like this teenager. Although community e-commerce companies are relatively asset-light, they cannot just rely on an IT system plus operational staff to speed ahead. A community e-commerce company is essentially a supply chain company, an M2C (production-sales integration) model company. The supply chain is like the vital spot of a snake, and its importance is self-evident. Currently, the product selection principles of many platforms are: scarce, local, and distinctive; the scenarios they enter are three high-frequency and rigid-demand scenarios for local community residents: kitchen (rice, flour, oil, vegetables, etc.), living room (fruits + snacks), and bedroom (beauty products). Therefore, in the process of expansion to other places, this "methodology" is replicated. How to discover hit products that meet the consumption of local community residents and how to find supply chains that meet these requirements are key. Another major judgment for 2019 is that in the future, more than 80% of community group buying companies may die or be acquired. I have also observed many companies engaging in vertical and horizontal alliances, merging supply chain advantages and group leader resources. Those who may be forced out are more likely the founders of these companies. Because team integration is the hardest part; the early stage of a merger is a honeymoon period, but after three months, some founders may leave in disappointment. 3 Operational capability building vs. superficial show Essentially, community e-commerce comprehensively utilizes location-based traffic and social traffic to reduce costs, thereby improving efficiency, to achieve the goal of enhancing experience. In terms of cost and efficiency, I am not at all worried about the operational capabilities of various community e-commerce platforms; the only thing I worry about is user experience. Every activity and operational method of the platform must have warmth, friendliness, and a sense of service. Recently, I heard some sharing from group leaders who claim monthly sales of 300,000 yuan. My deepest feeling is that group leaders are key figures in maintaining community relationships. The platform's training system, communication material library, honor advancement system, and incentive system must shift the role of group leader from part-time to full-time, like Xiaohongshu, which has a dedicated KOL cultivation manual. The sales and customer stickiness brought by a professional, full-time group leader are completely different from the value a part-time group leader brings to a community e-commerce company. I boldly predict that "group leader" may become a new profession in the near future. So, how to select good group leaders? Those who meet the criteria of "love trying new things, love sharing, have influence, have professionalism, and understand communication skills" are the KOLs. Those with strong personal IP attributes within their circles or residential areas are most likely to stand out and become new individual business practitioners. From this perspective, the community e-commerce model is truly new retail. It releases the value of 80% of community retail stores nationwide, empowers them, brings increments to all participants, reduces social inventory, and accelerates social goods turnover. It is a true supply-side reform! From the perspective of the second half of the internet, it is the combination of physical enterprises and the internet, integrating and empowering each other. Therefore, community e-commerce companies should strengthen their insight into users and scenario judgment, use warm operational methods for group leaders and users, build dedicated project teams and community operation teams, and improve the platform's service quality, delivery capability, fulfillment capability, and quality control capability. "May I win one person's heart and stay with them until old age," endlessly approaching the hearts of group leaders and users, conducting "deep fan marketing." Operations without warmth are all superficial show! 4 Getting more money vs. forcing profitability Is it better to be a profitable community e-commerce company or one that gets money? Brother Dong believes that before achieving a certain market share and profitability in several cities, community group buying platforms that rely on capital for crazy expansion are all hooligans! And in the choice between market share and profitability, profitability takes priority. Being profitable means you have found the best combination of efficiency, cost, and customer experience, and found the coupling point among team, supply chain, customers, and competitors. At this time, it is right to get money to expand or consolidate the foundation. Conversely, getting money is just an aphrodisiac. So, don't be afraid of those companies that get money early; their days are not necessarily good. These four Achilles' heels are the key climbs and hurdles between 0.5 and 1.0. Business is always like this; it is always climbing and crossing hurdles. 2019 is coming. Ma Yun said, we cannot change anyone, not even our own mothers. Our users live in various circles, and to some extent, in real and virtual internet communities. Being able to solve the problem of production-sales integration and person-store integration through the M2C community e-commerce model is a true marketing innovation and internet+. A small step for community e-commerce may become a big step for retail innovation and marketing innovation in the future. Community e-commerce, the third pole of Chinese retail, let's wait and see! If you are interested in the above content, you are welcome to scan the QR code to join the New Distribution WeChat community. The community includes: FMCG B2B, community e-commerce, internet transformation, marketing innovation, and other themed communities, as well as investor, CEO, and marketing expert communities. Please scan the QR code below to join the group. When adding friends, please indicate your identity and purpose. Click here to register in one click