Since August this year, Xingsheng Youxuan has successively withdrawn from Shanxi, Jiangsu, Zhejiang, Hebei, Anhui, Henan and other places. After two rounds of market contraction, it only retains a few key provinces for regional operations, showing a trend of degenerating into the largest local group. The lingering effect of cost reduction and efficiency enhancement persists, and the pattern of community e-commerce moving from four to three has basically taken shape.
Shoude's Attack As the only survivor among the 'old three groups' that still tenaciously survives, Xingsheng once had its own unique skills. In 2017, Xingsheng Youxuan relied on physical chain stores Furong Xingsheng and mom-and-pop stores to form a product structure of 'daily FMCG + fresh food' and a model of 'pre-sale + self-pickup', entering community group buying in Changsha. From 2017 to 2020, the first thousand-group war broke out. After a bloody survival of the fittest, the old three groups became industry representatives, but the most powerful Xingsheng, relying on Shoude, advanced rapidly on the track, with its development speed and control over organizational structure that other players could only admire but not imitate. Shoude is a third-party company whose main mission is to expand group leaders for Xingsheng Youxuan nationwide at the fastest speed. The overall person in charge is Yang Wei, who is a professional from Furong Xingsheng. However, the relationship between Shoude and Xingsheng is ambiguous but also 'settles accounts clearly'. For a long time, Xingsheng Youxuan's market expansion has been handled by Hunan Shoude Marketing. The earliest 14 employees of Shoude helped Xingsheng lay the market foundation in Hunan and established a 'pyramid-like' Shoude system, which was used to cultivate subsequent expansion personnel. Internally, the earliest 14 employees of Shoude are called the '14 Great Guardians'. In addition, in Hunan, Xingsheng Youxuan invested at least 50 million yuan to build its own logistics system, forming a five-level service network of 'city, district, county, town, and township' locally, ensuring that every city in Hunan has a central warehouse and a large number of sub-warehouses for accurate and rapid distribution of goods. With the supply chain advantages Xingsheng built in the early stage, the mature warehousing and distribution of the 'Hunan Model Super Large Warehouse', and the trump card of the Shoude Iron Army, Xingsheng Youxuan occupied a corner of 'favorable timing, geographical advantage, and human harmony' in the melee with Meiduo Tao. Especially the almost brainwashing direct sales BD in the Shoude system, the almost crazy KPI completion rate, and the organizational cohesion of the entire team, allowed this army surnamed 'Shou' but named 'Xing' to bite off many hard bones in the short term, especially during the period of intense competition for territory among community e-commerce companies. Shoude can be said to have made great contributions.
But this external tool and weapon is also a double-edged sword. Breaking out of Hunan's base is the first step of expansion, but since ancient times, it is harder to defend than to conquer. Although Shoude's BD speed is fast, speed alone is not enough; stability is the key. Especially after Meiduo Tao appeared halfway, Shoude could no longer hold on. The data feedback is even more obvious: the MV of Hunan Province alone accounted for 50% of the national total GMV, and with the two left and right guards of Guangdong and Hubei, it exceeded 80%. The SKU categories were also repeatedly reduced in other provinces. That is to say, on the surface, it went out, but in reality, it was still fighting a defensive war. Although at the last moment Shoude placed all its hopes on the push plan, when the three giants of community e-commerce entered the game, Xingsheng's momentum had already declined from this point.
The Shattered Dream of Panshi After Shoude's failure to form a highly differentiated external market with Meiduo Tao, last September, Xingsheng turned from offense to defense and entered the 'Panshi' stage: the main content was to suspend opening new cities, close invalid group points with daily orders below 3 orders, and publicly claim that everything is centered on order operations. The launch of the Panshi Plan was a step to rein in the horse at the edge of the cliff, after all, the reality is that Xingsheng's 'Hunan Model' indeed failed to be successfully replicated in other provinces. Oranges grown in Huainan are oranges, while those grown in Huaibei are trifoliate oranges. Even with the addition of the Shoude troops, it is difficult to resist the fact of internal decay. Unfortunately, the launch of Panshi was also powerless to turn the tide. Xingsheng's order volume in the first quarter of 2022 decreased by more than 60% year-on-year compared to 2021. One of the defensive lines, Guangdong Province, was also overtaken by Meituan Youxuan, with a difference of more than 8 times in order volume between the two sides. In addition, sales in the Hunan base also suffered a Waterloo, directly shrinking from tens of millions of orders in its heyday to the million-order level. But there is also good news in the overall decline in performance. Since the first quarter, Xingsheng Youxuan has achieved positive profitability in Hunan and Hubei. After overcoming the profit margin problem, Xingsheng Youxuan seemed to see a glimmer of hope, but it was only a flash in the pan. At the same time, the price paid will be equivalent. First, launching Panshi means to depose Shoude, which is like 'killing the donkey after it finishes grinding, and burning the bridge after crossing the river'. Second, the implementation of the Panshi Plan is only a transitional response measure. In the end, Xingsheng must save its life, so it will inevitably sacrifice the pawn to save the rook. The subsequent series of actions indeed confirmed these self-preservation behaviors.
The Sorrow of the Fortress The Fortress Plan is the last 'rook' left on the chessboard for Xingsheng. Its positioning is an upgraded version of Panshi. Its main function and task is to guard the final 'commander'. Changsha is currently almost like a 'bare commander'. According to relevant insiders, the main tone of the Fortress Plan was set as early as January this year: it targets the grid station reform in Hunan, Hubei, Jiangxi, and Guangdong, which are the top 4 sales regions for Xingsheng, and directly renames all grid station management departments in the above areas to Fortress Project Departments. Its effect can be understood from the literal meaning. From the two rounds of contraction from September to November, it can also be seen that Xingsheng intends to use Hunan as the headquarters to deploy three 'fortresses' that are easy to defend and difficult to attack around it, thus making a final desperate struggle for survival. The specific content of the Fortress Plan has three points:
First, the grid stations are taken back from the station masters and service managers to the company, and the company pays for the construction fees and rent. The relationship with service managers changes from cooperation to employment, achieving strong management and solving timeliness and delivery service quality.
Second, after the grid stations are taken back, market personnel are stationed to maintain the existing market and accurately develop new group points.
Third, the grid stations have autonomy and can pilot various new projects according to their actual conditions.
In addition, after the promotion of the Fortress Plan, each grid station settles finances independently, with the goal of turning each grid station from loss to profit. After streamlining, Xingsheng needs these regions that play a key role to strengthen their self-hematopoiesis ability. At the same time, it tightens management policies to achieve strong control and direct full-responsibility operation. That is to say, Xingsheng will make tenfold efforts to cultivate its last 'one acre and three parts of land' well. After all, as long as the green mountains remain, there is no need to worry about firewood. The 'Fortress Plan' is the ultimate form of Panshi, but it still follows the attitude of not being responsible after use. After the Panshi department was suddenly disbanded, some employees are still fighting for their rights and accounts, with withheld wages delayed and unpaid. Many people even resort to labor arbitration to seek justice, but these are common in the industries that have exploded this year. Xingsheng Youxuan is an enterprise worth learning from in community group buying. It has made many innovations in community group buying. It once kept pace with Meiduo Tao, and now it returns to the core market. Survival has become the most important goal for Xingsheng next.