Xingsheng Youxuan, unable to sustain its competitive edge amid intense industry homogenization, recently withdrew from the Guangdong market, following its closure of Fujian operations in April. The community e-commerce "big brother" is aging prematurely, with its business footprint shrinking from a peak of 18 provinces to just Hunan, Hubei, and Jiangxi (official website data not yet updated), which are also the earliest markets cultivated by Xingsheng Youxuan and Furong Xingsheng convenience stores. As one of the early players in community e-commerce, Xingsheng Youxuan initially benefited from the windfall of the trend, having secured eight rounds of financing totaling over $12 billion. It was once the talk of the town, even serving as a research benchmark for major companies like Meituan and Pinduoduo. Now, Xingsheng Youxuan is repeatedly contracting and fizzling out, forced to retreat to its Hunan stronghold. Without the "noble" background of a traffic platform and resource support, it cannot compete with low-price physical retailers in the discount era. Fighting alone, Xingsheng Youxuan seems to be beating a retreat. In contrast, Meituan Youxuan is re-energizing, Duoduo Maicai is striving for full profitability, Alibaba has merged Taocaicai and Taoxianda into Taobao Maicai, and JD.com, an investor in Xingsheng Youxuan, has restarted JD Pinpin... For Xingsheng Youxuan, this war was doomed from the start. As market share is gradually eroded, whether its stronghold can remain impregnable is another question.

Zero-Sum Game The brutal competition in community e-commerce is essentially a zero-sum game, as evidenced by platforms exiting the track and players frequently withdrawing from cities. "The city closures weren't sudden; the daily order volumes in these closed cities were too low, and competitiveness was weak, so we withdrew early," a Xingsheng Youxuan supplier previously told the media. "But it's somewhat surprising that even provincial capitals were shut down." Undeniably, Xingsheng Youxuan is a pioneer in community e-commerce. When the track was not yet crowded, it stood out with its "pre-sale + self-pickup" model and low-tier market strategy, developing rapidly. However, starting early does not directly equate to victory. Community e-commerce players incubated by internet platforms caught up from behind, completing in less than a year what took Xingsheng Youxuan four years. In contrast, Xingsheng Youxuan not only faces issues like difficulty in data traffic diversion and monetization but also fails to replicate its success in Hunan when expanding to other cities. Now it must confront the harsh reality that its daily order volumes mostly lag behind Meituan and Duoduo.

The author believes that even as a new retail model, community group buying cannot escape basic retail logic. In the three major system links shown below, all are indispensable, but most players in community group buying fail to satisfy the first two systems, leading to a collapse after burning through financing. Among these, a stable consumer system is the most "headache" for community group buying. As People's Daily commented on the "traffic of a few cabbages and a few fruits," community group buying is competing with offline vegetable vendors for customers. Internet giants still operate with internet logic: first, they attract traffic with high subsidies, burning money for growth. However, consumers attracted by low prices do not constitute a stable consumer system. But once the big players start the money-burning game, it becomes a zero-sum game; other players have no choice but to follow with subsidies, or face the bleak reality of losing customers. It must be admitted that the power of internet giants in the community group buying track is unimaginably strong. Therefore, players with insufficient capital are gradually eliminated. Even the survivors of the competition pay a heavy price in real money but struggle to get equivalent returns. As a high-frequency, rigid-demand grocery business, after deducting platform subsidies, the actual average transaction value is pitifully low. According to an insider in community group buying: "Although the platform announces high order volumes, due to low average order value and refunds, the actual GMV is not much." Moreover, the internet's excessive pursuit of data supremacy has led to various fraudulent activities and vicious competition, and the final GMV figures often contain water. Fresh produce categories, with low standardization and high timeliness requirements, also incur high warehousing and distribution costs. After layers of exploitation, profits are minimal, and a portion is taken by group leaders as commissions, making "losses" the norm for platforms. Examining Xingsheng Youxuan's financing history, nearly 70% of its investors are foreign and dollar funds. Affected by adverse external conditions, these institutions have been struggling to manage themselves and are unable to pay attention to the survival of their portfolio companies. In such circumstances, how much capital can Xingsheng Youxuan continue to burn?

The Hunting of the "New Three Groups" With capital leading the way, Meituan Youxuan, Duoduo Maicai, and Taobao Maicai have entered the 3.0 era of the "New Three Groups," and their rapid development follows a similar "pass code." First, besides traffic from their own platforms, the "New Three Groups" have brand surplus value as an additional traffic booster. Second, they all place great emphasis on the incentive and management of group leaders, users, and employees. More importantly, behind their fierce competition, they each hold different "martial arts manuals." Pinduoduo's "Duoduo Maicai" follows Pinduoduo's usual approach: "One low price beats everything!" Duoduo Maicai leverages Pinduoduo's mature product cooperation channels to lower group leader commissions and reduce end-customer prices, coupled with Pinduoduo's own 850 million user traffic, ensuring steady order growth. As for the "100 Billion Agricultural Research Special Project" launched after Chen Lei took office, it strategically guides Pinduoduo onto the "road to helping agriculture." Investments and plans in agriculture will inevitably strengthen Duoduo Maicai's competitive edge in community e-commerce. Meituan Youxuan (Tomorrow Supermarket) is showing its "youth" advantage, focusing on the service experience of "faster delivery, more products, lower prices." Meituan's customer base is mainly young urban professionals, so Meituan Youxuan's users are younger and have certain requirements for products; after entering the low-tier market in the community group buying track, its user base increased by 190 million in one year, which is extremely important for Meituan's market value and scale. Backed by Meituan's 680 million user traffic, Meituan Youxuan relies on the parent company for customer traffic diversion and uses group leaders and their group marketing to drive orders. As of the end of June this year, Meituan Youxuan's cumulative transaction users reached 470 million. Taobao Maicai, formed by the merger and upgrade of Taocaicai and Taoxianda, is supported by Alibaba's grand plans in local life, Taobao, and agriculture. Each platform has its own advantages and understanding of community e-commerce, and the competition in the 3.0 era of the "New Three Groups" is naturally more precise and strategic. Taobao Maicai and Duoduo Maicai are both enterprises with deep layouts in agriculture, which will gradually show advantages in long-term competition, followed by Xingsheng Youxuan and Meituan Youxuan. For Taocaicai, Duoduo Maicai, and Meituan Youxuan, their community e-commerce positioning is just a fulcrum of their overall strategy. In contrast, for Xingsheng Youxuan, community e-commerce is equivalent to the company itself. In the competition with giants, its desperate hope to enter the stock market is a "life-saving move," but with continuous city withdrawals, an IPO seems far away. Xingsheng Youxuan has fully enjoyed the pioneer dividend, but unfortunately, latecomers have overtaken it. In Xingsheng Youxuan's eyes, this is a business that can be scaled up and listed. But in the eyes of Pinduoduo, Meituan, and Alibaba, whether to list seems less important; this high-frequency business that continuously generates data and strengthens their business moats is about ecosystem competition, not just individual cities.

Capital Drifting, Xingsheng "Shrinking"

In the development of community e-commerce, Xingsheng Youxuan is undoubtedly the pioneer that created the community e-commerce model, establishing the "pre-sale + self-pickup" model and breaking through to create a second growth curve. This is the important value Xingsheng Youxuan brought to the market. Unlike the "traffic + monetization" model of internet giants, Xingsheng Youxuan's community e-commerce model combines "precise consumers + precise products," and only after polishing cooperation with suppliers and logistics providers did it achieve slight profitability in its Hunan stronghold. However, the market environment is ever-changing. As the track cools and capital drifts away, community e-commerce platforms are slowing down, with most platforms' order volumes stagnating. The tug-of-war with giants in terms of capital, organization, and personnel has also drained Xingsheng Youxuan's advantages. From first to fourth, from a "soon-to-be-listed company" to "whether it can list," Xingsheng Youxuan has lost the "top seat" in community e-commerce and has gradually transformed from a "pioneer" to a "follower." Under fierce competition, "capital" has become the most critical factor for Xingsheng Youxuan's survival. According to public media reports, from 2018 to now, Xingsheng Youxuan has cumulatively raised over $5 billion (excluding undisbursed amounts), approximately 35 billion RMB. In mid-2021, Xingsheng Youxuan's market value reached as high as $12 billion. Facing increasingly fierce competition in the community e-commerce track, whether it's Meituan Youxuan, Duoduo Maicai, Taobao Maicai, Jingxi Pinpin, or Xingsheng Youxuan, each platform has its own advantages and understanding of community e-commerce, but all are dancing on the edge of a knife. Negative profit operations mean that only those who survive can have the possibility to enter the trillion-yuan blue ocean market and even gain "discourse power" in the internet world. After a round of "slimming down" by internet giants, the community e-commerce business sector will abandon the traditional extensive development model dominated by scale and efficiency, moving towards an intensive development stage of "building high walls and storing grain widely." In contrast, Xingsheng Youxuan, as a pioneer in community e-commerce, faces challenges in maintaining its brand image as "a warm community e-commerce" in the eyes of consumers, especially after complaints about selling counterfeit Dove shower gel from Hong Kong and the cold response of just "refund" when a duck claw had a fly in it. The road ahead is long and arduous.

It is worth noting that behind Xingsheng Youxuan, Duoduo Maicai, and Meituan Youxuan, Tencent's shadow can be seen; while behind Taobao Maicai and Jingxi Pinpin are Alibaba and JD.com. In other words, the final outcome of the community e-commerce track largely depends on the competition among internet platforms. What Xingsheng Youxuan can do now is only stabilize its base, protect profitable regions, quickly close non-profitable stations using a last-place elimination system, and cut unnecessary departments and staff at headquarters. But can it survive the industry cycle? What will its ultimate fate be? The answer is already on the horizon.