Five-year ups and downs of community group buying

Five-year ups and downs of community group buying

“Those who get fresh food win the world.” Xu Xin, a celebrity in the investment world, talked about the commercial value of fresh food at a “Future Technology Summit.”

Going back to 5 years ago, the community group buying business first appeared in Changsha. The representative enterprise is you, me, you and Xingsheng. A brand new business revolution has quietly planted the seeds.

As a sub-track of fresh food e-commerce, after experiencing fierce market competition in 2019, community group buying left the third group represented by Tongcheng Life, Shihui Group, and Xingsheng Optimal Group.

In 2020, the new crown epidemic has stimulated the demand of the vast sinking market, and the war is rekindled. This time, a number of Internet giants flooded the track where startups were competing. In July, Meituan launched Meituan Optimal and upgraded its vegetable selling business to a first-level division. In August, Pinduoduo announced that it would spend 1 billion yuan in subsidies and launched the community group buying project “Buy Duoduo”.

Nowadays, the community group buying business of many large factories has ushered in the first anniversary of its launch, and the competitive landscape of community group buying has also been initially clear: Duoduobuying, Meituan Optimum ranks first in the first echelon, Orange Heart Optimum, Prosperity Optimum, Shihui The regiment competes for the second echelon, and Jingxi Fight and Hema Fair are potential seed players.

However, with the tightening of supervision and the suspension of subsidies, there are still many uncertainties about where the community group buying ship will head.

Times Finance has contacted practitioners from different periods in this fresh food war, and they told about the industry context in their own eyes.

1. Commander: Killed a batch of bronzes, but met the strongest king

Five years ago, Hong Jie from Taizhou, Zhejiang was still a user in the original life community. After several rounds of model iteration and exploration of fresh food e-commerce B2C, O2O, and new retail, Dai Shanhui, the vice president of original life, created a community group buying project called “Food Sharing Club” this year, and joined as a senior user Hong Jie , Became the leader of the earliest community group buying.

As the team leader, she needs to make a product preview in the community of more than 400 people before the start of the panic. In order to show the effects of some daily-use products, Sister Hong will post a small video in the group buying group.

The group leader needs to have strong network resources and promotion capabilities. Sister Hong runs a medium-sized supermarket, walks closer to the community members, and has a circle of acquaintances within 1 kilometer. Through the WeChat mini program group purchase, Hong Jie can get a commission of 5,000 yuan per month, which is higher than the local average salary level.

“The more you go to the township area, the better you can do the community group buying business. The township lacks large supermarkets, and there are not many channels for users to choose from. Low-priced fruits and daily necessities are more attractive to them.”

Five-year ups and downs of community group buying

The community group buys a hundred groups battle. Image source: New Distribution

This kind of good business continued until five years later, until the arrival of Duoduomai and Meituan stirred up the local market. At the beginning of 2021, Hong Jie’s stable customer base and income began to decline. In just a few days, more than a dozen group sites (community group buying sites) have sprung up like bamboo shoots after a rain. After five years of maintaining users, they may become competitors someday.

The efficiency of the giant’s market layout completely exceeded Hong Jie’s imagination. After feeling the pressure of being besieged, she had to become the preferred leader of Duoduomai and Meituan. “If you don’t enter the market, you will be out. Users in the WeChat group will be out from time to time. They want to buy more vegetables and Meituan varieties when they ask for it.” Hong Jie complained to Times Finance and Economics.

Hong Jie’s situation is just a profile of the siege of many second-tier brands. According to QuestMobile’s “Community Group Buying Insights Report”, in the second half of 2018, “community group buying” quietly blown out, with a financing amount of up to 4 billion. Among them, you, me, you and Xingsheng Optimal Group received hundreds of millions of yuan and tens of millions of dollars, respectively. But the enthusiasm of capital only lasted into the first half of 2019.

Starting in the second half of 2019, cases of national platforms shutting down and regional platforms being merged continued. Neighbor One, Squirrel Pinpin, and Daradish were typical representatives; until the epidemic in early 2020, offline channels and national logistics The forced closure of the “survivors” saw new hope.

However, these companies that have experienced big waves and scouring the sand have encountered the strongest king when the industry ushered in a full recovery . For community group-buying startup companies, the entry of Internet giants is a dimensionality reduction blow. They have huge user resources, can attract many suppliers and franchisees, and have sufficient funds for phased subsidies.

At the end of last year, Wang Bin officially became the stable supplier of Orange Heart’s preferred Jiangsu warehouse, and was envied by a group of peers. At that time, the giants had opened their doors in the Jiangsu, Zhejiang and Shanghai markets, and offline supply channels had suffered a significant impact.

As a first-line dairy product supplier, Wang Bin’s steady orders from the platform gave Wang Bin a reassurance. “The sales of explosive products can maintain about 2,000 orders a day, and the sales of ordinary single products can also exceed 500 orders, with a daily profit of six. Seventy thousand yuan is not uncommon,” Wang Bin said to Times Finance and Economics.

“The platform is completely trading at a loss.” Wang Bin has seen the madness of the giants when they seize the market. “The price of the goods and the selling price of the terminal are often the same, not including the commission of the team leader, the salary of the offline team and various subsidies. .”

Meituan Optimal spent less than 10 days to set up the group buying territory of Taiyuan City. “Based on the innate advantages of community service providers, Meituan can quickly gather a group of people in a city.” Chen Ming, an employee of Taiyuan Meituan logistics service provider, told Times Finance.

2. After the tuyere: The off-line skirmishers who were left out, the commander’s commission was as low as 1%

The expansion of the giants and the continuous low-price promotion planted hidden dangers.

On December 22, 2020, the State Administration for Market Regulation and the Ministry of Commerce convened an administrative guidance meeting on regulating the order of community group buying, requiring Internet platform companies to strictly abide by the “nine nos.” In June 2021, several platforms, including Meituan and Pinduoduo, received rectification notices again, and large-scale subsidies were suspended, and penny spike products were removed from the shelves.

Soon, the pace of community group buying slowed down. “After the development of the leader’s end, the community group buying platform has moved from extensive expansion to a refined management stage.” A community group buying practitioner told Times Finance.

Five-year ups and downs of community group buying

A self-pickup point in a community in Shanghai. Photo by Times Finance

The goal of the refined operation of the platform was quickly reflected in the terminal heads and ground push employees. The heads who had been lobbyed by multiple platforms felt the feeling of being left out and gradually losing their right to speak.

Zhang Qiang, who runs a convenience store in Qingpu, Shanghai, joined a community group buying platform at the end of 2020. Now, he is a large-scale group leader in the community and has taken over six platforms. In order to be able to handle hundreds of orders every day, the whole family is busy with commissions every day. His wife is responsible for posting links to discounted products in the community WeChat group, and Zhang Qiang is responsible for helping pick up, count and place the goods.

According to Zhang Qiang, the biggest temptation at the beginning of the group was the new incentive policy proposed by the platform. As long as the newcomer orders more than 1 yuan, the group leader can get a commission of 10 yuan. “At that time, it was not difficult to get a commission of 2,000 yuan a day.”

However, the honeymoon period did not last long. Since the beginning of summer, he has found that the monthly income on the book is getting less and less. “When the group first started, the commissions of each family were generally 10%, but now it is less than 5%.” Nowadays, Zhang Qiang can only maintain an income of more than 4,000 yuan per month. The good life that once paid more than 10,000 yuan a month ended too suddenly. .

Compared with Zhang Qiang, more small group leaders are like the chaperones in the community group buying track: they make less money and live more.

Full-time wife Meng Wan feels that she is working for the platform for free. She has arranged the self-pickup point in a residential building. As long as she chooses to start a group, she must be prepared to not be able to withdraw all afternoon.

At noon every day, Meituan’s goods will be delivered on time, and then residents will continue to pick up the goods. This state often lasts until 9 o’clock in the evening. “Everything is piled on the table in the living room at home. Some frozen products need to be put in the refrigerator. Sometimes users have to return the goods and call them to communicate. The commission for a bucket of mineral water is only 1%. After a month, You can only get more than 100 yuan, deducting electricity and communication fees, and the gain is not worth the loss.” Meng Wan has plans to withdraw.

In the view of Qian Li, an employee of the Tenhui Group, it is difficult to reproduce the grand occasion a year ago: “When the situation is good, 10 sites can be opened a day, and the results in these few days are less than half of the previous ones. “

What has also shrunk is the remuneration of employees. “The basic salary is only 5,000 yuan. Only when the group points meet the indicators required by the platform will they get a commission. For example, the group leader needs to recruit 5 new people within 7 days, and each group must reach at least The sales standard of 50 yuan can get a commission of 40 yuan, otherwise it is nothing.” Therefore, there are not a few local pushers who choose to leave the market.

Recently, Qian Li also needs to pay extra attention to groups with better sales in the area and continue to increase sales in their stores. And those group points that have not issued a single for a long time will be gradually abandoned.

3. Race against time: a struggle for efficiency

The higher the platform traffic, the better the conversion rate, and the greater the pressure transmitted to all aspects of community group buying.

The logistics and distribution of community group buying is like an intense relay race. Once there is a jet lag in the early transportation link, the difficulty of subsequent contract fulfillment will be greatly increased. Especially for top players, fulfillment time is a key cost that cannot be ignored.

Before 5 o’clock in the afternoon every day, the trucks in Wang Bin’s warehouse must appear on time at the entrance of the central warehouse that is preferred by Orange Heart. Thousands of boxes of dairy products in the truck only stay in the central warehouse for a few hours. Starting at 11 o’clock in the evening, they will be sent to grid warehouses in various areas one after another, and arrive at the station before 4 o’clock in the afternoon the next day.

The closest to the cluster is the grid bins distributed in various areas, which is also the next stop of the central bin. Guo Kai is the person in charge of a certain grid warehouse in Zhejiang Duoduo Shopping. His warehouse has basically achieved profitability. “The average daily order quantity is about 15,000 pieces, and the peak order period can reach 20,000 orders per day.”

According to Guo Kai, the grid warehouse must be equipped with truck drivers, sorters, and frozen goods warehouses. As Duoduobu has a firm foothold in the local area, the grid warehouses contracted by Guo Kai can radiate nearly 800 clusters around.

The commission of the grid warehouse consists of two parts: the commission for sending an order is 0.45 yuan, and the commission for covering a group point is 2.7 yuan. However, the prerequisite for profitability is to hurry up before the red line of fulfillment. “If it is not delivered on time, each order will be fined 20 yuan.” Guo Kai revealed to Times Finance.

When others are sleeping, it is also the busiest time for sorters. Their working hours start at 1 am and continue until 7 am. The sorting process needs to minimize the error rate and speed up the operation.

Liu Yuan, who is engaged in Guangdong fruit wholesale business, is also involved in the wave of community group buying. He is the upstream supplier of the two major platforms of Meituan and Hema Market. He needs to accept hundreds of catties of orders from the platform every day. After the order was cut at 11 pm on the platform, the truck filled with vegetables drove to the supplier.

Due to the need to follow the rhythm of the platform’s operation, Liu Yuan usually won’t be able to finish work until three o’clock in the morning. “The development of offline supermarkets is sluggish, and the supply to the platform can ensure a stable order quantity every day, at least small profits but quick turnover, and reduce the backlog of fruits in the season.”

Liu Yuan has been in the fruit wholesale business for 7 years. His previous supply channels have always been supermarkets and fruit shops. He has not thought about supplying directly to community group buying platforms, but the strict red line for fresh products has discouraged him. . His colleagues in the same wholesale market as Liu Yuan lost 700,000 yuan because of contract performance and return issues.

In October 2020, in the speech on the 5th anniversary of the founding of Pinduoduo, the business that founder Huang Zheng talked about most was Duoduo Shopping. His most evaluation of this business was one word-bitterness.

This is a competition on efficiency. From suppliers, freight drivers, pickers to group leaders, people in all links are rushing, and the community group buying war has entered a stalemate stage of competition.

4. Waiting for the final winner: “standing in line” is more important than profit

When someone swarms, someone is destined to be forced to leave.

On July 7, 2021, the community group-buying platform Tongcheng Life officially declared bankruptcy. Zhang Qiang also closed the store side that had been performing poorly. Fortunately, he retained the community’s fire and continued to operate the remaining five platforms. No customer feels uncomfortable because of the sudden collapse of the same journey. The large-scale subsidy when the giants enter the market has cultivated a group of highly sticky customers.

Zhang Qiang can perceive the local market share of each platform from the daily orders, and the Matthew effect is particularly obvious in the community group buying track. “Meituan Optimum, Duoduo Buying Vegetables, and Orange Heart Optimum have the most orders, and Shihui Tuan and Jingxi Pinpin have very few orders.” He plans to focus on the head company and close the revenue when necessary. Great platform.

In July 2021, many of Didi’s apps were removed from the app store due to illegal collection and use of personal information. This means that Didi’s Orange Heart Optimal has lost its strong drainage channel, which more or less makes the suppliers who join Orange Heart Optimal feel at risk.

During those few days, Wang Bin paid close attention to any news related to Didi, and he wanted to find a firmer backer. “If community group buying can exist as a stable business form, then the supplier must be able to maintain profits for a long time.”

Compared with temporary losses or profits, Wang Bin believes that the current “standing in line” is more important. He has joined the supplier exchange group of Duoduobuying, waiting for a chance to join again.

Guo Kai’s goal is more clear. He has already tasted the sweetness of the grid warehouse operation, and he is ready to expand the warehouse scale. “I am still more optimistic about buying more vegetables. As long as the warehouse cost is controlled, personnel management and refined operations can be done. Profitability, if the market stabilizes, the profitability of the grid warehouse can be raised.”

However, in reality, the war of community group buying is still fierce, and the expectations of practitioners will not come too soon .

In the first quarter of 2021, Pinduoduo will invest 6 billion yuan in Dodo Shopping, and Meituan will invest about 10 billion yuan in community group buying business, and it is expected to increase. On July 16, Xingsheng Optimal Network Transmission completed a new round of US$300 million in financing, with a post-investment valuation of US$12 billion.

Five-year ups and downs of community group buying

Prosperity prefers its financing history. Image source: Sky Eye Check

Five years have passed, and the community group buying track has not yet run out of the first listed company, and everyone is still waiting for the arrival of the new wave.

(All interviewees in the text are pseudonyms.)

Posted by:CoinYuppie,Reprinted with attribution to:
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