<div id="readability-page-1"> <img id="edit_6710570" src="https://imageproxy.pbkrs.com/https://images.tmtpost.com/uploads/images/2023/09/ad2d6ce4f982083d83e41c7a70715b43_1695048971.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1399" height="933" original-src="https://imageproxy.pbkrs.com/https://images.tmtpost.com/uploads/images/2023/09/ad2d6ce4f982083d83e41c7a70715b43_1695048971.jpeg"/>BEIJING, September 18 (TiPost) -- In recent years, the community group buying business seems to be on the decline. However, data shows that the busines is still growing.According to the data released by Kantar Consumer Index, the sales through community group buying continued to grow at a double-digit rate in the second quarter of 2023. In this quarter, 26% of urban households purchased fast-moving consumer goods through community group buying. After the Covid-19 epidemic, local warehouses face great challenges in terms of penetration rate and average order value, but user frequency still shows a significant increase.This also means that the competition in the market is still ongoing.On August 30th, Meituan launched a delivery service called &#34;Delivered in the Morning&#34;, which changed the self-pickup time from 4 pm to 11 am.At the same time, JD.com also decided to return to the battlefield of community group buying. JD Pinpin WeChat mini-program announced that it would change its name to &#34;JD Pinpin&#34; and gradually update and replace the mini-program icon, name, logo, etc.On the other hand, Alibaba is also not idle. In May of this year, Taocai Cai's official WeChat public account &#34;Taocai Cai Supermarket&#34; announced that Taocai Cai and Freshhema have merged and changed their name to &#34;Taobao Mai Cai&#34;. According to the official website, Taocai Cai is a community business platform that provides daily necessities and next-day self-pickup services to Chinese consumers through pickup points near them. Freshhema provides online and offline integrated service solutions for fast-moving consumer goods brands and third-party food retail partners. This move can be seen as a combination of community group buying and the digital capabilities of retailers.The initiatives of these internet giants indicate that after the era of &#34;Old Three Groups&#34; and &#34;New Three Groups&#34; in community group buying, in addition to Meituan Optimal and Duoduo Maicai, two major players who have held their ground, JD.com and Alibaba, two internet giants, are making a comeback. As a trillion-dollar market, the massive group leaders and users behind community group buying, the countless products, the enormous GMV, and the huge temptation have made the giants reluctant to let go.The most challenging project in internet historyBased on years of continuous investment, Pinduoduo and Meituan have taken a leading position in the community group buying business.According to estimates by HAYDEN CAPITAL, this business will contribute at least approximately 14 billion yuan in pre-tax profits to Pinduoduo by 2025, and may achieve overall profitability starting from 2023.Meituan has also gained significant benefits from this. Data shows that in 2022, Meituan achieved a GMV of 1.1 trillion yuan, with Meituan Youxuan contributing 13%. According to the financial report for the second quarter of 2023, as of the end of June this year, the number of transaction users on the Meituan Youxuan platform has reached 470 million. As a brand positioning itself as a &#34;next-day delivery supermarket,&#34; Meituan Youxuan has covered approximately 3,000 cities and counties. This has also become an excellent entry point for Meituan to further leverage the sinking market and increase user and order volume.With the market landscape becoming clearer, internet players are striving to turn losses into profits as their current goal. According to reports from Wandian, Meituan currently plans for the Youxuan business to achieve nationwide gross profit in 2024, and nationwide gross profit including headquarters allocation in 2025. The future goal for Youxuan is to continue pursuing growth without closing any cities, improve user experience, and regain market share.In addition to the two leading players, there are also some regional players in the market. However, unlike in the past, they are no longer relying on capital to drive their development.&#34;Capital is not interested in this track anymore.&#34; Chen Weilong, an industry expert in the community group buying sector, has experienced that fervent era. From 2020 to 2021, from Changsha to Chengdu, from Guangdong to Shandong, almost all investors in the primary market were focusing on community group buying, discussing each project three or four times.But as the giants continue to deepen their involvement, the entire market has become highly competitive, making it difficult to find suitable investment and entrepreneurial opportunities in the entire business chain. By 2022, the presence of capital in the community group buying market is almost non-existent.Although the data performance is still acceptable, there are different opinions in the market. &#34;This is an awkward business.&#34; Chen Weilong believes that small and medium-sized community group buying is essentially a private domain platform, and whether it is goods or the upstream and downstream, it can only engage in localized product supply and cannot compete with those platforms that can form a national-scale, large-scale volume.In his opinion, from the perspective of internet platforms, community group buying is one of the most challenging projects in the history of the internet. On the supply side, it requires establishing localized supply capabilities; on the product side, it requires developing a variety of highly dispersed, non-standard, and low development level fresh products; on the fulfillment side, it requires building various warehousing and distribution infrastructure for ambient, refrigerated, and frozen products from cities to towns; on the user side, it requires acquiring users in a highly competitive market that has been saturated with countless competitors... as well as market supervision and the watchful eyes of big players. Only the top companies can overcome these difficulties, and even for general giants, success is difficult.Generally speaking, if you focus on private domains, it means finding a group of users who are not sensitive to prices and winning with high prices, but it is difficult to sustainably expand the scale. The gameplay of community group buying is the opposite, requiring both low prices and scale.From an industry logic perspective, in order to expand the overall scale, it is necessary to create low-priced circulating goods, but low prices mean shaping the entire industry chain. This is a huge project that is almost impossible for small and medium-sized platforms to complete.It is also for this reason that at that time, some platforms other than internet platforms such as Shihuituan and Tongcheng Life experienced a transition from rapid progress to city closures. The founder of the community group buying model, Xingsheng Youxuan, changed strategies and retreated to their stronghold in Hunan. Chen Weilong once calculated that the cash burn rate of community group buying is 7 times that of food delivery, and it may eventually burn 3 times more money than the food delivery business. &#34;The community group buying business is too expensive, too heavy, and too difficult, not something that general giants can play with.&#34;In terms of business practice, community group buying has experienced three years of rapid development, but it has never truly solved the problem of ensuring stable fulfillment of fresh products in high temperatures during the summer. Therefore, there has always been controversy in the industry regarding the community group buying business. Some industry opinions believe that community group buying is always a transitional business solution for third- and fourth-tier markets.The survival strategy of local platformsHowever, even in such a competitive environment, there are still regional platforms that continue to emerge and join the leading camp, finding their survival strategy, which is referred to as the second wave of the rise of regional groups in the industry. Among the well-known local platforms today, You Jing You Tian in Henan is one of the representatives in the northern region.&#34;The logistics delivery costs of big players are several times higher than ours.&#34; In the view of Wang Shouren, the founder of You Jing You Tian, as a local community group buying brand that has grown in Henan, the core reason for its ability to survive in the intense capital war and competition from big players lies in controlling logistics costs and processes.Take Zhengzhou as an example. The number of community group leaders on the platform of top companies can reach tens of thousands. If we calculate that each car can supply goods to 30 group leaders, then 10,000 group leaders will need 300 trucks. Since one warehouse cannot handle 300 vehicles, in order to cope with this huge system, it is necessary to add grid warehouses between the main warehouse and consumers to meet the massive demand for orders, but this also greatly increases the cost.The transportation cost from the grid warehouse to the group leader is about 1.1-1.2 yuan, while the average customer unit price of top community group buying companies is usually only around 7 yuan. This single item alone accounts for almost more than 15% of the cost. &#34;The delivery fee for large companies is particularly expensive, and the fundamental reason for their inability to make a profit is that their customer unit price is particularly low,&#34; analyzed Wang Shouren.According to Wang Shouren, Youjingyoutian takes the group leader as the end point of the sales chain, with a daily order volume of about 15 orders per group leader, and the average customer unit price can reach more than 900 yuan, with an average shipping cost of about 17 yuan. In this way, the average logistics cost accounts for less than 2% of the total order amount.Good cost control is necessary to ensure the platform's sustained positive growth.&lt;p&#34;Last year's transaction volume was around 250 million, and this year it will reach around 400 million.&#34; Although most investment institutions are no longer chasing community group buying projects, there are still many industrial capitals in contact with Wang Shouren, as they like projects with guaranteed profits.However, as a brand that has already achieved profitability, Wang Shouren has little interest in accepting capital support. For him, the biggest challenge at present is that he has always been unable to achieve expansion in other regions. Currently, the business coverage radius of Youjingyoutian is only about 100 to 150 kilometers. Once it exceeds this range, new warehousing configurations are needed. However, it is very challenging to start from scratch and ensure the completeness of the three major elements of the supply chain, warehousing and distribution, and group leaders.This is also the common ceiling faced by almost all local community group buying brands. According to media reports, the current business volume of Hunan community group buying platforms Zhihuazhiguo and Fujian community group buying platform Diaodaojia is between 500 million and 800 million yuan. Among them, Zhihuazhiguo has penetrated into Hubei, Jiangxi, and other places, and is expected to exceed 1 billion yuan this year. However, insiders revealed that although Zhihuazhiguo, Jiubaijie, and other regional community group buying brands are trying to expand to other regions, they have not been very successful.Although it is not easy to expand beyond Henan, Wang Shouren is not worried about the penetration and expansion of large companies. As one of the three major local groups in Zhengzhou established in 2018, Wang Shouren believes that the biggest difference between Youjingyoutian and large companies is the ToB supply chain revolution it brings.Based on this idea, by the end of 2022, Youjingyoutian (a company) has already had 4,000 cooperative team leaders, with over 90% of them originally having their own stores. For Youjingyoutian, which focuses on deepening the B-end supply chain, the role of team leaders is not simply to provide pick-up points, but to be responsible for product sales at the end. Based on this, on the one hand, Youjingyoutian can shorten the supply chain and reduce the cost of intermediate links to less than 5% through the model of purchasing from the place of origin and pre-selling; on the other hand, team leaders are seen as partners and are required to have comprehensive abilities such as product selection, operation, copywriting, and promotion. With the combination of good products and community operation capabilities, it can bring more than 40% conversion rate to small stores. &#34;There are 6.8 million small stores nationwide, as long as these small stores survive, I can survive.&#34;This model also brings high personnel efficiency. Currently, with a SKU volume of 300-500, Youjingyoutian has only 12 core employees and can still maintain a daily product update rate of 90%.This is a market that is constantly differentiating. After experiencing the early chaos, community group buying is now at a crossroads of development - some are making rapid progress in the national market, while others are carefully calculating in regional markets. As thousands of sails pass by, in the established pattern of the community group buying track, large companies occupy the strategic high ground with financial resources, while small and medium-sized platforms fill the market gaps in vertical fields. (This article was first published on the TiPost App, author | Xie Xuan, editor | Fang Yu)</div>

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