On December 11, “People’s Daily” published a comment criticizing the Internet giants engaged in community group buying: “Don’t just worry about the flow of a few bundles of cabbage and a few kilograms of fruit. The stars of technological innovation and the infinite possibilities of the future are actually even more exciting. The heart is surging.” Not long ago, a self-media article criticizing Internet giants for using capital to take away the livelihoods of small vegetable vendors was also popular on the Internet. For a time, the voices questioning community group buying became louder and louder.
Community group buying is one of the hottest competition tracks at the moment. According to iiMedia Consulting’s data, the size of the community group buying market is expected to reach 72 billion yuan in 2020, an increase of 112% year-on-year, and the Chinese community group buying market is expected to exceed 102 billion yuan in 2022.
Since the beginning of this year, major Internet companies have personally stepped down to deploy related businesses. The top leaders of several Internet giants have also repeatedly stated that they are bound to win the community group buying market. According to various media reports, on November 3, Didi CEO Cheng Wei stated at an internal meeting that “Didi’s investment in Orange Heart Optimum is not capped, and it will take the first place in the market with all its strength.” At the end of November, Liu Qiangdong was on JD.com At the meeting, the senior executives proposed that they would personally lead JD.com to “fight the community group buying battle”; Wang Xing has more than once passed on the determination of “this battle must be won” in the middle and high-level meetings of Meituan.
However, is it really just a vegetable-selling business that the Internet giants have fancy? Why should these Internet companies invest in this “bent over to pick up steel” business at all costs?
On the surface, community group buying seems to be selling vegetables. In fact, most fresh products with low price and high consumption frequency are just a cover to attract users. Giants spend huge sums of money in community group buying not for those bundles of cabbage. It is the last “unowned” traffic portal for the Internet world.
Drunkard doesn’t mean wine
The general operating mechanism of community group buying is as follows: the platform recruits residents in the community or shopkeepers of surrounding small shops to become group leaders, the group leaders form a WeChat group, publish product information in the group, and consumers place orders through the link released by the group leader , The platform will uniformly deliver the goods to the leader’s home or the small shop the next day, and consumers will pick it up.
Fresh food is the main battlefield of competition among group buying platforms in major communities at this stage. Many people’s understanding of community group buying is limited to “selling vegetables.” However, “selling vegetables can only drain traffic, and really doesn’t make money.” Cheng Xiaoyun (a pseudonym), a former squirrel fighting operation operator, told the Caijing reporter.
As early as 2018, community group buying has been popular for a while. At that time, it was also one of the most popular tracks in the consumer field, and it was placed high expectations by entrepreneurs and investors. Squirrel Pinpin is a platform created during that round of “community group buying fever”. It started to form a team in June 2018 and settled in the first city two months later. The founder Yang Jun was once one of the co-founders of Meituan who followed Wang Xing’s continuous entrepreneurship.
Cheng Xiaoyun told the Caijing reporter that at its peak, the unit price of Squirrel Pinpin was around 20 yuan, and when it was high, it could reach 30 yuan. The proportion of fresh food was not high. It mainly relied on the standardization of frozen meat, beverages, and daily necessities. Commodity support. Fresh produce has high sales but low gross profit, so they will deliberately control the proportion of fresh produce. The plan at the time was to rely on fresh food in the early stage, increase as much as possible of the more profitable standard products in the later stage, and even sell some local life-related products, such as group buying tickets and hotels. But the market did not leave time for Squirrel Pinpin to adjust slowly. In August 2019, Squirrel Fighting was exposed to large-scale layoffs, and then the official announced the withdrawal of the station, and has since disappeared.
Both startups and giants choose fresh food as the entry point for community group buying. They are not trying to grab business with vegetable vendors, just because fresh food consumption is the most frequent demand. Providing low-priced fresh products through subsidies can quickly attract users and increase stickiness.
A related person close to Duoduo Food told the Caijing reporter that Duoduo Food is a key project of Pinduoduo, and Pinduoduo is doing its best to “All-in” grocery shopping. “The giants cut into community group buying, not selling vegetables, but to drive daily activity (daily active users) on the app. Buying vegetables is a high-frequency rigid demand, and Pinduoduo has a place in the middle-aged aunt group in the sinking market. Therefore, There is a larger display space.” He said.
Dmall’s community group buying platform under Dmall is more special. Multi-point teamwork does not deal in products itself, but only provides a platform for community group buying for physical supermarkets like Wumart. Rong Jian, the person in charge of the multi-point Dmall community group business department, told the reporter of Caijing that the products sold on the multi-point group involve various categories, and fresh food accounts for about 40%. The reason is that for supermarkets with offline physical stores, the dominant category of community group buying may not be fresh food but standard products.