The emergence of community group buying brings everything back to square one, and now the giants are standing on the same starting line.

In 2020, there was a strange scene in the Internet industry, and the giants laid out the fresh group-buying business one after another.

In the front, there was an iron army of BABA's "Box Horse + ele.me + Retail + Shihui Group", and then Tencent's prosperous preferred corners overtook. Meituan set up the "optimal selection" Business Department in June this year and put forward the "Thousand cities Plan."

And as you know, on the way to shopping, Pinduoduo, the most grassroots temperament, "will only be late, not absent": the launch of "buy more vegetables" in August this year is regarded by the company as the most important business, and Huang Zheng praised it as the "touchstone". "laymen" DiDi Global Inc., Byte and Kuaishou Technology also followed the pace. DiDi Global Inc. online "Orange Heart selection", byte is brewing to launch "buy vegetables today", and Kuaishou Technology has been in-depth research in Changsha. Although high-rise buildings are built on flat ground, the emergence of these three adds another handful of dry firewood to the fire of community group buying.

The giants each have a vegetable basket, which looks like an Internet conference from a distance and looks like a collection of newly developed places in the near future. Why does the Internet industry suddenly worry about the people's great cause of buying vegetables? Where does this strange perception come from?

01 small abacus of the traffic of the giant

The most "precious" thing in the Internet industry is not quantum computers, not source code, not 996, but traffic.

As early as 2016, JD.com adjusted his strategy due to traffic bottlenecks. In the first quarter of that year's earnings conference call, JD.com CFO Huang Xuande said bluntly: "the entire vertical category, Tencent brought about a significant decline in traffic transformation." "

This sentence is a bit roundabout, but the meaning is very clear: JD.com spends a lot of money on traffic from Tencent, but he still needs extra subsidies to convert it. In desperation, JD.com came up with the "Beijing X Plan" and cooperated with large traffic users. After that, it launched the Kepler platform to output customizable e-commerce solutions to find ways to solve the problem of single external flow.

As time flies, more and more Internet giants are tied up by traffic.

As of June 30, 2020, the number of transaction users of Meituan platform reached 460 million and the number of active merchants reached 6.3 million, both month-on-month and year-on-year, but the average number of transactions per transaction user dropped to 25.7 per year.

Meituan is not the only one who has encountered the dilemma of "only shopping but not buying". Big Brother BABA, who has been overlooking the Internet, is also besieged on all sides, not only with newcomers chasing, but also finding it more and more difficult to achieve the growth rate of the Great Leap forward.

By the end of September 2020, BABA's annual active buyers had reached 757 million, leaving only one resident population in downtown Beijing compared with Pinduoduo's 731.3 million. What is even more frightening is that BABA's annual active users have increased by only 15 million month-on-month throughout the third quarter; far less than Pinduoduo's 48.1 million.

The slowdown in growth has sprinkled a handful of salt on BABA's wound-in the third quarter of 2020, BABA failed to break through the barrier of "900 million mobile monthly active users and 800 million annual active buyers". BABA's monthly active users increased by only 7 million in the third quarter, a far cry from the quarterly growth of tens of millions in the past.

There are signs of weak growth. At the end of 2019, BABA's cost of getting customers exceeded 800 yuan per person for the first time, and has continued to rise ever since, reaching 1158 yuan in the third quarter of this year. More and more money is spent, and fewer and fewer people are coming. If it goes on like this, I am afraid we will have to open the registration stock delivery model in the future.

For Pinduoduo, it is rare to approach BABA at a time when traffic is becoming more and more scarce. But just because the elderly are worried doesn't mean the newcomers don't have to worry: in the third quarter, Pinduoduo grew 73.48% from the same period last year to 1.4576 trillion yuan, down from 143.68% in the same period last year.

This shows that user growth is no longer the core driver of GMV growth; in addition, the annual consumption growth rate of Punduo has also declined since the second quarter of 2019 and has been largely stagnant in the last two quarters. For Pinduoduo, the era of "relying on subsidies for growth" is coming to an end.

According to the conservative algorithm of the Ministry of Industry and Information Technology, the broad sense of China's Internet population is almost close to the peak, the entire market traffic has peaked, and new growth is almost impossible.

History tells us that there are only two solutions: either to break into the Kwantung style of "opening up wasteland", or to engage in land annexation and reach into other people's bowls. In the past few years, the drama of "traffic snatching" between platforms has never come to an end, and the famous scenes of "choosing one of the two" are common, which is nothing more than a true portrayal of "fat water introduced into one's own land".

The essence of traffic is to preempt users' time, and it is the first element of realization. But in the e-commerce business, user stickiness (loyalty) is sometimes illusory.

Most people's consumption decisions are determined by more subsidies, low prices, good service and fast logistics. This truth has been fully verified as early as Pinduoduo and JD.com-Pinduoduo relies on low prices and JD.com on logistics.

Nowadays, the dividend of mobile Internet is fading, traffic is scarce, the cost of getting customers is higher, and the increase in traffic is like a "new hair growing on the top of the head of middle-aged people". In such a dilemma, Internet giants can only break through imagination, package new concepts and create new stories in order to get out of the predicament.

Looking back over the past few years, countless tuyere has risen, countless new tracks have been developed, requirements have been validated, patterns have been overturned, and countless stories have gone with the wind.

From e-commerce, mutual funds, to medical care, short videos, as long as there is imagination, there is the figure of the Internet. Among them, there are some old stories that have been told, and community group buying is one of them.

Although it is no longer a new concept, it returned to the center of the stage in 2020, igniting the enthusiasm of the whole market and making the gods crazy.

The giant's entry into the community group-buying track is seen as a "wasteland-opening move" to gain sinking market traffic. The core of community group buying is freshness, which is not only a rigid demand but also a pain point, projecting a trillion market behind it. These two points alone are enough to support the giants to go all out.

But a real question is: how high is the threshold for community group buying? Can the mode work? Are the giants ready for everything from strategy to play? To answer the above questions, you need to know a sample first.

02 patterns that are difficult to replicate

In the process of the development of community group buying, an important sample can not be skipped, it is prosperous optimization.

In 2014, Yue Lihua of Yiyang, Hunan Province, ran a local chain snack bar, and around that time, his snack bar began to take on the service of buying and selling vegetables for people. With 30 years of "retail" experience, he sensed the business opportunity and set up Prosperity selection.

Although the birth of Prosperity Optimization is based on consumer demand, the difficulty lies in how to effectively transform it into a business model. In this process, Yue Lihua hit a brick wall everywhere and encountered several difficult problems of getting customers, cost, inventory and distribution one after another.

In the early days, Xingsheng was preferably delivered by the boss himself; after that, the front warehouse and distribution team were set up; the large warehouse was converted into a small warehouse and distribution station. Until 2016, Yue Lihua decided to integrate the previous model into the e-commerce system, through the store owner to post a message on WeChat group, allowing surrounding residents to place orders in the group and finally bring it up.

When selecting suppliers, Xingsheng Optimum will be screened by the "elimination mechanism". Those well-served suppliers will eventually stay. In this way, Xingsheng preferred to "community pre-sale + store pick-up" out of Yiyang, Hunan, and spread to the whole country.

After several years of verification, the community group purchase represented by Prosperity Optimization has gradually become a force. From 2017 to 2019, its GMV jumped from 36 million yuan to 10 billion yuan; in September 2020, the number of daily orders selected by Xingsheng reached 8 million, nearly double that of the same period in 2019, and the passenger order increased from about 10 yuan to 15,00020 yuan.

In essence, community group buying is a kind of consumption behavior based on community. The person who connects the shopkeeper and the consumer is called the "leader".

In the early development, the role of the leader was generally assumed by the precious mother and the housewife. Because these people have a lot of time and energy, have the innate conditions to run the community. Coupled with the fact that they can earn a commission and have a high degree of flexibility, many people join the community group buying business.

For Xingsheng Optimization, its rise is inseparable from the local user habits and social preferences.

Compared with the first-and second-tier cities with high work pressure and fast pace of life, the pace of low-line cities is much slower, with sufficient disposable time and higher social frequency. Buying food and cooking is not only to solve the problem of food and clothing, but also a reflection of the needs of the community.

From another point of view, whether it is community interaction or neighborhood relations, first-and second-tier cities are far inferior to low-tier cities. Coupled with the difference in consumption level and consumption capacity, low-line cities have a stronger demand for fresh at low prices, which is also the reason why "group buying" and "group buying" can be spread out quickly in low-line cities. In addition, the number of people who go north to Guangzhou to meet the role of "commander" is far less than that of low-line cities.

The favorable conditions and the harmony of the people have contributed to the success of Xingsheng in Hunan, but imagine whether it can go so smoothly if the exact same model is copied to the north, Shanghai, Guangzhou or other cities.

03 opening up wasteland or digging holes to bury themselves?

If the differences between regions indirectly lead to the non-replication of the community group purchase model, then from the perspective of the supply chain, this kind of replication is even more difficult.

Although the national supply chain layout brings enterprises the advantages of procurement, customer operation, and supply chain, the special fresh pattern of China determines that the cost advantage of global procurement is not obvious. For Internet companies, to participate in the above links and achieve lean management, mainly rely on data.

In this respect, there is little difference in strength, and no giant has a particularly prominent advantage. This means that there is no significant synergy of business advantages between regions.

Community group buying is not only an asset-heavy business (from distribution to warehousing), but also a long-chain business: one end is the producing area of agricultural products, and the other is the consumer. If the standard express module of e-commerce is taken apart, the three links of direct control to the warehouse, to the community and to the user can reduce the implementation cost. In this long chain, any link that goes wrong will produce a "bullwhip effect".

Community group buying is a "tiring and hard work", which competes not only with the supply chain level of the enterprise, but also with comprehensive strength. Short-term can rely on subsidies and push, long-term test is the financial strength, e-commerce experience, the level of local management, but also the cooperation of the enterprise's strategy and play.

At the current level, it may be difficult to strike a balance between "breadth" and "depth".

Breadth requires capital strength and scale, but it will increase bloodshed losses if it is not deep enough; while depth requires more outstanding operational and management capabilities, but it needs to bear the risk of missing market expansion opportunities. To some extent, the two run counter to each other, and it is difficult for anyone to do both.

At present, the competition of community group buying is still in the stage of "capital + pushing" horse racing enclosure. Xingsheng's preferred main station is still in Hunan, while Duoduo Buy and Orange Heart are fighting fiercely in Changsha. In the short term, regional players like Prosperity selection will continue to compete with the giants, but no one has yet emerged who is in control.

For the giants, they also need to face a difficult problem: how long it will take for community group buying to get through.

The main characteristics of fresh products are: poor controllability, large loss, low customer unit price, low gross profit, and category structure will have a great impact on gross profit. From the warehousing and distribution side, there is the problem of high homogenization competition.

Affected by the above factors, the whole industry is still at a loss stage. After entering 2020, with the expansion of the platform and the intensification of competition, the loss is more serious.

From the purchasing side, the current supply mode of suppliers can not reduce costs. From the consumer point of view, the user portraits of community group buying are sensitive to price, and it is difficult to raise the unit price of customers. Short-term forecast, it is difficult for the industry to get out of losses.

In order to achieve success, community group buying should not only improve the efficiency of the supply chain, but also cross at least two hurdles: expanding SKU, thus increasing customer unit prices and gross margins, and driving down the cost of goods.

At present, the commodity cost of fresh e-commerce accounts for 80%; to weaken the role of people, that is, to reduce the status of the leader in the link, so as to reduce the commission ratio, reduce costs, and achieve the transfer of traffic to the platform. Finally, with "high supply chain efficiency, low variable cost and low price, efficient customer acquisition and high repurchase rate" to form a positive cycle, out of the loss, run-through mode.

Assuming that community group buying can come to this stage, it is bound to witness the head breakage of the giant. Based on the heavy model of community group buying, the industry is difficult to be hit by dimensionality reduction, and many giants are willing to continue to invest in occupying the market, so it is difficult for the industry to move towards unification.

But at the end of this track, it will take time to test whether the strong is Hengqiang, the family is dominant, or the bulls carve up the world.

Over the past two decades, the pattern of the Internet has been unpredictable. "BAT" has become an old word and has been replaced by a new giant. The Internet is struggling to move forward in the "spell" of "I don't know how to win, but I can't lose". The emergence of community group buying brings everything back to square one, and now the giants are standing on the same starting line.