1.What is community group buying？
Community group buying means a group of residents who live nearby compounds to get discounts by buying together in bulk. This location-based approach has gained increasing popularity in China.
Compared with traditional offline stores, this community group buying model saves store rent and labor costs; compared with traditional e-commerce, community group buying can go directly to the community from farmer/factory/warehouse, and the group leader is responsible for the last one mile delivery. Or it can be picked up by consumers, which reduces the cost of per order.
The community group buying business model is based on WeChat as the carrier to integrate the community resources of multiple community leaders to form a pre-sale + group buying community business model which is managed and operated by merchants. The main sales scenario is a community WeChat group initiated by various Collection-And-Delivery Points, community convenience stores, community properties, owners, etc. Each group is equivalent to a community store. Community group buying has created a brand-new group buying model, which fully combines the advantages of e-commerce and group buying models, and is sought after by the capital market.
There is nothing new in the world, and community group buying is also a form of commodity circulation. We all know about retail. The essence of retail is determined in the two elements of “circulation” and “sales”. If retail is regarded as circulation, then the enterprise pays attention to flow, and a core metric is fast turnover. Focus on turnover; if you think of retail as a business, then the core metric is gross profit.
Different routes lead to the same goal. These indicators all consider the company’s supply chain management and operational efficiency.
The ultimate ownership of retail enterprises is to do a good job of supply chain management driven by customer demand. Strive to achieve multiple batches, small volume and zero inventory.
Community group buying has just achieved “multiple batches, small volume, and zero inventory.” This also explains why in the retail battlefield where so many giant playes compete, community group buying can blaze a trail. Moreover, in the early stage of the blowout, going backwards, in the big puzzle of retail, community group buying will take up more and more.
Another important factor is that community group buying has taken a road of integration. It is a combination of sky net, land net and human net. If we call the physical store this form of land network, then e-commerce is called sky network, and social e-commerce is human network.
The three big nets have their own advantages and disadvantages, and the community group buying that integrates the three has tenacious organizational innovation and strong vitality. On the one hand, the owner of the community, allowing customers to pick up the goods, and realize the physical network shop that required large investment in the past through; on the other hand; , Through e-commerce platforms such as Wechat small programs, the e-commerce of transactions become much easier; Most important is to choose a person with certain resources to be the leader, and collect her/his network resources. These community group buying groups are all neighbors. In the neighborhood, rapid fission can be achieved through the way of people bringing more people to join.
Whether it is new retail or smart retail, the core is to quickly match “people, goods, and markets”. Community group buying has improved the matching efficiency to a certain extent. Enterprise innovation is to further improve efficiency. Obviously, its customer acquisition cost is very low, and the circulation cost is only for intra-city distribution, without end-of-line distribution, plus zero inventory and high turnover, so the funds, venues, etc. are minimal.
2) The community group buying system brings value:
- Online + offline mobile community e-commerce service model
In order to solve the transformation and upgrading of traditional merchants, e-commerce, and micro-businesses, open up the last mile of products, brands and markets, find new marketing channels when the market is saturated, and strengthen the merchant brand. The connection between enterprise and community fans ultimately presents a mutually beneficial and shared ecosystem that is conducive to the long-term development of the company
2.Integration of community resources
The community group buying system integrates community resources, centralized procurement and centralized distribution to reduce the intermediate circulation price increase. Consumers can truly enjoy the benefits. Merchants increase sales and follow the trend of consumption downgrading, provide cost-effective products, and let users experience that good products are not expensive.
3.Group buying group sharing increases repurchase rate
Acquaintances join groups, high repurchase rate, rigid demand, fast-expanding group leader is housewife or convenience store owner, face-to-face build a sense of trust, fresh products account for more than 40%, daily rigid demand, and extremely high repurchase rate.
3) Why is community group buying so popular in China now? We can see from the following three points:
- Big environment: high penetration of WeChat + community scenarios
WeChat is a necessary condition for the popularity of group buying in the community.
With the help of WeChat, this super traffic portal, it has a huge user base, and establishes connections and interactions with community users through tools such as WeChat groups and small programs. Compared with the expensive customer acquisition costs of traditional e-commerce platforms, community group buying costs are relatively low; the popularity of WeChat Pay in third- and fourth-tier cities and middle-aged and elderly users is also an important factor.
With the help of the stable scene of the community, what is cut into is the light-social relationship chain of community owners, and the efficiency of fission and transmission is greatly improved. At the same time, due to the blessing of social relations, the order rate will be greatly improved.
2.Merchant side: reduce costs and sell goods quickly
- Guarantee freshness: adopt pre-sale mode + upstream direct sourcing, and reduce costs and transportation losses through self-built logistics.
- More affordable: centralized purchasing + elimination of intermediate links, reducing the cost of opening a store, and benefiting consumers.
- Good cash flow, zero inventory at a fixed price: the upstream account period pledges, the downstream pre-sales collections in advance, the cash flow is good, flexible and changeable, and convenient for operation.
From the perspective of merchants, community group buying takes the community as a unit and collectively delivers goods, which can save a certain amount of logistics costs.
The efficiency of community owners focusing on WeChat groups, promotion, and dissemination has also been greatly improved. At the same time, there are certain social relationships in the group, and they can place orders directly on the mini program or H5 page without having to find people to join the group and increase the conversion rate.
In addition, community group buying allows merchants to stock up on demand and implement a pre-sale model based on sales and purchases, without the possibility of overstocking and upselling.
3.User side: the impact of consumption classification on the sinking market
The community group buying model is very convenient for users: community + next day delivery, consumers only need to buy in the community, and fresh fruit will be home the next day.
In China, residents in big cities are under high work pressure, time is tight, they are more pursuing efficient and convenient shopping, and are willing to pay higher prices for convenience and efficiency. However, users in third- and fourth-tier cities have more time, do not pay as much time as the former, are more price-sensitive, and have limited access to high-value products.
Pinduoduo, Qutoutiao grows wildly under this background, and community group buying is also catering to the needs of the sinking market, thus being welcomed by users.
