Community Group Buying: China's Internet Giants' New Battlefield

Community group-buying is also more attractive to suppliers than traditional supermarkets. Due to the large orders from community group buying and fast payments, suppliers will give more discounts. The billing period for community group-buying is within seven days, while traditional supermarkets generally require 45-60 days.

From comparing the two models, the price of community group buying products is generally lower due to lower delivery costs in product circulation. Moreover, this model's main consumer groups belong to third- and fourth-tier residents with strong price sensitivity, so modest and affordable prices give community group buying platforms more tremendous advantages to open up the market. 

Internet giants may be the winner

The prominent players in the community group buying market include Internet giants, fresh food platforms, and offline retailers. Internet giants such as Alibaba (BABA), JD.com (JD), Meituan (MPNGF), Didi, and Pinduoduo (PDD) have joined the community group buying battlefield to obtain new traffic and increase consumer stickiness. They have sufficient financial strength and high brand awareness, which can quickly seize resources and cultivate consumers' minds. But their supply chain foundation is weak, and future acquisitions or investment in fresh food platforms may be the right choice. 

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The fresh food platform has built a relatively mature business model and supply chain through deep cultivation in the early stage, but its lack of financial strength will impede its expansion by the giants. Offline supermarkets have a group of highly loyal community consumers, but the online traffic is insufficient and operational capabilities are lacking. Community group-buying is more of a channel to supplement in-store sales and emphasizes user communication. Therefore, the future community group buying market is likely to be dominated by Internet giants. 

Risks

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