Black swan - thoughts
Community Group Buying as China’s Next Battlefield – Who Will take the Lead?
Understand what contributes to the success of the Community Group Buying model in China and who are the major players in the market.
While citizens worldwide wear face masks and queue up in grocery markets, the Chinese homemakers are getting fresh grocery deliveries within a few taps on their phones. Community group buying (CGB), a contact-free model started in 2016 for online grocery retail, took off during the pandemic. It now has all of China's tech giants looking for a share of the pie. In 2020, the total transaction value of China's CGB market more than doubled to RMB72 billion (US$11.2 billion).
A CGB service collates small orders from households living within approximate locations and form bulk orders to lower the unit price of the items, working as a decentralized Costco. A designated community leader, such as a convenience store owner, will form a WeChat group to list available products for delivery. Products on the platforms can range from fresh shrimps to face masks. Individuals can order through affiliate links in the group, and the orders are collated into a bulk order for the community leader. The next day, orders will be delivered to the self-pickup spot users choose, usually at the leader's convenience store. The leader gets 10%-12% of the sales commission per order through this process while bringing extra visitors to the store.
Key factors contributing to the success of CGB
1. An integrated ecosystem
The WeChat ecosystem, which consists of WeChat Pay, WeChat mini-programs inserted into WeChat App, and 1.2 billion monthly active users, allows the efficient and scalable spread of CGB. A complete supply chain, with takeaway businesses harnessing their warehousing and distribution capacity (built from fresh grocery e-commerce, for example), makes it possible for next-day delivery and early procurement.
2. Effective Customer Strategy
Customers in large cities value efficiency, while consumers in lower-tier cities are more price sensitive. The price sensitivity of customer groups in lower-tier cities makes CGB more attractive, which is why it became the main battlefield for CGB companies. Compared to young people living alone, a family of three tend to look for cheaper goods and stock up. Considering the buying habits of different consumer profiles, companies target bigger family sizes for CGB.
Major Players
Statistics on demographics and consumer behaviour
The 2020 China Social E-Commerce Consumer Shopping Behaviour Research Report from Internet Society of China showed that CGB consumers are mostly housewives aged 25 to 50 and living in second to fourth-tier cities. About 78% of the community leaders are female, married, home-based with extra time, and looking to improve the family's quality of life.
Frequency: more than half of the CGB consumers order at least once a week, and 11% order daily.
Average Transaction Value (ATV): more than half of the orders are below RMB100 (US$15).
Category: fresh products are the most popular.
The CGB process starts from suppliers to central warehouses, warehouse networks, pickup points and finally reaching the consumers. Such a model introduced by the CGB platforms eliminates the middleman and minimizes costs. CGB offers a vast range of product choices and contact-free and fast delivery at affordable prices during the lockdown period. Despite its rapid growth, businesses have encountered many problems in the past year:
· Many CGB start-ups tend to recruit more community leaders than they can handle to seize the market, causing unhealthy competition.
· The market tends to be homogeneous due to the similar product structure of each brand.
· Many community leaders registered with multiple brands and promoted the most profitable one.
· The low-price strategy at the beginning impacted the traditional businesses, which called for government intervention.
· The model of online grocery shopping still poses a risk to consumers. Product quality cannot be guaranteed due to next-day delivery, while the process for refund or return remains complex.
· Most brands do not offer direct after-sales customer service. They often rely on one single community leader to support the entire group, resulting in a poor customer experience.
At the moment, the business model of CGB is at the starting phase. Replicating a successful model is impossible as major brands are still figuring it out themselves. Through sound data analysis, improvement of internal management, and customer service enhancement, companies can better understand user demand and optimize resource allocation. These factors are critical to winning a place for themselves in the CGB market.
社区团购的百团大战
当你即使全副武装,却依然担心去超市的途中感染病毒时,中国的农村大妈们已经熟练地在手机上买菜买水果了。社区团购,这种零接触的电商模式,正悄然改变人们的生活。2016年在中国兴起,期间几次被唱衰,一场疫情又让它成为市场的新宠,引得互联网巨头们纷纷入场。艾媒咨询所发布的数据显示,2020年中国社区团购的交易规模为720亿元,比上一年多出一倍以上。
社区团购是一个社群预售+次日门店自提的零售模式。将每个小订单合并成大订单从而获得更低的价格,可以理解为一个去中心化的Costco。具体而言,团长,例如一个便利店老板,在微信群里发布商品的链接,群友们通过该链接下单拼团,隔天去指定的地点自提,自提点通常就是团场的便利店。团长可从订单中获取10%-12%的佣金,同时也给自己的便利店带来了额外的客流量。平台提供的产品种类从新鲜鱼虾到50公斤装的猪饲料,满足大小家庭的日常生活需求。社交、营销和下单整个流程都在微信一个APP上完成。
社区团购的发展离不开两个方面:
一是基础设施的完善
- 微信生态。微信支付、流量传播、分销逐渐被大家接受,而且小程序的出现,使得各种各样的服务在微信社群中更容易使用。1.2亿的月活使得微信可以覆盖各种圈层的用户,特别是低线城市中微信几乎是除了智能手机这类硬件外渗透率最高的触点。拼多多的快速增长也验证了微信生态的强大。
- 供应链完善。外卖、生鲜电商等模式带来的仓储配送的前期建设,使得次日达、原产地采购对效率要求得以实现。
二是消费者决策要素。
- 消费分层。一二线城市消费者更看重效率,三四线城市消费者时间充裕更看重价格,所以三四线城市是社区团购重点发力的方向。
- 社交化购物。小红书、拼多多、微商等社交电商的发展,验证了圈子对消费者决策的影响力。
- 场景化消费。在高榕资产的零售模型中讲到,不该用人作为最小粒度来理解购买行为,而应该从场景去看。比如三口之家的购买习惯和独居青年的购买习惯完全不同,三口之家更讲求实惠往往会囤货,这是社区团购的受众。
社区团购主要品牌对比
从消费群体来看社区团购
中国互联网协会社会电商工作组发布的《2020中国社交电商消费者购物行为研究报告》显示,从性别来看,社区团购的用户主要为2-4线城市的中青年女性,具体来说,主要是25-50岁之间的已婚女性,负责采购家庭饮食日常,对价格敏感。该研究称,83%的社区团购用户为女性,其中已婚比例占到92%。同样社区团购的女团长们也占到78%。她们多为3-4线及以下的25-45岁的女性,普遍已婚,居家赋闲,对提高生活质量水平需求强烈。
从金额来看,20%的人单次购买金额小于50元,消费在50-100元的占35.1%,100-300元的占36.4%,300-500元的占5.8%,500元以上的占2.7%。
从产品品类来看,48.9%为水果生鲜,45.3%为粮油调料,41.8%为零食饮料,34.2%为家居用品,33.3%为洗护用品,13.8%为母婴用品,4.9%为其它。
社区团购平台 “供应商—中心仓—网格仓—自提点—消费者”的流通方式,极大的缩短了中间环节,节约成本。低廉的价格,丰富的品种,快速的配送,无需接触过多人群,使得社区团购能切中消费者的软肋,尤其是疫情当前。然而社区团购这几年的发展也暴露出不少问题:
1.
不少企业为了抢占市场,盲目扩张,自身供应链却跟不上,团长招募过多,素质参差不齐,易出现内部竞争。
2.
各大品牌的产品结构类似,同质化严重。目前各品牌的收入60%-70%来源于生鲜产品。
3.
全凭团长推广市场,客源掌握在团长手里。不少团长同时代理多个品牌,通常优先考虑自身利益来选择品牌推销。
4.
初期的低价抢占市场让实体企业怨声载道,公众反响差,政府出手收紧行业管控。
5.
从线上采购生鲜这类易损坏产品对消费者来说依然具有一定风险,品质不稳定,退换不方便,单纯靠低价来吸引顾客不是长久之计。
6.
没有直接的售后服务,全靠团长来沟通联系,反应链条过长。
目前社区团购的发展模式依然不成熟,基本没有成功的经验可复制,各大企业都在努力走出自己的路:如“兴盛优选”最初的口号“复兴门店”;“同程生活”并购广东本地生鲜连锁品牌“千鲜汇”,在湖南推出B2B批发业务,入驻“抖音”;“橙心优选”开出自己第一个线下门店;美团集团来个“美团买菜”+“菜大全”+“美团优选”的组合拳。比拼完资本、品牌和流量的狂热过后,只有利用好数据分析,完善内部管理,提升服务,才能更精确的把握市场需求,优化资源配置,在细分市场打造出特色,赢得自己的一席之地。
Why will China change the world?
(blinkist adaptation)
Blockchaining Chicken
In the Western imagination, we characterize China by crowded megacities like Shanghai, Beijing, and Shenzhen. Today, many young people move to China’s most prominent cities in search of work. Yet, 40 per cent of the population still lives in the countryside. China’s latest novel creation can be found in a remote village called Sanqiao. Here, in the impoverished mountainous region of Guizhou, you’ll discover GoGoChicken, the first blockchain chicken farm.
Enter the blockchain chicken farm. This company raises high-quality, free-range chickens. These birds sell at a premium price to wealthy diners in the coastal cities. But these consumers want a guarantee that the chickens they’re buying are the chickens that are advertised.
Each chicken is tracked and monitored from the moment it’s born until it reaches the table. A chicken’s data is compiled and stored using blockchain technology. This distributed record-keeping system makes it extremely difficult to falsify any information. So, you can scan a code and see its entire life on a special website when you buy a blockchain chicken. This way, you truly know what you’re about to eat.
Online learning is re-educating China
City dwellers have much better access to education than countryfolk. Only 10 per cent of rural residents continue education after high school. In some regions, the high school dropout rate is above 50 per cent. To remedy this, China has turned to online learning.
In 2015, an elite urban high school, called Number 7 High School, began live-streaming classes for students in rural areas in Yunnan and Guangxi. Initially, the experiment was a failure. Poor internet infrastructure and family obligations kept rural students from really benefiting from the initiative. But, three years later, 88 of these students were accepted at Tsinghua and Peking Universities. It’s unclear if the program will work on a larger scale, but this small success is promising.
Piracy or innovation tweaking?
There’s some truth to this. In China, there’s a concept called shanzhai, which is a derogatory term for pirated goods. That’s because rural mountain villages have sometimes created whole economies around making imitation products, from pirated DVDs to fake designer handbags. Of course, these shanzhai economies only work by ignoring intellectual property rights.
While shanzhai can be about creating knockoff iPhones, it can also be something more. The idea that anyone can adapt and repurpose existing ideas for their ends actually opens a whole new field of innovation. That way, creative engineers can share ideas and remix products into an astounding array of new devices, even with few resources.
Just take a stroll through the Huaqiangbei electronics market, you’ll find hundreds of small-scale companies making everything from 3D printers to simple modular cell phones you can augment and repair on your own. This massive array of incredible shanzhai shows that China’s culture of swapping, sharing, and DIY manufacturing is a type of innovation all of its own.
China’s surveillance state has both practical and ethical problems.
In the popular imagination, China is an authoritarian state where the state closely tracks everyone. It’s true that the government monitors and restricts information in the media and on the internet. But China’s actual surveillance operation is less slick than you might think.
Consider a city like Guiyang. Authorities are attempting to catalogue all the residents into a massive database. But urban villages are populated by an ever-shifting community of rural migrants, so the task isn’t easy. Even after years of work, the spotty database includes only 60,000 people.
Companies like Face++ might offer a solution. This Beijing-based start-up makes facial recognition software for private companies and the Sharp Eyes program — a government initiative that aims to use surveillance cameras to monitor public spaces. Still, despite the hype, the program has stalled. Chinese cities still have fewer surveillance cameras than those in the US. And the software isn’t always as accurate as advertised.
Often, a camera’s facial scan can misidentify a person or fail to see a face at all. Even when data collection and surveillance efforts do work, there remains a host of ethical problems. For one, these programs generally target poor and minority communities. This excessive focus can create lopsided crime statistics that unjustly stigmatize these populations. And once the system has singled someone out, their negative data can follow them for life, even as they grow and change as a person.
Internet commerce ties remote villages to the global economy.
Shangdiping, a tiny village of 900 people in the mountainous Guizhou Province, was connected to the world only through a meandering footpath through the hills. That all changed in 2018 when a paved road was built.
Shangdiping, like many remote villages, is slowly changing. It’s now a patchwork mix of traditional and modern lifestyles. Farm animals still wander the streets, but there’s a flashy new internet cafe. The town’s single restaurant has no signage or set prices, but you can pay your bill with the smartphone app WeChat.
Many of these changes result from a nationwide effort to integrate China’s rural communities into the broader economy. At the heart of this effort is e-commerce. Villages have been adapting to the internet economy. This change is fueled by the e-commerce giant Alibaba and its website Taobao.com, a major shopping platform. In 2013, the company launched the Rural Taobao strategy. It aimed to transform rural communities into hubs of online commerce. First, the company opened Rural Taobao Service Centers to help villagers buy goods from Taobao.com. Then, it sent officials to teach residents how to sell goods on the website.