Community group buying can't go over three hurdles

The development of community group buying in recent years has begun to slow down.

The transformation and fall behind of companies such as Tongcheng Life, Food Sharing Club, Ten Clubs, orange heart preferred, etc., are promoting community group buying to the second half of the reshuffle.

As the Late Post article puts it:

Companies have invested tens of thousands of employees and tens of billions of losses, and they have no way back. In the past, they did a hundred things, a thousand things corresponding to a billion, ten billion profits, today, they have to do a thousand and ten thousand things, trying to reduce the cost of a dime or even a penny, in order to move closer to profitability - but this is the reality.

After the community group buying experienced the "nine no's" supervision, slowing down to dig up profits became the idea of all companies, but in this process, many people in the industry shook their heads and said that there was no hope.

The fundamental reason behind this is that the original Internet business has returned to become a retail business, and the original community group buying has a logical conflict of business model.

These conflicts focus on three main areas:

The transaction link relies heavily on people, but people are the biggest uncertainty;

The market cuts into relying heavily on high-frequency demand, and the more high-frequency just needs, the less profitable it is;

Growth in scale relies on community operations, and retail is the most challenging of the back-end supply chain.

The following is a disassembly analysis:

First, the transaction link relies on people, but people are the biggest uncertainty

Wei Zhe, former CEO of Alibaba, once said that don't be fooled by Yamato, the essence of business is still efficiency. Throughout the history of business, most of the big failures in business history, in addition to those systemic risks, stem from inefficient growth.

The first great leap forward in efficiency in the history of human commerce should be the first production line established in 1913 at the Ford Motor Highland Industrial Park.

Through assembly line operations, Ford standardized every production step, making the assembly efficiency of a T-car 8 times more efficient. Before that, there were 728 man-hours per car assembled, and only 12 cars were produced a year.

In later business developments, "standardization" became a sign of efficiency.

Innovating business models, reinventing operating models, the only thing entrepreneurs need to remember in these top-level designs is whether each of your links has achieved the greatest standardization?

Community groups obviously don't.

The transaction link of this industry is very simple, first of all, the platform recruits the community leader - the leader of the group to open a store - the powder guides the user to place an order - the summary order demand is unified to the platform procurement - the platform takes the order upstream procurement and distributes to the leader of the group - and finally the leader distributes the goods to each user.

Throughout the process, the head of the group becomes a hub connecting demand and supply. Unfortunately, the head of the regiment is the biggest uncertainty.

For the community group platform, in the recruitment standards of the group leader, it is best for him to have certain operational capabilities, and his influence in the community should also be good.

Theoretically, the village chief of our village is very suitable for this.

Backfired. As far as the current leaders of the community group platform are concerned, the proportion of retired aunts and idle mothers is not small. The slightly better quality may be the owner of the individual convenience store downstairs, or the staff of the rookie station.

In the previous recruitment policy of the group leader of the squirrel spelling, one of them is the 0 tuition learning community operation.

According to media reports, in these operational trainings, it is Che Haiyan, the head of the squirrel spelling national regimental leader management center, who appeared to say. Dozens of cities shuttled through, telling the first-line practical experience, sharing the development path of new retail in the community, etc.

In addition, most community group platforms will also train the head of the group online, and the training time is about 7 days. After 7 days, the head of the group is officially opened, and the platform will also help the leader get customers through subsidies.

In short, if the platform wants to cultivate an excellent group leader, it is bound to consume a lot of time and energy.

The reality is that the platform has only one leader in this community, but this leader has more than one WeChat group in the community. Through the subsidy diversion of the platform, the leader of the group uses the platform to empower the establishment of another community and entrain smuggled goods.

In addition, the regimental commander you have worked so hard to cultivate may go to a competitor in the next second.

Casually open a community group of WeChat Mini Program, as long as the user switches the community, he can see the name, store address and contact information of all the leaders in the current city.

This also facilitates the poaching of newly emerging platforms. At present, the monthly commission of the head of the group is roughly 3000-10000 yuan, and the disparity in income has given competitors a lot of room for operation.

How to prevent becoming a free group leader training school? This is the conundrum of community groups.

Second, the market cuts into relying on high-frequency rigid demand, and the more high-frequency just need, the less profitable it is

After the question of the regimental commander, there is the question of selection.

Today, under the logic of Internet business, it is first to create a blockbuster, which attracts social attention, thereby enhancing the brand influence of the platform.

But if the community group follows this line of thinking, it will be much more difficult to eat. The industry currently offers no more than 100 SKUs, and most of them are high-frequency just-needed goods.

The demand price elasticity of such products is low, the gross profit is low, and if you have to create a blockbuster product in these products, it is actually very difficult to protect the capital.

Take the current fresh category of the community group as an example, the reporter of Xi'an Daily once opened a community group APP and found that the fruits and vegetables in it are relatively high, and the price is not high, and some are even cheaper than the vegetable market.

Why does the wet market make fresh food the cheapest? Those small traders only go to the suburbs at two or three o'clock in the middle of the night to transport goods, and small and medium-sized batches are purchased and transported, and their loss rate can be controlled in single digits.

The fresh food industry is difficult to do, and the fundamental crux lies in how to standardize non-standard products.

Under the trend of distributed resource management, vegetables and fruits are still difficult to become relatively unified commodities. They are difficult to control from the beginning of production, even if it is an apple on the same tree, it is different; storage, transportation, and quality control are more difficult than ordinary commodities, and each link needs to pay a lot of personalized costs.

This whole process runs down, and the average loss rate of the industry is about 30%.

In 2016, there was a statistic that among the more than 4,000 entrants of fresh e-commerce, 4% were flat, 88% were losses, 7% were huge losses, and only 1% achieved profits.

By 2019, fresh brands such as carrots, fresh friends, mini fresh foods, and original convenience networks have all spread problems such as capital chains, layoffs, and closures, which is originally a non-profitable industry.

When the fresh categories on the community group platform are cheaper than the vegetable market, this generally indicates that the platform is losing money subsidies. There is no pinduoduo life, but there is a disease of burning money, and the final competitiveness of the community group is capital.

This has long been a To VC business.

An entrepreneur in Shanghai said in May 2019 that in order to raise the next round of financing, a local app that mainly sells vegetables does not care about losses at all, only cares about data such as platform GMV.

The platform has also set up a group buying department in Shanghai. After purchasing fresh goods upstream, they sell them to competitive platforms at a lower price than the cost price.

The entrepreneur said, "This is not a retail business at all, but an Internet business." ”

In view of this link, in fact, I had an exchange when analyzing Aunt Qian before. After the categories and channels have seized the innate dividend, what Aunt Qian needs to solve is the biggest problem of the entire fresh industry - loss.

Why is the loss rate of traditional fresh retail so high? This requires a dialysis of the logistics links in this industry.

Zhenghe Island 'Decision Reference' once published an internal speech by Xu Zheng, the founder of Daily Excellent Fresh. The article said that the fresh e-commerce logistics link will generally use 3 cold chains:

First, the cold source cold chain, that is, the company's large cold storage in the construction of hub cities.

Second, the refrigerant cold chain, that is, the company's use of ice packs, ice plates, foam boxes and other cold preservation measures to distribute the process.

Third, the time cold chain, that is, the time limit from the time when the order is placed to the time when it is sent to the user's hand to ensure that it is not broken.

Without these 3 cold chains, the loss rate is bound to increase. However, Peng Zhijian of Yuansheng Capital once said that the logistics cost of the three cold chains running down is about 30 yuan, which accounts for 30%-40% of the sales cost of the entire company.

The pre-warehouse mode launched by Daily Excellent Fresh is to cancel the refrigerant cold chain and directly build a warehouse in the community to ensure that it is delivered to the user for 1 hour. In this way, the average cost of daily fresh performance can be reduced to more than 10 yuan.

In this way, its customer unit price is about 100 yuan can easily make a profit.

In this regard, after Hema Xiansheng experimented with more than 90 pre-position warehouses, its CEO Hou Yi openly stated at the annual meeting of "China Entrepreneur": The front-end warehouse is a false proposition.

Hou Yi concluded through experiments that the unit price of the pre-warehouse model customers could not go up, the loss rate could not come down, and the gross profit margin was uncertain.

Retal is Detal (retail is the detail), fresh loss needs to start from the details of the entire supply chain control. Liu Baohong, executive director of Sisi International, once mentioned 12 words of truth in his book "Supply Chain Management": front-end anti-compliance, back-end weight reduction, and middle chaos.

Summarizing the loss problem of Aunt Qian, you can start from here.

First, the front end is anti-complicating.

There are many Chinese restaurants in Silicon Valley, the amount of dishes is large, the price is cheap, and it is difficult to eat, and the final result is to change a boss after a while. The reason is that there are too many varieties of menus, more than 120 kinds of stir-fry to choose from, any 3 samples, the price is 18 US dollars.

Due to the complexity of the SKU, merchants need to purchase small quantities and different raw materials for users to purchase. As a result, the corresponding category procurement scale is small, the bargaining power is low; there are too many SKUs, inventory pressure and loss rate are large.

These small shops are not as profitable as a small stall that only sells steamed buns.

The same is true in the fresh food industry, where too many SKUs are loss and cost drives. At present, Aunt Qian only has more than 500 SKUs, and stores generally place more than 200-300 goods.

Second, the backend loses weight.

There are two ways for companies to obtain resources, the first is to leave it to suppliers, and the other is to do it themselves.

Liu Baohong said that when companies do not have the ability to select and manage suppliers, they have to embark on a vertical integration model, resulting in asset-heavy operations and low return on investment.

These cases are not absent in the fresh food industry. At the end of 2015, the self-built vegetable base of Splendid Fresh was launched, but after 2016, there was no news.

Looking at the sky eye inspection, we can see a legal action document in May 2018, and its legal representative Li Wenliang was included in the list of "untrustworthy executors" because of his inability to repay the 120,000 purchase price and its interest.

Aunt Qian works directly with suppliers. According to the self-media "The Third Eye Retail" reported, Qian Dama's stores submit the next day's orders to the headquarters before 15:00 every day, and after the orders are summarized, they will place orders with suppliers and send them to Qian's own distribution center in the early morning.

After that, Aunt Qian sorted, packed and distributed internally, and delivered to each store before 5:30.

In this link, Aunt Qian can directly control the loss of suppliers. If a loss rate greater than 4% is found during the picking process, the supplier will face penalties.

After screening out the 4% loss, if there is any loss of those goods on the shelves before 5:30, the store can directly return it to the headquarters of Qian Dama to ensure that the store purchases 0 loss.

Third, chaos in the middle.

After both the front and back end are depreciated, the final test is the store's own planning prediction. When placing an order at 15:00 every day, how to ensure that the order volume will not be too much to cause inventory, and it will not cause too little to cause shortages?

The first is to understand the characteristics of consumption. Aunt Qian can understand the consumption characteristics of her community within 2 months and estimate the daily consumption of each store.

Thousands of stores, each store has different consumption characteristics. Aunt Qian needs each store manager to make statistical predictions and then report them to the headquarters.

Secondly, guarantee that no overnight meat is sold, and the inventory is promoted on the same day. Even if Aunt Qian still has inventory left, it will stage a wave of big promotions from 19:00 every day. 19:00 discount, 19:30 discount, until 23:30, all items will be free of charge.

The data shows that Aunt Qian's current loss rate is 5%-10%. The fresh industry has done the best at loss reduction, yonghui supermarket, with a loss rate of 4%, Hema fresh 10%, and traditional supermarkets 20%-30%.

Third, scale growth relies on community operations, and retail is the most test of the back-end supply chain

Forget about the community group, forget to go to the store, the essence of being wrapped in these fancy Internet games is actually a retail business.

What forms of retail has the Internet changed with community consolidation?

The first is the pre-sale model of selling first and then purchasing. Through the feedback order of the regiment leader, the community group platform will go upstream to purchase, and then directly send it to the leader of the group.

Such a transaction process can reduce the loss of goods to a certain extent, and even achieve 0 inventory.

The second is to accelerate market growth with the help of fission of the network of acquaintances. The neighbor group in the WeChat relationship network itself imitates the single mode of Pinduoduo, which can reduce the cost of customer acquisition and quickly open the market.

It's just that these ingenious social operations often make the platform lose its essence - this is still a retail business, and when all the fresh and curious routines are played, the biggest test of the market is the supply chain.

As early as September 2019, the friendly shop of JD.com's community group project could not be logged in, could not be registered, and could not be forwarded, and was suspected of malfunctioning. Later, AI Finance and Economics reported that Jingdong began to adjust its business direction and focus more on the supply chain, including warehousing and commodities.

The blind pursuit of scale has become meaningless, and community group buying is more important to find a way from the supply chain side to reach consumers.

From this point of view, Yonghui Supermarket's community group business relying on the Yonghui Life App seems to be more confident.

Its B2B platform Color Food Fresh has a revenue of more than 1 billion yuan in 2017, and has established fresh central factories in Chongqing, Beijing, Fujian, Sichuan, Anhui and other places, expanding the bulk business of 300 enterprises for catering + medicine + prison + education + banking.

Through professional buyers, Yonghui Supermarket is known for its fresh supply chain, and this group of people is the real retailer. Earlier, Lin Zhongbo of Yonghui Agricultural Company proposed, when will the vegetables be harvested to maintain freshness for a longer period of time?

After years of trial and error by Yonghui buyers, it was found that:

In April and May, the vegetables are collected in the early morning;

In June and July, the vegetables are collected before dawn;

In August and September, it is necessary to collect the food the night before;

Different dishes, different regions, there are different harvesting times. These are the retail businesses, the business of bending down to pick up steel hammers.

Unfortunately, traditional retailers are not sensitive to internet competition. Yonghui Life App can do a brilliant job in the supply chain, but it is not as good as Meituan Preferred and Taocaicai in Internet marketing and marketing.

Of course, including Meituan Preferred and Taocaicai, they have done a lot of work in the back-end supply chain guarantee, and the selection, packaging, and quality are better than their opponents.

From the perspective of the entire operating rhythm, Xingsheng Preferred is the most stable company. By verifying the sinking model of the market in Hunan, it has run through an optimal path through years of polishing.

But it is still that sentence: Internet people do not understand retail, retail people do not love the Internet - a new round of rise after the community group reshuffle, and back to "people".

People are the biggest non-standard products; people are also your best business model.