The retail industry players have always been competing for high efficiency and satisfying consumer experience.
Community group-buying develops fresh and daily necessities retail based on WeChat groups, mini-programs, apps and other traffic channels around community life scenarios. Those platforms use the team leader's community acquaintance resources for customer acquisition and adopt an 'online reservation + self-pickup model to realize online pre-sale and centralized distribution of fresh food and other categories.
Females, people living in the middle- and low-tier cities, and those aged 25 - 35 accounts for a relatively high proportion of the user group, among which middle-income households have the highest density. Compared with other e-commerce models, community group buying SKUs are fewer, ranging from 300 to 550. Fast-moving consumption food and fresh food that is conducive to attracting new users and increasing user stickiness account for the highest stock proportion.
This business emerged as early as 2015, but burning large amounts of money did not help gain profits. The fragility of the supply chain system has also made the industry slack. However, catalyzed by the pandemic in 2020, community group buying has attracted attention, especially from Internet giants such as Alibaba, Pinduoduo and Meituan.
According to QuestMobile, the number of monthly active users in the fresh food WeChat mini-app industry reached CNY 88.47 million in May 2020, a significant year-on-year increase of 65.6%. Also, the structure of terminal retail channels for agricultural products during the pandemic has changed significantly, with the proportion of community group buying consumption channels surging from 2% to 11.9% after the epidemic.
The fresh food industry is embracing the online channel
The adoption of online channels in the fresh food market is still low, creating huge growth potential due to the frequent rigid demand characteristics. According to Euromonitor, the market size of fresh food in China reached CNY 4.98 trillion in 2019 and is expected to reach CNY 5.1 trillion in 2020.
From 2017 to 2020, the online penetration rate of fast-moving consumer goods (FMCG) and grocery increased by 2% annually. Catalyzed by the pandemic, Statista predicts that this number will increase by 3% to 15% in 2021. For agricultural products, 52% of their sales are in traditional channels and e-commerce channels only accounted for 3% in 2019, which creates a broad room for future development.
Community group-buying is likely to help the fresh food industry achieve profitability
Fresh food, as non-standard products, requires a robust supply chain capability. Simultaneously, it is subjected to multiple costs such as labor, rental, terminal distribution and waste, which can lead to an overall loss. However, community group buying provides fresh food e-commerce companies with increased revenue due to pre-sales mode adoption: sales determined production. This model can also improve the current situation where the loss rate of fruits and vegetables caused by the complicated circulation process under traditional channels exceeds 10%, reducing the mark-up rate.
Assuming that the terminal markup rate is 25-30% while maintaining the same gross profit margin, community group buying requires a much lower unit price than fresh food platforms, as group buying can get lower prices from...