At height Amid the pandemic, a unique online shopping has become one of the hottest trends in China’s tech industry. It is known as “community group buying”, and it allows consumers to place bulk orders with their friends and family, saving money from Apple to iPhone. The model is a bit like Groupon Meets Instacart and proves to be particularly popular in groceries. But now, China’s community group purchasing platform is disappearing alone.
Late last month, Chinese food giant Meituan announced it was suddenly closing its grocery group purchase business, but many customers and even suppliers were surprised, except in four provinces.
In March, Alibaba’s grocery group’s purchase arm Taocaicai was also closed. Xingsheng Youxuan, a company that launched the national industry, now operates in only three provinces, compared with 18 provinces. Today, Temu’s Chinese sister company, Pinduoduo, is the only major Internet platform that still offers grocery group purchases nationwide.
Selling groceries is not a high-margin business, and the cost of shipping small amounts of potatoes may never make financial sense for tech companies. However, the promise of collective purchases is that it might be profitable enough to aggregate orders and deliver all of them to one place.
The industry began to form in the late 2010s, but it did continue to grow with the pandemic hit in 19009. With Chinese cities intermittent lockdown for three years, going to grocery stores is often impossible, and tech companies have seized the opportunity to digitalize and monopolize more daily activities. While families in the largest and most developed cities can afford to deliver groceries directly to homes, people in more underdeveloped areas have found an alternative way to buy groceries in groups.
In the early 2020s, community group purchases were seen as innovative solutions to the last mile delivery challenges associated with grocery delivery. But as the pandemic lockdown ended, Chinese companies, including Metuan, continued to expand their dense express networks, and they began providing delivery in just 30 minutes, eliminating the need for people to gather with their neighbors for group purchases.
“Now, instant retail is also about to reach lower-rise cities, so people can also buy groceries at the same price as the community group buys, but within an hour, rather than waiting for a day, and have to get groceries from community group leaders. “We’ve arrived at a time when we were almost an old model. ”
Meituan closed most of its collective purchases on the day it also issued a statement saying it would expand its instant delivery business. Meituan did not respond to Wired’s request for comment.
Watch the performance
One of the most interesting aspects of the collective buying business model is that it relies on thousands of contract community leaders. Called tunzhang– The playful twist of the Chinese term “military commander” – These people usually have deep ties to the local community and are recruited by the platform to promote their services and assemble bulk grocery stores.
In exchange for sales commissions, community leaders sort out grocery orders and deliver them directly to neighbors or wait at home for people to pick them up. Most community leaders are owners of small retail stores, or stay-at-home moms and retirees, who have plenty of time to perform.
