The Demise of China’s Hottest Online Shopping Craze

At the top From the pandemic, a unique type of online purchase has become one of the hottest trends in the Chinese technological industry. Called “community group purchase”, it allowed consumers to save money on everything, from apples to iPhones by placing bulk orders with their friends and family. The model, which was a bit like Groupon Meeting Instacart, turned out to be particularly popular for grocery store. But now, the purchasing platforms of Chinese community groups disappear one by one.

At the end of last month, Meituan, the Chinese food delivery giant, announced that it had suddenly closed its operations to buy grocery groups in all provinces except four, surprising many customers and even suppliers.

In March, the ALIBABA grocery group purchase arm, Taocaicai, also closed. Xingsheng Youxuan, the company that launched the national industry, now only works in three provinces, from 18 years old. Today, Pinduduo, the Chinese sister company in Temu, is the only major Internet platform still offering grocery groups across the country.

The sale of grocery store is not a company with high margins, and the cost of shipping something as small as some potatoes can never have a financial meaning for a technological company. The promise of group purchase, however, was that the pooling of the orders of the dozen and deliver them all to one place could be quite profitable.

The industry began to train in the late 2010s, but it really grew up when the pandemic success COVID-19. While Chinese cities entered intermittent locking for three years, going to a grocery store was often impossible, and technological companies have seized the possibility of digitizing and monopolizing more daily activities. While households in the largest and most developed cities could afford to have their homes delivered directly to their homes, the inhabitants of the less developed regions have found an alternative in the purchase of group grocery stores.

In the early 2020s, the purchase of community groups was considered an innovative solution to the delivery challenges of the last Mile associated with the delivery of the grocery store. But as the pandemic locks end and the Chinese companies, including Meituan, continued to extend their dense ends, they started to offer delivery in as little as 30 minutes, eliminating the need for people to come together with their neighbors to make a group purchase.

“Now, the instant retail trade also arrives in the lower level cities, so that people can also do shopping for perhaps the same price as the purchase of community groups, but in less than an hour, instead of waiting for a day and having to recover it from a community group leader,” explains Ed Sander, technological analyst at Tech Buzz China, who followed the group purchasing industry for several years. “We arrived at a time when it is almost an old model.”

The day Meituan closed most of his group purchasing services, he also published a declaration saying that she would broaden her instant delivery activity. Meituan did not respond to a request for wired comments.

Concerts

One of the most interesting aspects of the group purchasing business model is that it is based on thousands of contractual community leaders. Called tuanzhang– A fun touch on the Chinese term for the “regimental commanding” military title – These people often have in -depth links with local communities and are recruited by platforms to promote their services and bring together bulk grocery orders.

In exchange for sales commissions, community leaders sort orders from the grocery store, then deliver them directly to their neighbors or wait for people to come and get them. Most community leaders are owners of small retail stores or mothers and home retirees who have a lot of time for a parallel concert.