Community-based group buying rises in China in midst of quarantine restrictions

By Luo Shanshan, People’s Daily

Grocery shopping is currently undergoing profound changes in China as online group buying platforms and mini apps, and even chat groups on WeChat weigh in with great strengths in the commerce sector, especially after the novel coronavirus pandemic.

These platforms are driving an enticing trend for entrepreneurship in both the internet and offline sectors, attracting a large number of enterprises and entrepreneurs into the community-based group buying business. They received huge popularity, and the monthly turnovers of many have exceeded 100 million yuan ($14.1 million).

The rise of the business also came from the grocery shopping difficulties faced by the people when strict containment measures were taken across China to curb the spread of the novel coronavirus. Online group buying, which brings cost-effective products and interactive experiences, naturally became a new choice for many residents.

According to statistics released by a leading industry research and consulting services supplier, China had over 300 million users of online group buying in 2018, and this year the figure is expected to approach 500 million, as the COVID-19 pandemic spurred rapid growth of the business.

Chen Geng, a 36-year-old man living in Shanghai’s Pudong New Area, is the “head” of a grocery shopping group in his residential complex who helps fellow residents find quality products and place orders.

Every time he enters the WeChat group of his residential community, the man receives a huge number of messages from the residents asking him to place new commodities “on the shelves.”

Chen would recommend several quality merchandises every week in the chat group after browsing through a sea of commodities, and release in the group relevant information of the merchandises, such as name, weight and price, through a group buying mini app. All the other residents have to do is to open the links shared by Chen and pay.

Based on the information submitted by the residents, Chen would later place orders and distribute the commodities upon delivery.

As a matter of fact, Chen is not in the group buying industry, but a plain resident in the complex. He is trusted by his neighbors because he’s enthusiastic and often joins social activities held by the residential complex.

At first, only a few people randomly group-shopped groceries in the WeChat group, but the frequency was later increased from once to twice a week as the demand expanded and more people joined the group.

Such a mode is able to avoid middlemen along the distribution chain and reduce the operational and delivery cost of the suppliers, given the large quantity of commodities needed by residential communities. Therefore, the commodities are often cheaper than retail price.

“For instance, the northern snakehead fillet that we always buy is priced at over 20 yuan per bag on some e-commerce platforms, but the price we get is only less than 20,” Chen said, adding that group buying brings tangible benefit and convenience to customers.

He introduced that at the beginning, he had to record group buying information manually, which sometimes led to mistakes. But thanks to the mini app developed by group purchase platform Pinduoduo, Chen is now able to record the information in the app and reduce mistakes to the maximum. He told People’s Daily that the mini app has better facilitated the group buying of his residential complex.

“Our average transaction per week reached 80,000 yuan during the epidemic, and the least number recorded was around 50,000 to 60,000 yuan,” the man said.

Jing Linbo, president of Chinese Academy of Social Sciences Evaluation Studies noted that online group buying enjoys popularity as it features price advantage. Besides, the innovation of business mode is bringing a new reform, and the online group buying has fully discovered the potential demand of the consumers.

A large number of consumers are gathering up for lower prices from upstream manufacturers, driving the enterprise-oriented production to become consumer-oriented and manufacturing-on-demand. It will spur the energy of social productivity and the growth of production efficiency.

Now, Chen’s influence is expanding, and he’s reached by many residents from neighboring communities hoping to join his group. “The potential of community-based online group buying is not yet fully released, and the business is bound to embrace explosive growth,” Chen said.

Community staff sort commodities group-shopped by residents in Honggangcheng neighborhood, Qingshan district of Wuhan, Hubei province. Photo by People’s Daily