Analysis of competitive products of community group buying products

As social e-commerce has developed to the present, product segmentation has become increasingly refined, among which community group buying, as a new community retail model, has been favored by many businesses. With the entry of major companies such as Meituan and Didi, competition in the community group buying market has become fierce.

1. Industry development history and current status

1.1 Definition of Community Group Purchasing

Community group buying is a shopping and consumption behavior of resident groups in a real residential community. It is a regionalized, niche and localized group buying form based on the real community.

By providing group-buying discount activities to surrounding (in-community) residents, community shops can promote targeted publicity and consumption stimulation for core customers, rapidly increase the regional visibility and reputation of shops, and have a significant effect on the marketing of shops.

Currently, fresh food categories, as high-frequency and rigid demand, are an important source of traffic for community group buying. The operating model is mainly based on online pre-sales one day in advance. Customers place orders in advance on WeChat groups, apps, and mini programs, and then go to the community leader to pick up the goods the next day. It mainly solves the commodity needs of household consumers for purchasing fresh fruits.

1.2 Business Model

The business model of community group buying consists of the platform, group leaders and community residents:

• Group buying platform - group leader: the platform provides group leaders with products, logistics, after-sales and other support, and the group leader receives a commission of about 10%;
• Group leader - community residents: Group leaders use their own private traffic to establish community operations and recommend products to community residents;
• Community residents-Platform: Residents order products through the platform app or mini-programs, and the platform provides after-sales services to residents.

Image source: China Merchants Securities

Community group buying is a business model of fresh food e-commerce, which also includes platform model and forward warehouse model:

• Platform model: The platform provides home delivery services to consumers by cooperating with offline supermarkets, retail stores, and convenience stores.
• Forward warehouse model: The platform operates its own business and stores fresh goods in forward warehouses near the community in advance, and arranges delivery immediately after users place an order.

Classification of fresh food e-commerce business models Source: iResearch

By comparing the community group buying model, platform model and forward warehouse model, we can develop community group buying with the characteristics of low price and low cost, and it is easy to replicate and expand in second-, third- and fourth-tier cities.

By relying on the private traffic of the group leader, community group buying can reduce the customer acquisition cost to 20 yuan, which is only one-tenth of the forward warehouse model.

In the e-commerce business, the costs of attracting new customers, marketing, fulfillment, etc. combined account for 20% to 40% of sales. However, in community group buying, these three costs are all borne by the group leader, and the cost of the group leader only accounts for 10% or even less.

But a low threshold also means there are no barriers, the playing styles are homogeneous, and the competition is fierce. On August 11, 2020, Meituan Youxuan took over the original Meituan Maicai business in Wuhan, which was seen by the outside world as Meituan testing its strategy of transforming its forward warehouse model into a community group purchasing model.

Comparison of fresh food e-commerce business models Source: Self-made

1.3 Industry Development History

Industry development history chart Source: China Merchants Securities

1.3.1 From budding to reshuffle

Community group buying began to take shape in 2015. After spreading from first-tier cities to second-tier cities and then to third- and fourth-tier cities, it entered its explosive growth phase in 2018, with accumulated financing reaching 2 billion yuan. The industry gradually entered a period of reshuffle in 2019, with news of community group buying platforms including Songshu Pinpin and Dailuobo suffering huge losses or even "bankruptcy" being reported from time to time.

1.3.2 Regaining a new machine

However, during the epidemic, community group buying unexpectedly became an important support for residents' lives, with GMV and penetration rate growing by leaps and bounds. The reasons are analyzed from the supply side and demand side respectively:

• Supply side: During the epidemic, transportation was obstructed and farmers' markets were closed, forcing farmers and distributors to contact fresh food e-commerce platforms.
• Demand side: Residents are quarantined at home, and material distribution is implemented on a building-by-building basis, cultivating users' consumption habits of group purchasing of daily necessities. The online neighborhood groups established in this way provide a ready-made promotion channel for community group purchasing.

According to iMedia Consulting data, stimulated by the epidemic, the community group buying market developed rapidly in 2020, and the market size is expected to reach 72 billion yuan. With the good growth trend of the market in the future, the scale of China's community group buying market is expected to reach 100 billion yuan in 2022.

1.3.3 Giants Influx

Starting from the second and third quarters of 2020, various capitals have actively poured into the community group buying track.

• Didi: Didi launched “Chengxin Youxuan” in Chengdu in May 2020. On November 3, Didi CEO Cheng Weigang stated at an internal meeting that “there is no upper limit on Didi’s investment in Chengxin Youxuan”;
• Meituan: In July 2020, it established the Preferred Business Department and entered the community group buying field. The "community group buying" business is designated as a first-level strategic project, which will be the next revenue growth point for Meituan.
• Pinduoduo: In August 2020, Pinduoduo launched Duoduo Maicai, which will be the company's development focus in the next stage. From Chairman Huang Zheng to CEO Chen Lei, Pinduoduo has made it clear from top to bottom that the agricultural field is the company's future strategic investment direction;
• Alibaba: Four teams are trying community group purchasing, including Hema, Retail Channel, Cainiao Station, and Ele.me, but most of them are in the early stages. Among them, the Hema branch is the most anticipated. In mid-September, Alibaba CEO Zhang Yong announced that the Hema Business Group would set up the Hema Preferred Business Department.

2. Experience the environment

System version: MIUI 11.0.5

Experience time: 2020.11

Product type: Community group buying APP

Experience version: Meituan v11.3.402, Pinduoduo 5.38.0, Chengxin Youxuan 1.0.10, Xingsheng Youxuan 1.2.8

3. Competitive product analysis

3.1 Analysis Object

This article studies the community group buying products of Meituan, Pinduoduo, and Didi: Meituan Youxuan, Duoduo Maicai, Chengxin Youxuan, and Xingsheng Youxuan, a "community e-commerce leader" established in 2017 with coverage in more than 100 prefecture-level (county-level) cities in Hunan, Hubei, Jiangxi and other places.

3.2 Basic product information and target users

Product form: Meituan Youxuan and Duoduo Maicai currently do not have independent apps, and all four products have WeChat mini-programs.

Launch time: Xingsheng Youxuan was launched in 2017, and Meituan Youxuan, Duoduo Maicai, and Chengxin Youxuan were all launched in the second and third quarters of this year.

Available provinces and cities: Currently, Duoduomaicai has opened stores in the most provinces and cities, while Chengxinxuan has opened stores in the least. The sinking markets in North China, Central China, and West China are hot, and Shandong, Henan, and Guangdong have become provinces with densely distributed stores.

Table source: self-made

Target users: Community group buying serves the "family consumption scenario" and its target users include group leaders and consumers. Group leaders are mainly mothers and community convenience stores. Data show that mothers account for 27% and community convenience stores account for 73%.

The consumers are mainly 20-40 year old users in the sinking market with high frequency of grocery shopping needs, mostly married women.

Consumer portrait Source: Self-made

Community group buying consumer characteristics statistics Source: China Merchants Securities

3.3 Product core functional structure

The core functions of Duoduomaicai are the simplest, with only two modules: product management and order management. Other products at least include account management. There is no product search function in the product management module, and no evaluation and sharing functions in the order management module. Overall, the product functions are relatively simple.

Meituan Youxuan has developed a recipe function to facilitate users to view recipes and purchase products, serving users with unclear needs; Xingsheng Youxuan has developed a short and medium-length video function to increase user usage time, improve user activity and stickiness.

Product core function structure diagram Source: Homemade

Product core function comparison table Table source: self-made

3.4 User shopping flow chart

Community group buying user flow chart Source: Self-made

3.5 Product Core Function Experience Analysis

3.5.1 Basic functions

The main experience is the product display module. Different product display functions correspond to different user shopping purposes:

• Has a clear purpose: product search function
• Has a vague purpose: product classification function
• No clear purpose: Product recommendation function/discounted product function

3.5.1.1 Product search function

Duoduomaicai has no product search function

The product search process is divided into: before search, during search, and after search, which correspond to the search default interface, search input interface, and search result display interface respectively.

Pages before and during search : Orange Heart Selection provides the best experience.

There are default search results, historical records, and recommended searches, which can not only provide users with purchase suggestions and meet the needs of users with vague/unclear purposes, but also drive traffic to their own advantageous products. Associative results can reduce the number of search results and improve search efficiency.

Page after search : Meituan Youxuan has the best experience.

There is a product filtering interface that can satisfy users' needs to filter products with different sales volume and prices. In terms of product display, all three use a single column display. Meituan and Chengxin use the format of left picture and right text, showing 3-4 pieces of information on a single page, while Xingsheng uses the format of upper picture and lower text, showing 1-2 pieces of information on a single page.

Considering that Xingsheng does not have a result filtering tool, and the text and image information density of a product has not increased significantly, this way of displaying information is not conducive to users finding products quickly, but it is conducive to guiding users to buy top-ranked products, thus reducing supply chain pressure to a certain extent.

Summary : Overall, Meituan Youxuan has a better user experience, while Xingsheng Youxuan has more room for improvement.

Suggestion : It is recommended to add voice input and photo recognition search functions in the future.

Product search function Source: Homemade

3.5.1.2 Product classification function

In terms of the number of product categories, Xingsheng has the largest number, while Chengxin has the least (Meituan has 12 levels, Xingsheng has 30 levels, Chengxin has 9 levels, and Duoduo has 11 levels).

Xingsheng Youpin not only provides fresh fruits and vegetables to meet users' grocery shopping needs, but also offers commonly used household items, daily chemicals, and home appliances for selection, with a more complete product category. The demand for these types of goods, like buying groceries, is a medium- and high-frequency demand of households. In offline shopping scenarios, these goods are usually purchased in one trip, which is in line with user needs and behavioral logic.

All four products display the product classification function on their homepage. The difference is that Meituan only displays five important categories, while the other three display all categories. Duoduomaicai does not have a dedicated category page, all categories are displayed on the homepage.

Summary: Xingsheng Youxuan has the most comprehensive product categories, which can meet users' more diversified home shopping needs and bring more diversified benefits to the platform.

Product classification function Source: Homemade

3.5.1.3 Product recommendation function/discounted product function

This function of the four products is divided into two types: "Limited-time flash sale" and "Boutique recommendation":

Limited-time flash sales : refers to discounted products with a purchase time limit, which encourage consumers to place orders by creating a sense of urgency. Among the four products, except Xingsheng Youxuan, all of them place this module below the product classification module on the home page, while Xingsheng Youxuan places it after the "Featured Recommendations" module.

Meituan Youxuan and Xingsheng Youxuan use a sliding browsing method to provide consumers with an immersive shopping experience.

In terms of the design of the structural and presentation layers, Meituan Youxuan’s shopping experience is better.

On the one hand, it provides richer discount information (time limit, number limit, number of group participants, price discounts, product features, etc.) and more efficient information acquisition efficiency (3-4 discount information per page); on the other hand, the visual display of the module gives consumers a stronger sense of urgency. Xingsheng Youxuan has added a link module "Enter xxx" to the corresponding category page of the product in this module to direct traffic to similar products.

Chengxinxuan and Duoduomaicai display flash sale products in a modular way. In Orange Heart Premium, you need to click "All Flash Sales" to enter the secondary page to obtain more information on flash sales products. The entrance is deeper than other products, which affects the shopping experience. Duoduo Maicai has limited flash sales products, and uses a left and right sliding method to display all discount information.

Featured recommendations : Meituan Youxuan and Chengxin Youxuan classify products according to their characteristics, Duoduo Maicai combines the featured recommendations with the product classification page, and Xingsheng Youxuan takes the “small but fine” route, recommending one product every day and placing it at the front of the homepage.

Summary: In terms of page visual design and information interface design, Meituan Youxuan’s product recommendation function/discount product function has a better product experience.

Suggestion: It is recommended to use left and right sliding interaction for the horizontal secondary directory of boutique recommendations.

Product recommendation function/discounted product function Source: self-made

After using the product display function, some users will click to enter the product details page to confirm whether to add it to the cart.

3.5.1.4 Product details page

Use the KANO model to analyze the needs of users after they click into the product details page:

Basic requirements include:

• Get price information: purchase price/discount strength/discount time period
• Get specification information: weight/origin
• Get order information: pick-up time/pick-up address
• Get detailed information: Product introduction
• Get Feedback: Buy Reviews

Expected demands include: quality assurance, related product recommendations, etc.

Exciting needs include: price comparison of similar products, recipes, etc.

Meituan Youxuan, Duoduo Maicai, and Chengxin Youxuan use the form of sliding up and down to display products. Meituan Youxuan and Duoduo Maicai have similar information designs and consist of four screens:

1. The first screen displays basic product information;
2. The second screen displays related product recommendations;
3. The third screen displays product details;
4. The fourth screen displays more product recommendations.

Duoduo Maicai consists of three screens, omitting the second screen of the above two products.

Compare three products:

First screen: basic product information

All three products display basic information such as price, specifications, and order to meet users' basic needs. Meituan Youxuan has added a platform guarantee module to provide quality assurance for products, which is a product highlight.

Second screen: Related product recommendations / Fourth screen: More product recommendations

Although the second and fourth screens are both product recommendations, they should be different.

The first and third screens meet the basic needs of users, while the second screen is inserted in the middle of the basic needs. Improper design can easily affect the user experience.

Therefore, the message must be brief and effective. Meituan Youxuan has a better design on the second screen. Compared with Chengxin Youpin, the recommended products are similar products (other types of kiwis, or other fruits), allowing consumers to easily compare prices without exiting the page. The title "Neighbors love to buy" adds social attributes to endorse the quality of the recommended products, increasing the probability of users adding to their cart.

In addition, activity modules and recipe modules have been added to meet users' excitement needs.

Summary : Meituan Youpin not only meets the basic needs of users, but also makes innovations in expected and exciting needs, creating an aha moment in the user experience process.

Product details page Image source: self-made

Different from the above three products, Xingsheng Youxuan uses left and right sliding method to display information. The three modules respectively display "Direct Purchase Live Broadcast", "Basic Information" and "Product Details", among which only some recommended products have the "Direct Purchase Live Broadcast" module.

Click on a recommended product to enter the details page. The "Direct Purchase Live Broadcast" module will be displayed by default. This module consists of product information and short cooking videos, which meets the user's excitement needs. Basic information will be displayed after swiping right.

Personally, I think the logic of information display is questionable. Before understanding the basic information of the product, that is, before considering whether to buy it, displaying the cooking method of the ingredients has limited appeal to users. If the intention is to use attractive pictures of dishes to guide users to buy products, the pictures of the dishes can be added to the basic information sliding picture page, and the pictures can be automatically slid to display the products.

In summary, it is recommended to set the "Basic Information" module as the default module for the details page, and swipe right to enter the "Direct Live Broadcast" module.

The purchase record module is intended to show users other users who have purchased the product, creating a realistic sense of rush buying when shopping offline. However, the information displayed in this module is the unfamiliar user's avatar, user name, purchase date, and number of copies purchased.

It is of little value to the user himself, but the purchase information of acquaintances/neighbors and everyone's evaluation of the product are more meaningful to the user.

Summary: Xingsheng Youpin can make modifications in two aspects: information display logic and purchase record module.

Product details page Image source: self-made

3.5.2 Features

3.5.2.1 Meituan Youpin: Recipes

This module solves a pain point during grocery shopping and cooking, namely, what dish should I cook?

The recipe module provides users with a rich selection of dishes and their preparation methods according to time/cuisine. What dish will be cooked? This question has been changed from a fill-in-the-blank question to a multiple-choice question, reducing the difficulty and cost of decision-making and providing users with a better full-process experience.

At the same time, we provide links to purchase ingredients to attract traffic to corresponding products, expand consumer categories, increase average order value, and increase user usage frequency.

Meituan Youpin recipes Source: Homemade

3.5.2.2 Xingsheng Youpin: Xingsheng Youshi

Xingsheng Youshi mainly provides third-party UGC/PUGC short and medium-length videos, with the content mainly consisting of cooking videos and health and wellness videos, aiming to increase the time users spend on the app and improve user stickiness.

However, there are many points that need to be improved in this module:

• Video playback experience: Videos cannot be played in full screen, which does not provide an immersive experience, and dragging the progress bar is troublesome;
• Functional traffic diversion and monetization: Cooking videos are a good traffic entry point, and monetization can be achieved by increasing the purchase volume of corresponding products. Currently, this channel has not been opened up;
• Video content: The quality of third-party UGC/PUGC content is difficult to guarantee. Low-quality videos are harmful to the platform’s brand image, so you must remain cautious.

Xingsheng Youpin Xingsheng Youshi Image source: Homemade

3.6 Product Operation Analysis

According to different target users, operations can be divided into consumer operations and group leader operations:

3.6.1 Consumer Operation

The four products have similar operating methods in event operation, user operation, channel promotion, new media operation and offline community operation. In terms of content operation, Meituan Youxuan has developed a recipe function, while Xingsheng Youxuan focuses on live streaming and short and medium-length videos.

Consumer operation table source: self-made

3.6.2 Group Leader Operation

Unlike C-end consumers, B-end group leaders are highly sensitive to income. Only by finding ways to increase the income of high-quality group leaders on the basis of attracting new members can the entire process of group leader retention, activation, and monetization be completed.

Meituan Youxuan has established a relatively systematic group leader training program through its WeChat official account. By combining online and offline methods, it strengthens the connection between the platform and group leaders, improves group leaders' brand identity, and uses subsidy strategies to help group leaders with different experiences increase their income.

Meituan Youxuan online and offline group leader training Source: Some from the Internet

Chengxin Youxuan and Duoduo Maicai push useful information posts for group leaders through WeChat public accounts. Some of these posts are operation guides, and some are tips for increasing income. Compared with Meituan Youxuan, they are less systematic and have limited guiding effects.

Orange Heart Selection, Duoduo Shopping Push Image source: Homemade

4. Conclusion

Through the above analysis, the author believes that Meituan Youxuan is more perfect than other competitors in terms of product design and product operation.

However, in the entire chain of community group buying, in addition to consumers and group leaders, supply chain, warehousing and distribution, and capital chain also play a vital role. From the industry consensus that "community group buying starts with the group leader but ends with the supply chain", it can be seen that this is a business that relies on traffic to occupy the market and then competes on product services.

The advantages of Duoduomaicai mainly lie in the agricultural product ecology:

Meituan has accumulated certain supply chain resources through its long-term layout in the fresh food sector. Xingsheng Youxuan has been deeply rooted in the Hunan market with its Furong Xingsheng store network. Didi's technical advantages in algorithms empower warehousing and distribution. In addition, all four products are backed by capital support from Internet giants, ensuring the stability of each company's capital chain.

When the business model is basically mature and the supply chain, warehousing and management capabilities of each platform are similar, the competition among them returns to "money". Only with money can the market be expanded, and only by occupying the market for a long time can the competitors be eliminated. Therefore, major giants have increased their investment.

The fierce battle is about to begin, and it will take time to tell who will have the last laugh.

Author: Si Niang is the best 🎊

Source: Si Niang is the best 🎊