On the last day of this month, after passing all the news but not interested in any of them, I decided to read successful case studies of rising startups on the internet, then this one blew my mind.
Shihuituan – Scaling Community Group Buy in China’s Lower-Tier Markets
Shihuituan (十荟团) is a community fresh group buy e-commerce platform. It copies the model of Pinduoduo, but brings to low-tier cities and focuses on fresh food instead of mass products. The company has secured ~$80B investment from the internet colossus Alibaba.
Three main questions answered in this analysis are “How does Shihuituan solve the two critical cost problems of every e-commerce: logistics and customer acquisition”, “Why is WeChat the KSF for this platform?” and “What are challenges we may face when implementing the model in Vietnam?”
How does Shihuitan solve the two critical cost problems of every ecommerce: logistics and customer acquisition ? They use community builders – who collect all the orders of residents in highly populated areas, then distribute them to the front door of each customer. This will bring down logistics costs. Besides, these people are active WeChat users who feel freely introduce products to their customers and gradually build trust with them, then customer acquisition costs are nearly zero. Shihuitan only needs to provide a fixed commission for these community builders, around 8-10%.
Why is WeChat the KSF for this platform?
- WeChat is where people cluster in China (1.15 MAU, omg..), socialize and share products information
- WeChat integrates with WeChat Pay, then purchasing in e commerce is no longer a problem
What are challenges we may face when implementing the model in Vietnam? The answer is infrastructure, including a place for people to cluster, and an ewallet that everybody uses (mobile payments are necessary for scaling business in terms of managing data and transaction. In Vietnam, both of these types of platforms are not popularized among local people, and the market is fragmented with no dominants. This makes it hard for Vietnam companies to leverage this model and create value for customers.
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