What is the situation from innovation to subsidizing community group buying？

　　The sudden entry of "giants" broke the development rhythm of the whole community group buying track, and the rules of the game changed accordingly. The industry has changed from "innovation" and "implementation" to "capital" and "subsidy". It is not surprising that the life of the same journey has walked out of an inverted "V" trajectory from rise to fall.

　　The "giants" are still involved in the track of community group buying, but the startup companies that started first were "conveniently" crushed. On the morning of July 7, Tongcheng Life (now renamed Honey Orange Life), a community group buying platform, officially declared bankruptcy. According to the reporter, its founder, chairman and CEO He Pengyu was still talking with suppliers that night. During more than four hours of talks, he shed tears several times and promised to try his best to pay off his debts, but there was nothing he could do.

　　Tongcheng Life is not the first enterprise to declare bankruptcy in the community group buying circuit, but its bankruptcy was called "the first case of bankruptcy in community group buying" by the media because of its high popularity, which caused a shock in the industry.

　　Why is the same life "sudden death"? What is the situation of community group buying now? The reporter interviewed some people familiar with the matter.

　　From innovation to subsidies.

　　The usual reason for a company’s bankruptcy is poor management, but living together — — This company, which was established in January 2018 and belongs to Suzhou Fresh Orange Technology Co., Ltd., is obviously not included here. From He Pengyu’s internal letters to employees and suppliers, we can clearly see the inverted "V" trajectory of Tongcheng life from its rise to its rapid "fall". According to He Pengyu’s open letter, it only took about a year and a half. "Tongcheng Life has achieved a front-end performance and entered a benign development stage."

　　At that time, Tongcheng Life was still the star of the community group buying track, which was recognized by many investment institutions. According to reports, in 2019, Tongcheng Life received four consecutive rounds of financing, ranging from tens of millions of yuan to 100 million US dollars. In June 2020, Tongcheng Life announced that it had completed the $200 million Series C financing. According to public reports, it was valued at about $1 billion before bankruptcy, and it can be regarded as a small and beautiful startup company.

　　In recent two years, the community group buying model developed from fresh e-commerce has rapidly developed into a new format of e-commerce industry, which provides a new way to promote agriculture and enrich farmers and attract flexible employment in cities and towns, and also attracts a large number of entrepreneurial teams. Ten Hui Tuan, Xingsheng Youxuan and Tongcheng Life are the three fastest teams, which were once called "the third group" by the outside world.

　　However, the booming community group buying market has also attracted "giants" to enter the market. Since September, 2020, Ali, Meituan, Didi, Pinduoduo and others have offered "big killers" of price wars, and "buying food for one cent" has become popular, even the vendors in the vegetable market have felt the pressure.

　　The sudden entry of "giants" broke the development rhythm of the whole community group buying track, and the rules of the game changed accordingly. The industry has changed from "innovation" and "implementation" to "capital" and "subsidy".

　　According to the reporter’s understanding, in the face of the sudden crisis of survival, Tongcheng Life has also struggled, and at the same time, it has also sought capital mergers and acquisitions. It has discussed the acquisition intentions with JD.COM, Ali, ByteDance, Meituan, etc., and even a team has settled in due diligence, but in the end it failed due to changes in the wind direction of the industry.

　　Li Ming (pseudonym), a former executive of Tongcheng Life, told the reporter, "At the end of June, Tongcheng Life also hoped to get better business data by increasing marketing efforts, and then obtain a ‘ Giant ’ The olive branch of the merger, but unfortunately it was rejected again. Later, due to the expiration of brand authorization, executives decided to start renaming and strategic transformation to make a comeback. Regrettably, at this time, suppliers began to concentrate on collecting money, which eventually led to the break of the capital chain. "

　　At present, community group buying is still in the stage of rapid expansion and growth. Meituan (Meituan Optimization), Pinduoduo, Didi (Orange Heart Optimization) have occupied the head position, and Xingsheng Optimization and Ten Clubs have also been incorporated by JD.COM and Ali. After Tongcheng Life left, community group buying has become a game for "giants".

　　After the shopping, it was a huge loss in the industry.

　　The industry is not surprised by the fall of Tongcheng life. After the community group-buying track entered the era of "giants", it became the norm to fight for prices and head rebates, and no one could achieve positive benefits in the short term, while the service innovation and experience innovation at the customer end came to a standstill, and the internal consumption of the whole industry was serious.

　　It is understood that the current profit rate of the community group buying industry has rapidly declined from profit to loss. Li Ming revealed that before the "giant" entered the market (before September 2020), the monthly sales of a platform with a volume like Tongcheng Life ranged from 800 million yuan to 1.2 billion yuan, and the gross profit was around 20%. After the "giants" entered, with the huge subsidies to consumers and the competition for "heads", the monthly revenue of the platform dropped by more than 80%, and the gross profit directly turned negative, and the whole community group buying market further slipped into the mire of losses in the whole industry.

　　The regulatory authorities have repeatedly taken measures to curb this crazy involution under the disorderly expansion of capital. In December 2020, the General Administration of Market Supervision and the Ministry of Commerce organized an administrative guidance meeting to regulate the order of community group buying, with the participation of six Internet platform enterprises, including Alibaba, Tencent, JD.COM, Meituan, Pinduoduo and Didi. At the meeting, the "nine no’s" of community group buying were put forward. In March this year, the operators behind five community group buying platforms, including Meituan Youxuan (Shenzhen Meituan Youxuan Technology Co., Ltd.), were fined 1.5 million yuan for alleged unfair price behavior.

　　But this still failed to curb the expansion of the "giants". On the one hand, they continue to steal similar "1 cent" activities, on the other hand, they seize the terminal market by greatly increasing the commission rewards and subsidies of "heads". Li Ming said that at present, the rewards and subsidies given by several giants to the "heads" of community group buying terminals have reached the highest level of 15% to 18%, basically subsidizing the platform’s own income. This is irrational competition and is suspected of disguised price war.

　　On July 8, the reporter inquired about some community group buying platforms, which not only had the activity of "sending 15 eggs in 5 days", but also had 1.25 yuan a catty of sand sweet potatoes and 0.99 yuan a red heart pitaya. On the community fresh-keeping platform, the single pitaya with red heart is from 4 yuan to 5 yuan, and the sweet potato in sandy land costs 5 yuan a catty, which is much higher than the community group buying platform.

　　Behind the shopping price and subsidies is the huge loss of the whole industry. According to public reports, in the first quarter of this year, the adjusted net loss of Meituan reached 3.892 billion yuan, and the investment of Meituan in community group buying business was about 10 billion yuan, which is expected to reach 20 billion yuan this year. In the first quarter, Pinduoduo’s gross profit dropped to 49.74%, and Pinduoduo invested about 6 billion yuan in buying more vegetables, and will increase investment in 2021.

　　Suppliers are affected by the mess.

　　From the booming performance to being forced to declare bankruptcy and exit, the collapse of Tongcheng Life is not only regrettable, but also left a chicken feather.

　　In the early morning of July 8, He Peng Yu issued an open letter through his personal circle of friends, proposing three solutions to the bankruptcy of Tongcheng Life: to protect the rights and interests of all creditors to the maximum extent within the scope of law; Make every effort to preserve the existing assets, hand them over to the court for proper sealing and disposal, actively cooperate with the government’s guidance, and pay off the debts with the company’s assets; If the assets are not enough to pay off the debts, He Pengyu promises to start a business again. "I will record every debt clearly and try my best to repay the debts."

　　It is also known that on July 8, Tongcheng Life issued a repayment plan for the supplier before starting the bankruptcy liquidation procedure. It had already paid the salary for employees in June and promised to pay social security for employees in the future.

　　Although the entrepreneurial team of Tongcheng Life tried its best to make up for it, there were still many vegetable farmers, small vendors and even large and medium-sized suppliers who failed to get the payment on time.

　　Since 2019, an animal husbandry company has cooperated with Tongcheng Life to supply eggs, and it has been owed nearly 800,000 yuan. After the crisis of Tongcheng life broke out, Mr. Wang, the person in charge of the company, came to ask for arrears. "There are hundreds of egg farmers behind me, so I have to go to the door to collect debts."

　　According to the latest situation, on July 8, Tongcheng Life has started to repay some of its suppliers’ debts in advance, and the rest will be distributed by the court after the bankruptcy liquidation procedure is started. At present, the work is still in progress in an orderly manner.

　　As of the morning of July 9, more than 600 suppliers have reached repayment agreements with Fresh Orange Technology, and the money mainly comes from the loan raised by He Pengyu and the team.

　　On July 9, Mr. Wang booked a return ticket with the repayment agreement. But next time, if the community group buying platform collapses again, can suppliers be so lucky?