Analyst Take: Breaking Down China’s Fast-Growing (But Troubled) Community Group-Buying Phenomenon

The recent COVID-19 lockdown in Shanghai shone a spotlight on community group buying—a digital shopping trend that leverages the collective purchasing power within a community—resulting in bulk orders that yield steep discounts. But even though strict quarantines and food scarcity helped accelerate adoption, the future of the practice is uncertain, thanks to persistent price wars that have led to shakeouts among the tech companies behind the concept.

Here’s how community group buying rose to prominence

China’s shopping culture created a fertile ground for the growth of community group buying. The business model, which dates back to at least 2019, has found particular success in China, where shopping is a communal experience and where finding the best deals is a national sport. These behaviors also helped drive the meteoric rise of Pinduoduo—an ecommerce platform that offers better prices the more social network connections one invites to join in on a purchase—in the mid-2010s.

Big tech companies piled in, seeking a share of a fast-growing market. Market leaders including Meituan Youxuan, Pinduoduo’s Duoduo Maicai, Alibaba’s Taocaicai, Didi’s Chengxin Youxuan, and JD.com’s Jingxi Pinpin are just a few of the many players that have launched group-buying services. According to iResearch, there were 285 services across the country as of March 2021.

Read This With Insider Intelligence