Insight – Group buying takes off in China during COVID lockdowns
8 June 2022
Group buying is a new trend in e-commerce in China. It involves groups of consumers banding together to purchase goods in bulk or wholesale. It has become highly popular during recent lockdowns.
Australian brands should consider promoting their goods via group buying. This may enable brands to market more effectively and to improve the competitiveness of goods in market.
What is ‘group buying’?
Group buying is an e-commerce model that typically involves a group leader who manages a group of like-minded or geographically clustered consumers.
The activity takes place in online forums, including social media channels. For example, WeChat is now a popular forum for group buying activities.
It works like this: a group leader promotes products to a chat group, and this leader provides links to group-buying platforms or ‘mini-programs’. This enables chat groups to source bulk orders directly from brands or distributors.
The mini sites that connect purchasers and sellers are accessible only on private internet sites. This means that deals cannot be located via searches on the public internet.
Group buying becomes critical during lockdowns
Group-buying platforms became popular in lower tier cities before the pandemic. Major platforms like Pinduoduo used social media to share fresh produce directly from farmers, as well fast-moving consumer goods (FMCG) brands.
Two factors powered the group-buying trend pre-pandemic. Consumers liked building connections with farmers, which is part of the ‘farm-to-table’ trend. But there was also a ‘brand-to-consumer’ trend. Group buying combines lower prices and simplified logistics with greater scope for brands to build relationships with customers.
Lockdowns have accelerated the group-buying trend. Today, group-buying platforms are becoming a daily part of life. This is partly because the populations of entire cities have found themselves unable to leave their homes or unable to receive deliveries as usual. Furthermore, many supermarkets are closed.
Apartment complexes have banded together to form buying groups. Meanwhile, relationships within communities have deepened.
Is this purchasing model relevant for Australian brands?
Australian brands should consider group buying as a go-to-market model. This is because the group buying trend will likely continue beyond the pandemic. Lockdowns have overcome the principal barriers to adoption. Consumers are likely to continue to use group buying now they have learned how it works and have experienced the savings.
Other market factors will also encourage adoption. Rising customer acquisition costs across traditional ecommerce channels make group buying an attractive marketing option. Exporters can target groups of relevant consumers through a trusted community leader and thereby remove costs within retail supply chains.
This model may offer a more manageable method for cross-border shipments while market access remains difficult. This is because sending a bulk order directly to one apartment complex requires less delivery co-ordination.
How we can help you with e-commerce in China
To find out more about group buying, please contact our China-based e-commerce specialists. They can help you with advice on:
- e-commerce market entry models
- how Chinese e-commerce is different from the rest of the world
- e-commerce operations in China
- business models in Chinese e-commerce.
Contact us online or call 13 28 78.
About this insight
We commissioned this insight from China Skinny. China Skinny is a Shanghai-based market research consultancy.