China’s group buying trend has hit S’pore’s shores, do the community leaders profit from it?

One of the hottest tech trends in China right now is “community group buying”, which refers to collective online grocery shopping.

This hyperlocal group purchasing model organises people within approximate locations to collectively bargain on items through bulk purchase.

This contact-free model for digital grocery retail took off during the Covid-19 pandemic as a convenient way to procure daily necessities in lockdown. All of China’s e-commerce giants as well as some of its tech firms have jumped onboard this trend, fighting for a slice of the pie.

E-commerce giant Pinduoduo, for example, was built on group purchases. The company offered low prices to “teams” of online buyers, encouraging consumers to recruit friends and family to buy together.

In 2020, the market value of community group buying more than doubled to US$11.5 billion as digitally-inclined consumers were quick to embrace the conveniences offered by the online grocery retail model during lockdown.

Since the onset of Covid-19, community group buying has shown major potential to disrupt the traditional offline grocery retail sector and it’s now hitting Singapore shores.

Community leader is at the core of group buying

Community group buying is a form of social e-commerce — it’s a type of purchasing model that utilises a user’s social networks on messaging apps, for example, to promote and sell products and services.

Customers living in the same vicinity convene to place individual orders online that are then collated into group bulk purchases by a designated community group leader.

The community group buying model can be likened to a decentralised Costco, offering a concentrated range of bulk products at reduced cost.

After submitting the bulk order, it is delivered to a designated pick-up location, divided and distributed by the community leader.

The community leader is therefore a critical piece of the community group buying model as they act as the sole intermediary between the brand and community buyers.

How they ventured into group buying

For Winson Lee, 33, it all started during the circuit breaker. He was craving for egg tarts and wanted to order from Tai Cheong Bakery but realised that he needed to hit a minimum order, so he ended up pooling orders with his neighbours.

When friends and neighbours started asking for the next round of orders, we realised there was a gap in the market. We wanted to be inclusive so that the group buys are not limited to different estates as there are many people who don’t live near a host, or find it troublesome to have to collect from a host with constraints on timing and distance.

– Winson Lee, founder of Group Buys SG

A creative director by day, he went on to start up Group Buys SG to offer the service to more communities, with the aim to help as many people as possible order food that used to be inaccessible to them.

He added that the group’s mission is to bring good deals to people and help increase awareness for local businesses.

They have also used the platform to give back to society with charitable acts such as donating packets of rice to the needy and organising reunion dinners for the residents at old folks’ homes.

Cheryl Guo also encountered her first group buying experience during the circuit breaker period in April last year. She was browsing on Facebook when she chanced upon a post where other users left comments on group buying food for their estate.

She was inspired by the idea and started up Sengkang Group Buy as a side hustle in May 2020, which organises group buys for both food and non-food related items via WhatsApp group chats.

For Delia Denyse, 32, she first got to know about group buying platform WEBUY in early February 2020. WEBUY offers a wide range of products from ready meals, groceries, and also constantly bring in new products from overseas.

They were looking for group leaders and I thought it would be a good (way) for me to earn some extra pocket money during my spare time. Prior to this, I’ve had experiences participating in group buys but not hosting, so I thought it would be fun to give it a try.

– Delia Denyse, host of Bendemeer Light x WEBUY

The housewife organises weekly group buys from WEBUY through a WhatsApp group chat that she personally manages.

“Group buying has allowed us to share carton deals and bring down unit prices. Not only do we enjoy lower prices and save (money), but we share recipes and reviews in the group as well,” she added.

As for Charmaine (last name not disclosed), 38, she first started doing small group buys back in 2019 simply to hit the minimum order quantity (MOQ) for free delivery with her neighbours.

Her interest in group buying deepened and she went on to join WEBUY as a member in her old estate.

“When I moved into my new place about a year back, the host from my old estate asked me to apply to be a host too since I have been hosting other suppliers,” she said.

The HR and admin executive organises group buys via WhatsApp group chats for mostly food, but also accepts other requests from her members. Most recently, her group buys are more focused towards toilet rolls.

Behind-the-scenes of being a community leader

Being a community leader is no walk in the park.

Leading a group buy can be stressful and tiring, having to negotiate the terms with the vendors and suppliers, confirming the details prior to the day of delivery, and making sure that our members enjoy the products.

– Winson Lee, founder of Group Buys SG

Cheryl, who holds a full-time day job, finds time a challenging factor. She has to spare time to consolidate orders, coordinate with vendors, check on payments, sorting out orders and packing them, as well as reply enquiries.

“Sometimes, we have over 20 private messages to reply in a day,” she said.

When it comes to sourcing for suppliers, Delia describes herself as the “middleman” between WEBUY and buyers. When buyers request for certain items, she raises it up to WEBUY for them to bring in certain items to fulfil buyers’ needs.

We have to share good deals or new items promptly, consolidate orders on behalf of our buyers, collect payment individually, coordinate collection when the items arrive and lastly, answer any queries and provide customer service and service recovery on behalf back to WEBUY as well.

It’s a job that requires a lot of coordination and you take on and juggle many roles at the same time.

– Delia Denyse, host of Bendemeer Light x WEBUY

For Cheryl, she said that her members are the ones who do the sourcing.

“If they are interested in the items, then we will negotiate with the vendor for better discounts if they require us to hit certain MOQ.”

Group Buys SG also do not actively source for suppliers as they have brands and businesses approaching them for collaborations. For instance, they have worked with organisations like Changi Airport Group and Guocoland to bring good food and deals to its members.

On the other hand, suppliers reach out to Charmaine instead through recommendations from neighbours and friends. Sometimes, she also receive such messages from unknown suppliers.

In all, Charmaine said that while being a group buy host is fun, it’s also very tiring.

“A lot of people don’t see the administrative part behind all the group buys. And when (all the orders arrive), my house becomes a warehouse!” she exclaimed.

Furthermore, the demographics of her members are wide, so she sometimes have to patiently guide the older members who are less tech-savvy in learning how to place orders via Google Sheets and Forms.

Do community leaders profit from group buys?

Winson stressed that GroupBuysSG is not-for-profit, explaining further that it is a community initiative where a team of volunteers take turns to organise group buys every week.

“In a month, we get about 1,000 orders. As we curate our items carefully, we are very particular about food safety and quality. We also don’t want our members to suffer from “group buying fatigue”, hence we pace and plan our launches carefully,” he said.

He added that they do not mark up the cost of the products and they do not charge administrative fees. Furthermore, their islandwide delivery fees — which range between S$5 and S$9 — fully go towards the delivery personnels.

When asked who decides on the pricing, Winson shared that they leave it to their vendors and suppliers.

Our only guideline is that it has to be one of the best deals around because you only get that one chance to convince our members that your products are worth the calories and moolah. Singaporeans know a good deal when they see one.

– Winson Lee, founder of Group Buys SG

For Sengkang Group Buy, Cheryl stresses that they does not mark up the cost price that the vendor provided. Instead, all profit that she earns derive from the administrative and delivery fees.

Sengkang Group Buy receives an average of 50 to 100 orders for a single vendor, charging each of its members a flat rate of S$2 per order regardless on the number of items.

For those who wish to opt for doorstep delivery, they charge between S$4 and S$6 per location within Sengkang and Punggol area.

According to Delia, she offers a range of 40 to 70 unique products for her buyers to order from on a weekly basis. She also does not charge any administrative fees or delivery fees, as her buyers will typically self-collect the orders from her place.

However, she earns a commission fee of five to 10 per cent, depending on the sale of each item.

As for Charmaine, she is unsure of the average number of orders she has received so far, but shared that the “weekly average is about S$2,000 to S$3,000 worth of sales.”

She charges based on the suppliers’ pricing and does not charge any additional fees. Including her group buys on WEBUY, Charmaine reveals that she earns an average of S$1,500 a month.

“Some group buys are no-earnings, but I do it anyway because my estate has nice neighbours. Not everything has to be on a profit basis,” she added.

Perks lie beyond just savings

GroupBuysSG is active on various social media platforms such as Facebook, Instagram, Telegram, and even TikTok.

“As a result of our strong following and consistent sales figures, we are in a better position to leverage on our outreach to secure a better deal and savings for our members. We take pride in careful curation of our items and we always do our best to make sure it is the best deal around,” said Winson.

“Savings can range between five and 20 per cent discount off the retail pricing. Savings can also come in the form of cheaper delivery fees and not having to meet MOQ.”

Cheryl shared that some vendors offer huge discounts of 20 to 30 per cent off the retail price.

According to Charmaine, community group buying is not only cheaper than retail, but it’s also easier to collect for her estate since there aren’t many options in the vicinity.

Depending on the supplier, they can be cheaper by 10 to 20 per cent, sometimes (by) up to 50 per cent. It’s not always about savings, but also about saving time and effort as well as travel or delivery fees.

– Charmaine, community leader on WEBUY

Beyond scoring discounts, community group buying also offers convenience. You can skip the queues and simply wait for the order to be delivered, which saves the hassle of lugging back the items.

Winson and Delia also feels that it helps to foster a sense of “kampung spirit” as members get to interact and bond with each other in an increasingly disconnected world.

Group buying not only allows us to enjoy good deals and savings together, it has also connected the community and brought about a closer cohesiveness and reconnected neighbours and offered a good platform to know each other.

– Delia Denyse, host of Bendemeer Light x WEBUY

“Through regular interactions, our community members get to know one another better and discover more common interest, thereby forming strong social ties and a social network within the estate,” added Winson.

Covid-19 has propelled the rise of group buying

Commenting on the Covid-19 situation, Winson said that he is happy to be able to work with affected businesses to bring their products to his members.

The pandemic has also brought about the rise in group buying in Singapore as many are urged to stay home.

Delia said that Covid-19 has helped boost her sales, especially during the circuit breaker period when people are looking for alternative ways to get their groceries and necessities.

“There was an influx of buyers during that period and they continued buying even after circuit breaker (ended) as they realised that this was a good alternative to shop (from).”

Charmaine also agreed that group buys was booming during the circuit breaker period. However, with the gradual reopening of the economy, she finds that her income and sales have dropped.

A win-win for everyone

Delia observed that the group buying landscape in Singapore has expanded beyond basic necessities and groceries. There’s now a huge market to group buy services, hotel stays, tickets and attractions, she noted.

“As more people familiarise themselves with the concept of group buying, they participate frequently and enjoy the process of community sharing through group buys,” she added.

Cheryl chimes in that the discounts really help members to save a lot over time.

However, Winson is of the opinion that the group buying boom is over.

“There are now many (inactive) group buying platforms on Instagram and Facebook because the entry level of being a host is so low. Anyone can be a host,” he reasoned.

However, he stressed that it takes effort and dedication to be one. For one, you need to “only bring (in) the good stuff” that adds value, otherwise members will start to leave the group.

“For a group buy to be successful, you really need to have attractive prices or items that no other platforms can offer,” concurred Charmaine.

(The group buying landscape) is already saturated. There are hosts in every single estate — sometimes more than one, and even in the same block. Maybe there are more suppliers that yet to jump on the group buying bandwagon, but most of the big suppliers are already in the scene.

– Charmaine, community leader on WEBUY

She further asserts that group buys are mostly about low price and convenience. The fact that everything is so easily accessible with the touch of a button is a double-edged sword.

If shoppers are interested in a certain item, they will typically conduct an online search and try to suss out the best deal on different platforms or retail stores, she noted.

Commenting further on this, Winson said that group buying harnesses the power of group savings and helps to minimise waste by not ordering too much to hit the minimum spend on their own.

“Members get good deals, businesses get brand exposure, and delivery personnels earn a decent income. It’s a win-win situation for everyone,” he added.

Featured Image Credit: Sengkang Group Buy