Chinese tech giants are squeezing retailers with group buying platforms and analyst predicts tighter regulations to level playing field
- Community group buying platforms, backed by Big Tech cash power, are hurting neighbourhood supermarkets and retailers, analysts say
- Not all are joining the bandwagon as some manufacturers seek to protect brand image and avoid price-discounting war
These purchasing platforms, backed by the financial might of Alibaba Group Holding, Tencent Holdings, Meituan and Pinduoduo, among others, have become the go-to buying channels for consumers seeking big rebates, disrupting traditional distribution and pricing systems, some complained.
Blue Moon Group, a Hong Kong-based soap and detergent producer, suffered a loss in the first half this year as margins shrank, blaming an oversupply of lower-priced products. Other firms are being forced to compete on prices or adapt their marketing strategies to overcome the challenges.
“Small retailers and merchants have little strength in fighting against the community purchase platforms, which have advantages in capital and lower prices for goods,” said Zhang Yi, chief executive of iiMedia Research. “The shock will be destructive if pricing [on these platforms] is not regulated.”
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Tightened regulations among key trends shaping China’s internet in 2021
Community group purchasing platforms, led by Meituan Youxuan, Duoduo Grocery, Chengxin Youxuan and Xingsheng Youxuan, are expected to record 102 billion yuan in transaction volume in 2022, according to a forecast by iiMedia, a 16 per cent jump from this year.