The End of China's Bulk-Buying Boom
Bloomberg Businessweek|May 16, 2022
A distinctive form of e-commerce is in free fall after a shift in attitude in Beijing
Joshua Brustein
The End of China's Bulk-Buying Boom

China’s richest tech giants and financiers are hitting the brakes on one of the country’s hottest internet trends in years: community buying, in which tech companies facilitate the traditional practice of neighbors pooling resources to purchase items cheaply in bulk. Hundreds of startups have already gone bankrupt and investors could lose billions of dollars in the latest cautionary tale of how quickly a shift in attitude in Beijing can doom a thriving industry.

Community buying was initially a rural phenomenon, with farmers banding together to save money by purchasing supplies in large volume. In recent years it’s become more urban, turbocharged by smartphones and used primarily for buying groceries rather than seeds and fertilizer. Hundreds of thousands of neighborhoods began using platforms such as JD.com, Meituan, and Pinduoduo in what looked like a revolution in e-commerce.

But demand didn’t keep up with intensifying competition. The industry has also gotten caught up in President Xi Jinping’s sweeping crackdown on China’s internet giants. Last year the government fined several community-buying platforms for excessive spending on promotions to win users.

The Covid-19 lockdowns in Beijing, Shanghai, and other cities should have provided the opportunity for a windfall, but the disruption in logistics networks crippled the platforms’ ability to meet demand. Now even deep-pocketed operators are retrenching. “It’s been a roller coaster for this sector since the pandemic,” says Sherri He, managing director of Kearney, a consultant in Greater China.

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