Shihui Tuan raised $1.3B from Alibaba to lead China group buying boom — shut down in 2022

Shihui Tuan was founded in 2018 during China's community group-buying frenzy. The model was simple: neighbourhood 'group leaders' collected orders for fresh groceries, and the platform delivered them in bulk to a pickup point, bypassing traditional retail. With Alibaba as its principal backer across multiple rounds, the platform raised over $1.3 billion in total. Its Series D round in March 2021 alone brought in $750 million.

The funding was spent on ferocious subsidies — selling fresh produce below cost to capture market share, paying group leaders generous commissions, and building logistics networks in hundreds of cities. By mid-2021, the platform was operating in thousands of communities across China. But the unit economics were deeply negative: customer acquisition costs were high, order values were low, and the thin margins of grocery retail could never support the subsidy levels.

In early 2022, Alibaba underwent a strategic shift. It decided to compete in community group-buying directly through its own MMC (Multi-Mobile Computing) business unit rather than through an investment. Shihui Tuan had also reportedly failed to meet profit targets tied to its investment agreement with Alibaba. Without its backer's continued support, the funding stopped. The company shut down all national operations in mid-2022, laying off over 90% of its workforce. Suppliers were offered only 30 cents on the dollar for unpaid goods, and total debts exceeded 1 billion yuan.

Shihui Tuan's collapse was part of a broader industry reckoning. Other community group-buying platforms such as Tongcheng Life and Chengxin Youxuan also failed or sharply contracted in the same period, as investors realised the model could not produce profits even at massive scale.