For small household appliance companies, 2020 is a turning point.
According to the "Report on China's Home Appliance Market in the First Half of 2020", in the first half of 2020, China's home appliance market fell by 14 percent year-on-year13%, but the retail sales of small household appliances were 78 billion yuan online, a year-on-year increase of **124%。
It is also in this year that the scale of China's small household appliances market has reached 450 billion yuan, and various Internet celebrity popular products such as air fryers, bread machines, yogurt machines, and wall breakers have frequently come out of the circle, and the entire industry has entered a period of "savage growth".
As a leader in small household appliances, Xiaoxiong Electric ushered in the peak of its market value in July 2020, and its stock price soared to 16331 yuan per share, with a market value of more than 25 billion;Joyoung shares also in 2020, the company's revenue exceeded 10 billion yuan for the first time, and the net profit growth hit a record high, reaching 9400 million yuan.
The continuous rise in the market demand for small household appliances has attracted the pursuit of capital from all walks of life, and the small household appliance industry has also become a popular outlet from the niche track for a while, and new players have begun to enter the market to seek a piece of the pie.
Tianyancha data shows that as of October 2023, there are about 143 small household appliance related enterprises in China20,000 companies, from the perspective of establishment time, 44% of the related enterprises are new companies established in the past five years.
But after 2021, the entire industry changed dramatically again. As the popularity of small household appliances began to gradually dissipate, the sales of major brands quickly declined significantly, and the speed of decline exceeded everyone's expectations, and the performance of related industry companies also shrank significantly.
From 2021 to 2022, Joyoung's revenue decreased by 6 percent year-on-year09% and 345%, net profit decreased by 20 year-on-year69% and 2898%。
Last year, although Joyoung stabilized the revenue volume of 10 billion yuan, the net profit was only 5300 million yuan, the profitability level fell to the 2014 period;In the same period, the stock price of Xiaoxiong Electric also began to plummet.
Until today, the small household appliance industry has entered a turning point, the overall market sales continue to decline trend, from "popular" to "out of favor", each brand can only actively look for opportunities to reduce costs and increase efficiency from the direction of the first chain, in order to survive this turnaround.
How did the small household appliance industry rise?
What kind of turning point has the small household appliance industry entered at present?
How should small household appliance brands find opportunities from the first chain?This article intends to further focus on these three aspects.
The popularity of small household appliances in China is directly related to the rise of the "home economy" in 2020.
At that time, affected by objective factors, young people in China generally began to work from home, and the change of life mode and the restriction of consumption scenarios gave birth to consumers' demand for small household appliances, which eventually triggered a breaking point in the industry.
From the "2020 China Home Appliance Market Report" released by the China Electronic Information Industry Development Research Institute, it can also be understood that household appliances are the most topical and eye-catching product category in 2020, and they are also the only product category with positive growth in retail sales, with a total retail sales of 213.7 billion yuan, an increase of 185%。
Domestic small household appliances have two major characteristics: one is fast iteration, and the other is high appearance, and these two happen to be the necessary elements for the Chinese consumer market to create "Internet celebrity attribute" products. For young people, buying a small household appliance home can not only be used as a decoration, but also practical in daily life, and at the same time meet diversified needs.
Due to the relatively low technical threshold and high iteration requirements of small household appliances, this provides sufficient development space for new players. Tianyancha data shows that in the second and third quarters of 2020, there was a blowout in the registration of enterprises in the domestic small household appliance industry, and the number of new enterprise registrations per month exceeded 150,000.
The influx of new players also provides a sufficient source of power for the product update speed of the entire small household appliance industry, and then stabilizes the popularity of small household appliances in the field of e-commerce.
In fact, as early as the first quarter of 2020, Xiaoxiong Electric's products have covered more than 30 categories and have more than 400 SKUs.
At present, the average annual growth of Xiaoxiong Electric Appliances can still be maintained at about 20%, as of the first half of this year, SKU has risen to more than 500, second only to the United States, Supor and Joyoung, the three old home appliance manufacturers in the small household appliance market, it can be said that Xiaoxiong Electric is one of the biggest rookie winners under this wave of small household appliances.
In addition, "Delmar", which is in Shunde, Guangdong, with Xiaoxiong Electric, is also a big winner in this wave. In the past, Delmar focused on the management of small household appliance chains, and the company began to build its own production capacity after 2014, and its business gradually penetrated into the upstream production links, and finally realized the integration of research, production and marketing, and obtained the listing approval of the Growth Enterprise Market (GEM) and successfully IPO.
In the first half of the domestic small household appliances period, the industry is showing a trend of savage growth, as long as the small household appliance brand can grasp one of the advantages of the product end or the first chain, it will soon be able to firmly grasp a certain market share and achieve performance gains.
With the dissipation of the popularity of small household appliances on the Internet, the entire industry has begun to feel the arrival of the "cold air".
Tianyancha shows that as of October this year, a total of 38 financing events have occurred in the small household appliance industry, with a financing amount of more than 7 billion yuan. Among them, from the beginning of 2020 to March 2021, there were 29 investment and financing events in the small household appliance industry, with a financing amount of more than 3 billion yuan.
However, from January to October 2023, there were only 4 financing events in total, and the financing amount was only 04.5 billion yuan. At present, the entire small household appliance industry has ushered in a turning point, and capital is also quietly waiting to see who has the opportunity to get the ticket to enter the second half.
There's also a reason why the heat of small appliances dissipates so quickly. Due to the low entry threshold of the entire industry, the product quality of small and medium-sized brands is also uneven.
According to the 2020 complaints accepted by the National Consumers Association released by the China Consumers Association, household electronic appliances are ranked at 961% of the complaints accounted for the first place, and in terms of categories, kitchen appliances and small household appliances with more emerging products and Internet celebrity household appliances are the key directions of complaints.
In addition to frequent quality problems, serious product homogenization is also a major problem in the industry. The main sales channel of small household appliances is online e-commerce, and product iteration will also be adjusted according to the direction of the Internet.
This leads to extremely fierce competition in the small household appliance industry, sometimes for the sake of performance, some brands will deliberately reduce costs, reduce the price to gain an advantage, the final result is to cause market chaos, the number of complaints continues to rise, and consumers have begun to lose confidence in domestic small household appliance brands.
In addition, the current domestic consumption environment has changed, national consumption tends to be rational, and the non-essential rigid needs of small household appliances will not follow the speed of brand renewal to replace.
The data shows that from January to September this year, the overall retail sales of small kitchen appliances were 388600 million yuan, a year-on-year decrease of 96%；Among them, the online retail sales were 296100 million yuan, a year-on-year decrease of 99%；And offline retail sales are only 92400 million yuan, down 8 percent year-on-year9%。
In the recent Double 11 promotion activity, the online retail sales of a total of 14 categories of small kitchen appliances were only 42200 million yuan, a year-on-year decrease of 167%；Online retail sales were 21.9 million units, down 122%。
The first battle between brands, coupled with the sluggish demand in the consumer market, has undoubtedly put all small household appliance brands in a predicament, like Supor in the first half of this year, with an operating income of 998.3 billion yuan, down 331%, and the net profit attributable to the parent company was 88.1 billion yuan, down 56%；
Joyoung also disclosed in the financial report that the company's operating income in the first half of this year was 431.8 billion yuan, a year-on-year decrease of 834%, net profit attributable to shareholders of listed companies24.7 billion yuan, a year-on-year decrease of 2866%。
The transformation of the industry has reached the point where it is imminent.
The demand side continues to decline, consumer attention plummets, the past "heating" too fierce small household appliances market, has now returned to a calm state, the industry will also develop rapidly in the first half, and gradually enter the second half of branding and quality.
However, it is not easy for large and small brands to get through the current transition period smoothly and get tickets to enter the second half, and the decline in market growth has forced brands to continue to reduce costs and increase efficiencyHow to find a new way out of the ** chain derivation has become the key to survival.
The selling point of small household appliances is that the cycle is short and hot, and the seasonal styles of various brands are basically the same, which is a very big test for the entire logistics and distribution system and storage costs.
However, due to the high concentration of the small household appliance industry, this provides favorable conditions for reducing warehousing and logistics distribution. According to the "Times Weekly", the total output of household appliances in Shunde District, Foshan City accounts for about 15% of the country, the export volume accounts for about 10% of the country, and the local matching rate of the household appliance industry is as high as 80%.
As early as 2019, the output value of Shunde's household appliances was close to 250 billion yuan, of which small household appliances accounted for more than 40%;Cixi City, Zhejiang Province undertakes 60% of the world's small household appliance manufacturing.
Therefore, small household appliance brands can use the method of cooperative centralized procurement to allocate goods from the production area, so as to reduce procurement costs and improve procurement efficiency, which can not only optimize the cost of the industry collective, but also ensure the stability of the industry and improve the timeliness of products.
In addition, the difference between small household appliance brands and traditional household appliance brands is that the main sales channels of small household appliances are on the e-commerce platform, so the number of stores and offline warehouses are far less than traditional household appliances with dense channel layout, which is also an industry pain point that is difficult to overcome in the small household appliance chain system.
In view of this aspect, the small household appliance industry can refer to the practice of discount retail enterprises and rely on Ander Zhilian, which owns the home appliance logistics site of Midea Group, to complete the **.
Ander Zhilian's first-class chain system has mature experience in both the FMCG field and the home appliance industry, and can efficiently solve the problem of scattered direct procurement orders of various small household appliance brands.
In addition, in recent years, major e-commerce platforms have also been actively building the best chain between industrial enterprises and warehousing, and establishing a digital infrastructure for industrial products from commodities to procurement to fulfillment.
For example, Jingdong ** chain relies on digitalization to help various brands inventory industrial products within a safe range, reduce the risk of inventory backlog, help enterprises to achieve the best replenishment of consumable industrial products, accurate management to pieces, and at the same time provide more than 300 kinds of hardware combinations according to the type of industrial products to minimize storage space.
There are many types of domestic industrial products, and the specifications and parameters, length, and weight span are very different, and it is impossible to rely on unified specifications of hardware for material storage, which has always been a problem in storage costs, especially for small household appliances with more SKUs.
Taking into account the industry characteristics of the industrial manufacturing industry, Jingdong is based on the Mercator standard commodity library system in the warehousing link of the first chain, maximizes the use of storage space, and successfully reduces the burden of enterprise inventory management through intelligent terminal technology.
And this is suitable for all current small household appliance brands to reduce costs and increase efficiency to the greatest extent. Therefore, it is difficult for the small household appliance industry to build a first-class warehouse network in a short period of time, and it is the fastest choice to achieve results by backing the tree. [*Chain Paradigm].
Xiaoxiong Electric official website, Joyoung official website.
References:1. "Small household appliances meet the "trough of demand", the industry has entered a period of contraction and adjustment", the first power grid 2, "Internet celebrity small household appliances "epidemic" became popular, is it a flash in the pan or a take-off outlet?, The Paper 3, "High "Beauty-Price Ratio" Small Household Appliances Become Popular "Circle Fans"", China Youth Daily 4, "Internet Celebrity Small Household Appliances "Fall from Favor"", GPLP