Wen Jin Yufan.
How beautiful the sweeper used to be, how low-key it is now. During this year's "Double 11", major e-commerce platforms no longer compete with GMV (total merchandise transaction) battle reports, but brand war reports are swiped, but there are few sweepers in them. Now that the promotion has come to an end, as the leading companies in the industry, Ecovacs and Roborock have not announced their battle reports, which is in stark contrast to the high-profile announcement of turnover and growth rate in the previous two promotions.
Sweepers are a category with a high proportion of e-commerce sales, and the "Double 11" promotion is an important node of the year for major brands. However, all signs show that the sweeper track has braked sharply after the rapid rise of the lazy economy under the epidemic. From 2020 to 2022, sweepers will be sold more and more expensive by relying on the improvement of product power and perfect functions, and the average industry price of a sweeper will rise from 1435 yuan to 2812 yuan, doubling in two years. In this process, the basic functions of the sweeper, as a new type of household appliance that replaces brooms and vacuum cleaners, have been perfected, and manufacturers have begun to add intelligent functions (drying, sterilization, etc.) to maintain **, but after the end of 2022, there has been a decline in sales. Liang Jie, an entrepreneur of smart household appliances, analyzed that the sweeper has passed the stage of initial penetration by product power, and next, popularization and consumer education are the key to continued penetration.
In 2023, the sweeper industry will be forced to start exchanging price for volume, but the pain has been reflected in the industry's leading enterprises. Ecovacs, which was once known as "sweeping grass", fell 92% in its latest quarterly financial report, while its stock price has already begun to fall, as of November 13, the stock price is 4694 yuan, market value 2648.8 billion yuan, hundreds of billions of yuan have evaporated from the high point two years ago;If you count from the beginning of this year, it has fallen by more than 35%. Although the performance of the former thousand-yuan big ** Rock Technology in the latest quarter is acceptable, the current stock price has fallen by nearly eighty percent from the high point, and it has been affected by many shareholders since the beginning of this year. As of November 13, its ** share price was 29840 yuan, market value 3923.3 billion yuan.
The capital market reflects future expectations, and the outside world has to sweat for this track of "high growth is no longer and net profit is declining". How effective is the exchange of price for volume, and how long will it last?When will the next iteration cycle of sweepers come, and can going overseas to find new increments and develop new categories of floor scrubbers become a new growth pole for the company?These issues will take time to verify.
Sweeper: The pattern is stable, but it can't go up
During this year's "Double 11", the sweeper track uncharacteristically presented a scene of "crying at the head and laughing at the waist". Ecovacs, the leading companies in the industry, and Roborock did not release sales reports as in previous years. You know, both of these companies are mainly online sales in the domestic market. This year's "Double 11", because of the increase in subsidies for e-commerce platforms, the overall increase in the intensity of concessions to merchants, the category of sweepers, high customer unit price, high user value, high contribution to the e-commerce platform, the more the head is more likely to benefit. But the fact is that Cloud Whale Intelligence and Dreame Technology, which are ranked low in the track, posted a high-profile "Double 11" battle report. Cloud Whale announced on November 1 that the cumulative payment amount of Cloud Whale omni-channel exceeded 3500 million yuan, a good start in 4 hours, sales exceeded the "6.18" whole process, and the platforms increased by 31% year-on-year;Dreame announced on November 12 that during the "Double 11" period, Dreame's omni-channel sales exceeded 2.1 billion yuan, a year-on-year increase of 100%.
In the view of Chen Le, an investor who pays attention to the sweeper market, "the old people are low-key, and the newcomers are high-profile" does not represent the change of the industry pattern. According to the data of the research agency Aowei Cloud Network as of August 25, the top 5 brands in the overall sales market share of sweepers are Ecovacs (32.).6%), Roborock (20.1%), Xiaomi (171%), cloud whale (88%), Dreame (81%, online only). "But the big two are really stuck in a lack of growth. Chen Le added.
Ecovacs, which has turned from a foundry, has been firmly in the top spot, with a market share of about 40 in 20206%, its share price rose wildly from April 2020 to July 2021, and its market value increased by more than 130 billion yuan, thus giving it the title of "sweeping grass". So far, Ecovacs is still the first sweeper in China, but its share has dropped slightly to 398%。As the second in the sweeper industry, many people may have forgotten that it was once a member of the Xiaomi ecological chain. In 2019, when the sweeper market entered a period of rapid development, Roborock was no longer satisfied with being Xiaomi's foundry, and in 2021, it got rid of its dependence on Xiaomi's revenue and relied on its own brand income to achieve its own portal, and its market share increased from 13 in the two years from 2021 to 20225% jumped to 213%。From 2020 to 2021, Ecovacs, as a "sweeping grass", was hot in the secondary market and transmitted to the primary market.
3rd and 4th place. However, the timing of these two efforts is in order, and Cloud Whale will enter the top three in the industry in 2021, with a market share of 15 in 20220%。Dreame caught up in the second half of 2021 and broke into the fifth place in the industry by 2022, with a share of 70%。Correspondingly, Xiaomi's market share increased from 156%, which is constantly diluted to 95%, ranking fourth.
No matter where they are in the industry, players are facing the same problem: the sweeper can't go up. 2021-2022 is a watershed year for the industry. From 2017 to 2021, the market size of sweepers in China soared from 5.6 billion yuan to 10.8 billion yuan. According to the data of Aowei cloud network, the domestic sales of sweepers in 2020 will be 6.54 million units, which is the high point of the industry. In 2022, the industry felt the downward pressure for the first time, with sales falling 24% to 4.41 million units, returning to 2017 levels, with both online and offline sales falling by two to three percent.
As a company listed on the sweeper, this business contributes 8 to 90% of the revenue of Ecovacs and Roborock. The change in people's enthusiasm for sweepers is directly reflected in the financial reports of these two companies. In 2022, Ecovacs sold about 31190,000 units, down 125%；Roborock sweeper sales volume 22460,000 units, down 204%。Entering 2023, the market is not improving. According to Aowei cloud network data, in the first half of 2023, the sales volume of sweepers will be 1.45 million units, a year-on-year decrease of 539%；Sales were about 4.7 billion yuan, down 3 percent year-on-year66%。Chen Le believes that the industry sales in 2023 are estimated to shrink by about 30% compared with last year, and "it is even more difficult for industry players this year than last year."
From constant price increases to having to reduce prices
What are the factors that cause the sweeper to not sell?Liang Jie analysis said that the sweeper belongs to the emerging small household appliances that young people like, and its sales are declining, which is related to the increase in product prices, and the weak market environment for optional consumption is also one of the reasons.
Looking back on the development history of sweepers in the past few years, it can be said that it is a history of price increases. Every technological innovation is accompanied by a round of market penetration, and at the same time, the product is also sold more and more expensive because of the increase in functions or experience optimization, and mainstream brands have high-end products of 4000-6000 yuan. Yuan Cong, a former practitioner of a sweeper manufacturer, said that especially after the sweeper of the all-round base station became the mainstream in 2022, the sweepers of each company have at least doubled. The data shows that the average retail price of sweepers has risen from 1,435 yuan in 2020 to 2,812 yuan in 2022;By the first quarter of 2023, the average price of the industry will continue to rise to 2,965 yuan, and the proportion of all-round + self-cleaning sweepers will reach more than ninety.
After Ecovacs went to sea, they also insisted on taking the high-end route, which was more expensive than irobot, the global leader in sweepers (with a global market share of 46% in 2020). Taking the ** on the Amazon platform in the United States as an example, the price range of Ecovacs and Roborock is more than $800 and $1,400 respectively, which is significantly higher than irobot. iRobot's hottest item costs around $250.
On the surface, Ecovacs sells more expensive because the products are higher-end. Ecovacs and Roborock's flagship machine is an all-round sweeping and mopping product that integrates self-cleaning and self-dust collection functions, while iRobot's highest-end product only includes self-dust collection performance as of March this year. But essentially, Ecovacs, Roborock, and iRobot have opted for two different expansion strategies. China's leading manufacturers are taking the high-end route, so they are more motivated to accelerate product updates and iterations to continue to increase the unit price of products and obtain profits. iRobot, on the other hand, is to reduce costs through scale effect and increase market penetration with cost-effective products.
Under the high-end strategy, Ecovacs consumers are more inclined to buy new products rather than old ones, that is, they are more willing to buy upgraded products at a higher price in exchange for a better user experience. But when the function of the sweeper cannot be improved, but all the way, we all know the result: when the penetration rate of the sweeper is not high, the product will have a crisis of declining sales. According to Yuan Cong's analysis, the retention rate of sweepers in urban families is less than 10%, and there is still plenty of room for penetration. However, as a functional product with rigid demand, after the underlying functions of suction and dragging, self-cleaning and self-dust collection are satisfied, manufacturers can rely on upgrading non-rigid functions such as suction, drying, and sterilization, which are more expensive to sell, and the pull of permeability is relatively limited. In the third quarter of 2022, the industry's leading players were the first to suffer. Ecovacs' revenue growth rate fell to 228%, net profit fell 157% to 112.4 billion yuan, the market value of 100 billion yuan fell by two-thirds in a year to 34.7 billion yuan;Roborock has also seen an increase in revenue but no increase in profits, and its market value has shrunk from more than 60 billion yuan more than a year ago to more than 20 billion yuan.
For a new category, product power (whether the function is practical and convenient to use) is the main factor for the early penetration of **insensitive consumers. When the product enters the stage of micro-innovation, the growth rate slows down is inevitable, in this case, the new category to continue to deeply penetrate the market, ** is the most important factor for mass consumers. At present, the sweeper is at such a stage, and the popularization can seize a larger market. Since the end of 2022, the sweeper industry has begun to exchange price for volume. An example is that, according to Guoxin** news, the sales growth rate of the sweeper industry began to exceed the sales growth rate. In order to stop the decline in sales, even if the profitability is impaired, the top players have to temporarily put down the high-end strategy and start the first battle. In August 2022, Ecovacs took the lead in slashing prices, and its main product in the domestic market, T10 OMNI, was reduced by 800 yuan to 3,999 yuan. Subsequently, Dreame, Xiaomi, etc. followed up with price reductions.
In 2023, the average price of the industry's all-round products will drop from 5,076 yuan to 4,084 yuan, and during the "6·18" period, the head brand will reduce the price to around 3,000 yuan, and the self-cleaning model will also drop from 3,618 yuan to 3,124 yuan. During this year's "Double 11", the price of sweepers continued to drop, for example, the aforementioned Ecovacs T10 OMNI dropped to 2699 yuan;Roborock P10 dropped from more than 3,000 yuan to 2,799 yuan.
On the whole, according to Yuan Cong's analysis, the head manufacturers did not carry out large-scale price reductions for the whole line of products, therefore, the small range of price reductions has brought a slight increase in the sales of the corresponding products, but it has not changed the trend of the overall sales decline of sweepers, nor has it reversed the performance of the head players in the capital market. Ecovacs' performance in the first three quarters of this year was not satisfactory. In the first two quarters of this year, revenue maintained a slight increase, but net profit decreased by nearly one-third year-on-yearIn the third quarter of this year, its net profit fell by 92%;On the whole, the revenue of 10 billion yuan in the first three quarters of this year only brought a net profit of 600 million yuan. The market value has fallen from more than 140 billion yuan at its peak (mid-2021) to 26.4 billion yuan today. In the first three quarters of this year, revenue and profits have maintained growth, and the stock price has also improved, but on the whole, the stock price has risen from the highest point of 149499 yuan fell to 298 yuan, and the market value fell by about 80%, and it is now 39.2 billion yuan.
The track of the sweeper, the real name deduces what it means to "rise higher, fall worse".
The next battlefield
Whenever an industry is about to enter the moment of involution, it seems inevitable to go overseas to pan for gold. Ecovacs and Roborock, the two major sweeper giants, acted earlier, going overseas in 2012 and 2017 respectively.
Globally, the American sweeper manufacturer iRobot ranks first, but part of the market share is being eaten up by Chinese manufacturers such as Ecovacs and Roborock. The top two in the North American market are American local manufacturers irobot and shark, and it is very difficult for Chinese manufacturers to expand, but Ecovacs and Roborock still choose to attack at a staggered peak. Before 2020, Ecovacs finally squeezed into the top three in the North American market, with a market share of only 3%. Since 2021, Roborock has begun to emerge on the channel, according to the data of Guoxin in June 2023, Roborock has entered the third place of Amazon sweepers in the United States with a share of more than 15%;Ecovacs' share of Amazon in the United States has not changed much, and it is still below 5%.
Not only the Chinese market, but since the end of 2022, sweepers in the U.S. market have also entered the stage of exchanging price for volume. Taking the Amazon channel in the United States as an example, the average price of products has dropped from more than $300 in 2021 to slightly more than $250 since 2023. However, since 2023, the sales of sweepers in the European market have recovered strongly, and in this market, the advantages of Chinese brands are very obvious: Ecovacs, which was deployed earlier, has a stable market share of the third place;Roborock, which entered the market late, ranked second. iRobot's share is constantly being squeezed, but it still sits in the top spot.
Reflected in the financial report, Ecovacs' overseas revenue in 2022 and the first half of 2023 accounted for 30%, specifically, Ecovacs brand sweepers and Timco (Ecovacs sub-brand) floor scrubbers contributed 1.2 billion yuan and 1 billion yuan respectively. Unlike Ecovacs, which mainly relies on the domestic market, Roborock's overseas revenue even exceeds its domestic revenue, and it has not announced its overseas revenue in the first half of this year, according to its 2022 annual report, overseas revenue reached 34800 million yuan, accounting for the company's revenue (66.300 million yuan).
At a time when the sweeper market has been quite involuted, the head players have to open up new product lines to maintain growth while going to sea to survive. At this point, the two "enemies" of Ecovacs and Roborock collided again, eyeing the same new battlefield - floor scrubber.
It should be emphasized that the floor scrubber and the overseas battlefield are not separated, and the products of Ecovacs and Roborock to the sea have both sweepers and floor scrubbers. After sweepers, floor scrubbers are considered to be the best track for cleaning electrical appliances. According to Everbright** research report, the industry's sales volume is expected to exceed 5 million units in 2023, or it will surpass the sales of sweepers in one fell swoop. Chen Le believes that because the floor scrubber is more "foolish" to use, the consumer circle is theoretically larger. The main function of the sweeper is to sweep + suction, because the more and more functions are done, it needs to be matched, mapped, partitioned, etc., and consumers need to learn to use it. The floor scrubber is an upgraded version of the vacuum cleaner, which combines the functions of "vacuuming + strong stain removal", which can suck up dry and wet garbage at the same time, and has a lower threshold for use, and is more suitable for China's unique hard ground.
The ** of the floor scrubber has also dropped more significantly. Compared with the sweeper in the past, the first curve of the sweeper is downward, which is also conducive to accelerating consumer education. The average industry price of floor scrubbers in 2021 was 3,124 yuan, and it dropped to 2,597 yuan in the first half of 2023. According to Chen Le's understanding, there is a lot of room for cost reduction in the future of floor scrubbers. Because the sweeper is algorithm-driven, the cost of intelligent components and development is high;The floor scrubber is dominated by hardware, the domestic production rate of parts and components is high, and most of them are ordinary materials, so there is more room for cost reduction.
In the field of floor scrubbers, Ecovacs' Timco ranks first in the market, with a domestic market share of 47% in 2022 since the product was launched in 2020. In the first half of this year, its revenue from floor scrubbers (32800 million yuan) accounts for almost half of the country. In contrast, Roborock's basic disk is still a sweeper. Its floor scrubbers were launched a year later than Ecovacs (2021), the overall positioning is more mid-range, and with its overseas experience, it has begun to sell floor scrubbers on Amazon in the United States in 2022, bringing new increments to overseas business, but it has not separately announced the revenue of floor scrubbers in the financial report.
On the whole, it is the trend of the domestic sweeper market to exchange price for volume, and the two giants in the industry, Ecovacs and Roborock, one bets on floor scrubbers, and the other turns to overseas markets. Both have their own challenges. Floor scrubbers, like sweepers, are optional consumer products, and sales are bound to be affected by the economic environment. In the face of the sluggish economic environment in overseas markets and the performance of the old rival irobot, the performance may fluctuate greatly due to the high proportion of overseas business.
In the current environment, the first priority of Ecovacs and Roborock is to optimize the first-class chain, and ensure that profits are not eroded too much while reducing prices to boost sales. In this process, wait for the recovery of optional consumption and wait for the next iteration cycle.