From the shell announced will be 15500 million yuan acquisition of love space, more than a month has passed, during this time there is a lot of discussion in the industry, accompanied by a trace of anxiety, anxiety in the future content, this time we want to combine "close" to the shell and love space both sides of the industry friends, talk about the acquisition of love space understanding, only on behalf of different perspectives of view, for reference.
The previous content of "Sloth" also mentioned that from the perspective of the exploration time of the business, Shell (Lianjia) is not a "newcomer" in the home improvement industry, but has entered the industry for 10 years, the earliest can be traced back to the establishment of the Lianjia Decoration Division in February 2013.
There are two things that have more memory points: one is that in 2015, Lianjia and Beijing Vanke established a joint venture company Wanlian Decoration (Vanke withdrew in 2020, Shell took over, and now the brand is no longer operating), maybe Shell is more willing to define the time point in 2015 as officially entering the field of home decoration;The other is that in April 2020, on the occasion of the 2nd anniversary of the establishment of Beike, the "Quilt Home Decoration" was officially launched.
At the end of 2021, Beike proposed a development strategy of "one body and two wings", one representing real estate transaction services, and two wings representing home improvement and home furnishing and Huiju (renting) business. Extending from real estate transactions to the residential service chain, the home improvement business has become an important driver to help consumers move from "buying a house" to "living well". In July 2023, it will propose "one body and three wings" to increase the business of Beihaojia on the original basis.
In July 2021, it was announced that it would acquire 100% of the shares of Shengdu Decoration for a total consideration of no more than 8 billion yuan, which became a landmark event for climbing the second mountain. The acquisition of Love Space has become a new acquisition of Beike in the home improvement industry since the acquisition of Shengdu Decoration.
Beike's traffic advantage provides a very strong support for the expansion of new business, which is also the envy of the industry. In 2021, Shell's income from home improvement and home furnishings will be 19.7 billion yuan, in April 2022, the acquisition of Shengdu was fully completed, the team and brand were integrated, the performance began to merge, and the nationwide replication was started. In 2022, the contract value will be 5.4 billion yuan, and the revenue will be 504.7 billion yuan, with a cost of 3.6 billion yuan.
The recently released financial report for the third quarter of 2023 shows that Shell Home Improvement achieved revenue of 317.7 billion yuan, operating costs of 225.2 billion yuan;In the first three quarters, the contract value of home furnishing was 9.4 billion yuan, and the operating income was 721 billion yuan, operating cost 507.7 billion yuan, gross profit margin of 2958%。10 cities, including Beijing, Shanghai and Hangzhou, achieved a single-city operating profit for two consecutive quarters.
It should be said that through the power of capital, coupled with the development of home improvement business capabilities, Beike has initially opened a gap with its peers in terms of scale, focusing on the Beijing market is expected to have an annual contract value of 2 billion yuan.
Shell's offensive momentum on the home improvement industry is very ferocious, which has attracted a wide range of attention and has had a great impact, not only the rapid transcendence of the performance level, but also the psychological impact on peers. As for the acquisition of Love Space, it has contributed to the breakthrough of the scale of the home improvement business, but why is Love Space this time, just for the scale?Probably not.
Based on our own observations, as well as combined with exchanges and interviews with industry insiders, we have sorted out some core points.
The two companies are somewhat fateful. Friends who know the industry know that in 2015, after the establishment of Wanlian Decoration, the industry always intentionally or unintentionally compared the love space with Wanlian, and the temperament of the two companies is close. On the topic of investment or acquisition, Love Space is the home improvement company that has the most contact with giants including Alibaba and JD.com, and it is not the first time to talk with Beike, but it has not been able to get together in the end for many reasons.
Objectively speaking, Love Space is one of the rare, remaining and innovative enterprises in the Internet home improvement era, and has gone through 9 years of development. In the past few years, there is still a certain amount of pressure on love space, not only to deal with market involution, pixel-level imitation of peers, but also to face personnel turnover and team fluctuations. Even though the market competition is extremely fierce, Love Space has not lost, Beijing Dadian has become a benchmark for the performance scale of 1 billion yuan in a single store, and there are often colleagues from Beijing and even the whole country to visit and Xi.
For the home improvement industry, in the past 9 years, it has also experienced a process of "questioning the love space, understanding the love space, and becoming the love space".
If the home improvement company has a version, Love Space belongs to 3Version 0, which is already transforming into a product company. Home Improvement Company 10, just can provide design services and organized contractor team, a small number of commodity display, commodity display must rely on merchants, rely on matchmaking, earn deductions;Home Improvement Company 20, the owner's consumption can be purchased in the experience venue of the home improvement company in one stop, and the commercial value depends on management, and the profit is made by squeezing designers, foremen, and merchants1.0 and 2Version 0, which is essentially a labor service, is self-employed, is not economical in scale, and has low management marginal returns.
At present, the mainstream complete assembly companies in the industry have only enriched the supply on the supply side, and some links have achieved digital management. In essence, the relations of production have not changed (and in this sense, the holy capital is indeed too expensive). Love Space has traces of product-driven and reconstructed production relations. These are all thanks to the long-term investment in the three major infrastructures of product chain, information system and industrial workers, which makes it ahead of the industry in terms of conversion rate, human efficiency and ping efficiency.
If the acquisition of Shengdu helped Shell tell a story of scale growth in the capital market, then Love Space told a more advanced story from the perspective of "efficiency improvement", which is more meaningful for the development of the industry.
For a long time, Love Space has been relatively heavy, so as to make users lighter. Its reconstruction of the production relationship lies in the final completion of the deterministic service closed loop through product research and development, standardized commodity interaction, direct procurement chain, self-built warehousing and collection management, on-time distribution, and standard delivery and installation of direct management workers. In this process, the right to the goods is transferred, and the enterprise has the freedom to set prices. Traditional decoration companies have no right to goods, and gross profit is always in the game.
With the help of the empowerment of the technical middle platform to the delivery link, the delivery of goods, the enterprise arranges the process by itself, arranges the direct management of industrial workers by itself, and the process is connected in an orderly manner. Even if there is a process and quality dispute, it is also defined as an internal contradiction and resolved internally, there is no prevarication, efficiency and reputation are under control, these are the manifestations of the reconstruction of production relations, in a sense, love space is also a value sample of new productivity.
The use of new management structure, information empowerment, integration into corporate culture and other ways to break the original interest structure, to create a set of mechanisms that can change the actual action, and then create results, this is what distinguishes Ai Space from other companies, and it is also the reason why many companies "understand and become Ai Space".
At present, the leading edge accumulated by Ai Space in the store conversion, efficiency improvement, and delivery level is actually the most missing link in the three-wing strategy of Shell Integration, and the nest home improvement relies on the strong market and traffic first-mover advantage of Lianjia, and rushes to the first place in the performance level in a short time, but there is still a large room for improvement in the dimension of store conversion, and the biggest test is whether it can catch the traffic, whether it can provide products that truly match consumers, and whether it has the ability to deliver on a large scale.
Some people will be picky about the profitability of love space, the biggest variable in the profitability of home improvement companies is the cost of customer acquisition, this big problem is just after the perfect combination of marriage, and Beike can support in the customer acquisition link. (There are certain objective factors in this, the business hours of offline stores in 2022 are only about 2 3, which cannot be regarded as a complete year, and the operating data in 2021 is relatively more valuable for reference).
Coordination of the three brands. After the completion of the acquisition of Love Space, Beike already has three brands, Quilt Nest, Love Space, and Shengdu, from the perspective of customer unit price, the overlap of the three brands is still very high, and it is still unknown whether the horse racing mechanism is efficient in the decoration industry. Next, Beike needs to coordinate the relationship between the three brands, polish its own operation system, and design a more efficient development path under the current traffic pool.
Here may be added a conjecture: the three brands will go along different development routes, referring to the current brokerage system, the nest home improvement may develop into a direct brand, for example, Lianjia;Love Space will gradually develop into a franchise brand, for example, Desuo. It's hard to evaluate Shengdu, after all, it has covered more than 180 stores.
Next, will Beike continue to choose acquisitions?Who will be the target of the acquisition?Or choose to endure it, there are many rumors in the market. But in the high-end market, the shell will probably not give up, which is also an attractive cake, if you aim at this market, then the villa mansion decoration company represented by the Shang layer will not be the next target to considerI don't know, maybe the shell didn't think it all through.