Online shopping brings about changes in the pattern of home appliance channels

Editor's note: Channels, as an important industry link in the home appliance industry, have always been strategic partners for home appliance companies. A few years ago, the home appliance channel system developed through a relatively early period and formed a relatively stable pattern. However, in the past two years, the number of online channels has risen sharply and the competition among big chain channels has intensified. Small and medium-sized chain channels have joined forces to take root in the third and fourth-tier markets, and relatively stable home appliance channel systems have begun to show some factors that may cause changes.

Traditional chain channels: "Su Mi and America" ​​still contend for hegemony

Comments: The mention of household appliances channels, Suning and Gome, the two largest domestic chain channels, are well known in the industry. In the past two years, the competition between the two major channels has not stopped for a moment. Although Gome is in a passive position in the competition due to changes in high levels, the overall structure of Gome has been formed and the competitive strength still exists. Looking at Suning and Gome's competition this year, the expansion strategy has not changed.

Expansion continues

This year, with the expansion of Suning, the number of stores in the Mainland has continued to increase, but also taken the pace of internationalization. From the acquisition of Japan's LAOX Co., Ltd. to the acquisition of Hong Kong's laser appliances, Suning began to test the water's international development.
At the end of 2009, Suning Appliance proposed a change in marketing, chain operations entered the fast lane, and the number of stores opened was “high and high”. At the beginning of 2010, Suning formulated the overall goal of opening 400 to 500 new stores throughout the year, including 200 first- and second-tier markets and 200-300 county-level shops. The number of target stores opened throughout the year has become the highest in the calendar year. During the "May 1st" this year, Suning opened a total of 90 new stores and reopened stores, setting a new record for the same period of time.
In the last two years, Suning has taken over LAOX in Japan and acquired Hong Kong laser appliances in China, which has initiated an international development strategy. Suning Appliance completed the control of LAOX, a veteran home appliance chain company, through a company registered in Hong Kong, China. Under the consideration that the total amount of mergers and acquisitions did not exceed 300 million yuan, Suning completed the initial layout in the Japanese electrical appliance chain market and the Chinese Hong Kong market. It also gained a "springboard" and training base for overseas markets.
After going through high-level changes, Gome recently announced the restart of its expansion strategy and plans to open 120 new stores in the second half of this year. Senior analysts said that Gome's move is to compete with Suning, and the deeper intention is to stimulate the stock price. This year, the five-year strategic plan revealed by Gome reveals that Gome emphasizes effective expansion in the aspect of network layout, with emphasis on regional scale advantages, and will continue to optimize the network in the primary market and open large stores and effective stores in the core shopping district; Markets, implement new supply chain integration, and penetrate the secondary market. By 2014, GOME will achieve an effective store target of 2,000 stores.
It is understood that in the second half of 2010, Gome (including listed and non-listed companies) will achieve 120 new effective stores, and there are currently 66 effective stores, of which Shanghai New Zhongrong Store is expected to achieve annual sales of 500 million yuan. Another 17 stores can achieve annual sales of over 100 million yuan.

Cooperation upgrade

In fact, in the fierce competition, the two national chain channel dealers realized the importance of cooperation with home appliance companies. In the past two years, the cooperation between Suning and Gome and the home appliances companies has become even closer. Around the two major chain channels, household appliance companies have seen large-scale single-source outsourcing.
In Suning, Midea, Haier, and Samsung successively joined Suning's “Ten Billion Partner Club”. In the 2010 strategic cooperation agreement signed between Samsung and Suning Appliance, the sales target set by the two parties was 10 billion yuan, which was a growth of 5.88 billion yuan in 2009. 70%. At the 2010 Suning Strategic Cooperation Summit, the top management of the two companies set a goal of nearly 10 billion yuan in cooperation and achieved an increase of more than 55%. In addition, Suning has also become HP's only direct channel provider in China.
In addition to signing large orders with home appliance companies, Suning will further expand the scope of cooperation. On July 15, China Unicom and Suning Appliance held a signing ceremony in Nanjing, announcing that they would fully carry out strategic cooperation and become core strategic partnerships. By then, China Unicom will authorize Suning Appliance to fully represent and sell 3G, 2G, broadband access and fixed telephone services. Suning Appliance fully opened its national stores and established China Unicom’s business acceptance and terminal sales areas.
In terms of Gome, major orders signed with home appliance companies have also appeared frequently, and cooperation has been promoted at multiple levels of corporate brand strategy and marketing. This year, LG Electronics and GOME signed a cooperation agreement in 2010 to determine that the full product line of color TVs, air conditioners, refrigerators, washing machines, mobile phones and Other product lines is targeted at 9.3 billion yuan. Gome Electric has become the largest channel provider of LG Group in China. The two parties also focused on the annual sales target, defined the marketing strategy, and planned everything from product introduction, promotion, information system interconnection, and market expansion to ensure the realization of the strategic goals.
On June 23, Great Wall Computer and Gome Electric officially signed a strategic cooperation agreement. In the next 8 years, the two parties will cooperate closely on the Great Wall Computer products including notebooks, desktops, tablet PCs, and consumer electronics products to expand market share. . In addition, the two sides will also carry out comprehensive strategic planning in various aspects such as products, channels, marketing, and services.
Whether it is the signing of big orders with companies, or the expansion of cooperation to a deeper level, or cooperation with operators, the competition between the two major chain channels is constantly escalating.

Network channels: sudden emergence of young consumers

Comments: At the same time of fierce competition in the traditional channels, a new competitor emerged along with the progress of technology. In the past few years, online channels also dismissed traditional channel providers and companies, but this year, all home appliance companies and channel distributors have begun to have a new understanding of the network channels.

Online shopping army emerges

Staying home, home appliances delivered to the door, online shopping is so convenient. In the past two years, Jingdong Electronic Mall, New Seven Days, Century Electric Appliances, and Taobao.com have started to sell home appliances, and sales have risen rapidly. The industry has begun to pay more attention to this emerging channel.
According to survey data, in 2009, China’s large-scale grid purchases amounted to approximately 3.55 billion yuan, an increase of 111.31% from 2008. According to the "Commercial Blue Book" released by the Chinese Academy of Social Sciences, the total amount of home network purchases in 2010 is expected to increase by a factor of two over 2009 and will exceed 80 billion yuan.
Taobao Mall Electric City has launched more than 9 million yuan on a single day since the launch of the “brand day” on July 12. Among them, Lenovo's notebooks sold 172 units, while Oaks air-conditioning sold 490 units a day.
In Jingdong Mall, the reporter clicked on a number of air conditioners and refrigerator products to check, and some of the hot models sold had reached hundreds of units. There were many mentions of consumers who purchased the products. On June 18 of this year, Jingdong’s sales exceeded 100 million yuan, and orders were close to 150,000. From the perspective of sales in the first half of the year, Jingdong Mall CEO Liu Qiangdong believes Jingdong can easily complete the planned sales target of RMB 10 billion this year. "Jingdong has exceeded 10 billion yuan in sales, and its average growth rate can reach over 100%. After five years, Jingdong's sales volume is expected to exceed 100 billion yuan, and by 2014 it will exceed Gome and Suning's sales." Liu Qiangdong The future development is full of confidence.
In addition, the new seven-day electrical network sales data show that in June its air-conditioning, refrigerators, washing machines, overall sales volume increased by 3 fold.
Of course, these sales volumes are far from the traditional channel sales, but the rapid growth of online channels has caused traditional channel providers and home appliance companies to pay attention. At present, consumers in the 80s and 90s are increasing, and consumers’ consumption concepts have changed. Many consumers in this age group have already accepted the way to complete shopping in front of computers, and they agree with the convenience they bring. In the next 10 years, this part of consumers will become the main group of consumers. The trend of online shopping has become unstoppable.

Traditional channels pressure

Of course, in the face of emerging online channels, traditional channels also have their own initiatives. On January 25 this year, Suning Tesco officially launched. Suning executives said that Suning's various basic operating platforms and external promotion conditions have all matured, Suning Appliance will rely on its own large procurement and service network, and thousands of global home appliance manufacturers, IBM, Cisco and other technology partners, Baidu Sina and other sites are working together to strive to use Suning's shares for over 30% of China's national grid purchase market for 3 years, and build it into China's largest 3C appliance B2C website, strengthening its cooperation with physical stores "Army." Virtual network "Air Force", a comprehensive innovation chain model.
As for the current trend of home network purchase, Gome's chairman Chen Xiao said recently that the core strategy of Gome's five-year strategy is to transform the store operations into commodity management and focus on the core of both network development and single store benefit.
Gome re-planned a new development model on the original platform of e-commerce (e-commerce channel), and the new e-commerce of the country will focus on featured products targeted at younger groups. In the Gome 5-year plan, e-commerce will achieve a scale of 15 billion yuan, accounting for 15% of the online shopping market.
This also means that the traditional home appliance channel has initiated the development model combining the physical store and network mode. At present, the biggest bottleneck in the development of online channels is logistics and after-sales installation, especially logistics. Most online shopping channels rely on logistics companies, and logistics companies are not responsible for the services of online shopping channels. As a result, non-delivery of goods, bad delivery attitudes, damaged goods, etc. occur from time to time and become the focus of online shopping complaints.
However, traditional channel companies do not have such worries after entering the field of online shopping. Their relatively complete logistics system can timely support online orders and logistics and distribution. In this important aspect, the traditional channels undoubtedly occupy an important advantage. The traditional channel to enter the network channel will inevitably bring severe pressure on emerging network channel providers.

Household appliance companies test water net sales

Of course, at the same time as channel providers “kill”, the choice of home appliance companies is even more important. It is the delivery of goods to traditional channels, self-built stores, or delivery of online channels. To a large extent, it will determine the channel providers’ “ Victory."
However, on the whole, home appliance companies still do not “put all the eggs in one basket” and adopt a diversified approach in channel selection. Most foreign-owned home appliance companies still rely on the advantages of chain channels in the primary and secondary markets; domestic-funded household appliance companies mainly rely on national chain channels in the primary and secondary markets.
In addition, the reporter communicated with many people in charge of household electrical appliances. After the company tried out water and network channels, the sales volume was still very small, but the growth was very fast. Many companies already attached great importance to this channel, and even some companies started to get involved in electronics. Business market.
Following Haier, Skyworth, and Hisense, TCL and Galanz’s self-built online store has officially launched. Home appliance giants have set up online malls, which seems to imply that home appliance companies are brewing a channel change.

Regional channels: forming alliances to adhere to the township market

Comments: In addition to the national chain channels Suning and Gome, some regional channels also show strong competitiveness. These regional channels have been rooted in many places for many years and have cultivated a deep brand trust in the hearts of consumers everywhere. In an on-site interview in Hunan and Zhejiang, the reporter noticed that regional channel distributors such as Hunan Zhubai have already taken root for decades and become the main channels for local generations of households to purchase home appliances and department stores. In the face of increasingly stringent national chain channel dealers infiltrating into the third and fourth-tier markets, the regional chain merchants chose to join forces and put the “battlefield” on the third and fourth-tier markets.

Join forces to fight the national chain

On July 6, Huiyin Home Appliances, Zhejiang Baicheng, Southeast Electric Appliances, Mianyang Jiafulai Electric Appliances, Huazhong Communication Square, Yinchuan New Baidongqiao Electric Appliances, and Xiamen Three Gorges International Trade Co., Ltd. and more than 60 regional home appliance chain companies from the tertiary and tertiary markets A joint voluntary coalition organization, the National Consumer Electronics Channel Alliance, was formed.
Although Zhu Renhe, chairman of the China Household Electrical Appliance Business Association, made it clear that the main purpose of the voluntary alliance between the third and fourth-tier market channels is to hope that these home appliance retailers, which are dominant in the local market, can jointly promote the third and fourth-tier home appliance markets in China. However, it is still very clear that the regional channels have joined forces to counter the nationwide chain channels that are increasingly infiltrating the third and fourth-tier markets.
With the implementation of a series of home appliance consumption policies to promote the implementation of home appliances to the countryside, the household appliances market in the third and fourth grades has released a huge capacity, which has caused widespread concern among home appliance companies and channel distributors. In this broad market, the coverage of national chain channels is low, and regional chains that have been rooted in the third and fourth-tier markets have more geographical advantages.

The main battlefield is in the township

The establishment of this alliance is not so much a competition between the regional channel dealers and the national chain merchants. It is better to say that the regional channel traders are avoiding the competition of the big national chain operators.
Jiangsu Huiyin in the alliance can be described as very representative. Jiangsu Huiyin is headquartered in Yangzhou, Jiangsu Province. The sales and aftersales network covers 27 cities and regions in Jiangsu Province and Anhui Province, with more than 360 outlets. According to Guo Guangzhong, Assistant General Manager of Huiyin, “We have found that 50% of home appliance sales are purchased by rural residents in cities, and this ratio is increasing year by year.”
Therefore, Jiangsu Huiyin has determined the rural development strategy and divided the basic business model into three levels. The first level is to build self-operated stores in the urban market, and the second level is for each township, with 1 to 3 companies joining. The third level is between every 2 or 3 townships and builds a service chain.
In March this year, Huiyin Appliances was listed in Hong Kong. Guo Guangzhong stated that Huiyin will adhere to the business model and is committed to developing a home appliance chain company based in Yangzhou, Jiangsu as the center, East China, and the entire country.
Jiangsu Huiyin is only a microcosm of regional channel dealers. In fact, in Hunan, Hubei, Jiangsu and other regions, there are channels that have been operating for many years. Although the sales scale of these channel providers still has a large gap compared with the national chain channels, the “family marketing” model and the operation in the capital market also have considerable strength.
Zeng Fen, deputy manager of the household appliances business department of Hunan Zhuzhou Department Store Co., Ltd., told reporters that in the Zhuzhou area, many consumers have been shopping in the building since the 1970s. Many of them have brought their children, and the children have grown up. Bring your descendants to shop. Zhuzhou Department Store’s home appliance sales accounted for roughly 70% of the region’s share.
Because of the primary and secondary markets, the share of national chain channels has exceeded 80%, and the regional channels must continue to develop. They can only rely on the local market and accelerate the radiation of the surrounding tertiary and tertiary markets. In the future, the main battlefield for regional channel dealers and national chain channel dealers will be concentrated in the third and fourth-tier markets.