"There is a fish in the north, and its name is awkward. It is a big one, I don’t know how many thousands of miles it is. It’s a bird, and it’s called Peng. Peng’s back, I don’t know how many thousands of miles. The cloud of the sky." For the Chinese home furnishing industry, Kun Peng has never been a thing in the pool.
In 2017, the size of China's home furnishing market was about 3 trillion. In addition to red apples, all-friends and other old-fashioned panel furniture companies still maintain a scale of 10 billion, and there is no traditional home business to break through the ceiling to join the Chinese home industry billions of clubs.
The closest one is the European faction. In 2017, the revenue was 9.7 billion. It is a big probability that the 20 billion will be exceeded in 2018. In the second echelon, Gujia and Sofia achieved sales of 6.6 billion and 6.1 billion respectively in 2017. The remaining annual sales scales such as Minhua, Xilinmen, Zuo, Mousse, Meikemeijia and Qumei are all in the range of 2 billion to 4 billion.
It is easy for us to regard home appliances as the industry closest to home, but the pattern of China's home appliance industry is in stark contrast to the current state of the home industry.
In 2017, the size of China's home appliance market was about 1.7 trillion, but there have been several giant companies with annual sales exceeding 100 billion. Among them, we are familiar with: Haier, sales of 241.9 billion in 2017; Midea, sales of 204.7 billion in 2017; Gree, sales of 148.2 billion in 2017. The remaining annual revenues of a series of home appliance companies such as TCL, Changhong, Hisense, Oaks, Skyworth are in the range of 10 billion to 100 billion.
In 2014, when the home furnishing industry was in the cold winter, a home furnishing company CEO Dong Mingzhu asked: “How do furniture companies achieve tens of billions?” Dong Mingzhu asked: “Have you ever thought about doing 100 billion?” On another occasion, the Iron Maiden More sharp: "Your market is much bigger than me. You can't do it for hundreds of billions. It's your own disappointment."
Objectively speaking, Chinese furniture companies have their own helplessness. For example, more personalized needs allow many furniture companies to customize only according to orders. For example, most furniture companies are still in the stage of hand workshops, which cannot be automated or even semi-automated. For example, underdeveloped large-scale logistics allows finished furniture or Assembling furniture requires expensive long-distance transportation costs, which makes the national brands encounter competition and encirclement of some regional brands everywhere, and also gives local furniture stores and dealers a stronger voice...
Looking at the world, only the “flat pack” and “self-assembled” global home furnishing brands with IKEA furniture as the core have achieved sales of 298.5 billion yuan in 2017, which stands out from the crowd.
Estimated at an average annual growth rate of 11%, we speculate that the size of China's home furnishing market will reach 4.4 trillion in 2021. What is certain is that there will be a batch of billion-scale enterprises by then, but can China's home furnishing industry be able to create a billion-dollar industrial giant? Our answer is: yes, and sure, sure and sure!
Most of the traditional home people have not paid attention to the fire of the stars that the industry is bursting out: Lin's wood industry, which was founded in 2007, has reached 5 billion in 2017. In 2008, Shangpin's home sales in 2017 were 5.3 billion in sales in 2011. After a major transformation, Wayfair sold more than 20 billion in 2016. In 2015, Ai Jia Life's revenue in 2017 exceeded 10 billion. It is expected to reach 30 billion in 2018 and over 100 billion in 2020!
So, what made the difference between Hongjun and Yanque in the old and new home business? Where will the billion-dollar Chinese home unicorn be born in the future? How to build a volley ladder from a billion, tens of billions to a hundred billion jump development?
The wind rises at the end of Qingping
China's home furnishing industry chain is at least 20 years behind the times. Ten years ago, Gree and other Chinese home appliance brands began to explore chain monopoly and downstream home appliance chain stores. Five years ago, most Chinese clothing retailers began to shout retail transformation. Most of the mass consumer goods companies began to follow Ma Yun’s guidance two years ago. A wave of new retailers. But all of this seems to have nothing to do with traditional Chinese home furnishing companies. Most of them are still sticking to the category manufacturer model, and downstream rely on dealers and home stores to penetrate their products into every corner of the market.
Like a nebula between two stars, the Chinese traditional home industry is destined to be completely shredded in the huge gap between the new era and the old model:
A designer who wants to realize his personality and become a vassal of the manufacturer. There is no shortage of outstanding designers in China, especially after the renaissance of the oriental aesthetics and the rise of the younger generation. A group of young and stylized designers with rich personality and creativity emerged in the industry, but now they are mostly adorned by manufacturers.
Whether as an in-house creative or as a third-party provider of outsourced design services, they can only be covered by vendors that need to maximize risk aversion, delivering the most popular design solutions that are most likely to be recognized by the market, and allowing those creative designs The manuscript is as dead as his own talent.
It is difficult for products to iterate over the increasingly difficult manufacturers. With the increasing reliance on terminal promotion and the increasing cost of production, it is well known that manufacturers are getting worse and worse, but the bigger problem facing manufacturers is that they cannot achieve product iteration through innovation.
They are eager for product innovation to achieve differentiated competition and increase gross profit, but they have to choose to produce the most mediocre mass goods to eliminate the high inventory risk caused by insufficient ordering in downstream channels. This can be called the manufacturer's product innovation paradox.
Facing the industry chain to the intermediate crisis. Since the e-commerce industry has been rampant, it has become the mainstream trend of various industries to realize the flattening of the industrial chain by going to the intermediate link, thereby improving the efficiency of industrial operation and lowering the price of end products.
Relative to daily necessities, clothing and other consumer goods industries, the dealers in the home furnishing industry have to pay for more functions such as delivery, installation, and after-sales in the public relations and terminal operations of the mall, but with the rise of home e-commerce and shopping centers. With the rise of home retail formats, home dealers will face serious role-changing challenges and even survival threats.
A household store that is increasingly depleted in traffic under the traditional commercial real estate model. The traditional business model of the home store makes it actually play another middleman role in the traditional industrial chain. The high cost of rent, entrance fees, promotion fees and other expenses are finally converted into product premiums by manufacturers and distributors. By.
To make matters worse, as the younger generation becomes a mainstream consumer, e-commerce, shopping centers or other emerging formats are becoming a more preferred option when buying home products. The traditional store relies on location advantages and frequent promotions to attract traffic patterns is ineffective, but it has become the new normal for home stores.
Compromise the customer's overall intensification. The compromises in various industry chain links eventually become a comprehensive customer compromise, including what you see in the home store may be the same popular goods (personalized compromise), you must go to the distant home store over and over again if you want to buy a home (convenience) Compromise), you need to buy a sofa in this store to buy a dining table and chair in that store (one-stop stylized matching compromise), you must accept the terminal price increase after the general maintenance of the ex-factory price 3-5 times the terminal price (price compromise)...
Designers who are eager to realize their creativity but lack industrial resources, those who are good at producing professional products but are eager to integrate into the overall solution, and those who are eager to get rid of the middlemen’s identity and seek role transformation, are entangled in traditional home stores and consumption that do not promote unsuccessful Customers who have intensified their compromises together constitute the current home industry that appears to be stable but undercurrent.
The root cause of this dark tide lies in the deviation of the industrial resources organized by the manufacturers and the era of customer sovereignty centered on the ultimate demand. Once the opportunity is found to allow them to jump out of the industry's current situation and recombine at the core of customer needs, these eagerly-moving industry players will unleash a huge industrial force.
The end of the SPA era
The traditional home industry must be called IKEA because the IKEA representative's SPA model has been extremely successful in the past. Through low-cost minimalist design, customized self-service stores, global distribution centers, and extensive integration of global supply chains, IKEA maximizes the vertical accumulation of industrial resources in the value chain, virtually eliminating all wear and tear. The intermediate link of industrial operation efficiency has created nearly the same price/performance ratio for customers.
But even if it was put in the past, IKEA is not the ultimate. Japan's Nidali went further in the SPA model. In addition to its own control over design, terminal, logistics and other aspects, Nidali also chose to build its own production bases in Vietnam and Malaysia. This highly integrated SPA model allows Nidali's end-products to sell at a 30% cheaper price than IKEA, which is why IKEA is invincible around the world, but it has been hit hard by Nidaly in Japan. Nidali still holds the Japanese market with 7 times the sales of IKEA and the market share of more than 50%.
But now both IKEA and Nidaly face new challenges – the lack of product richness brought about by the highly integrated SPA model. IKEA's minimalist design and high cost performance are intoxicating, but more and more IKEA consumers are beginning to generate new concerns: “Will I buy something that is too IKEA?”
IKEA has been keenly aware of this and has implemented a strategy called “Designer Open Source”. A group of IKEA fans are now known as "Ikea Hacker" (IKEA hacker). They use their imagination on the basis of IKEA civilian furniture and pick up tools to personalize the IKEA products. IKEA has built a large fan community to engage these tens of thousands of fans in the “redevelopment” of IKEA products.
They can not only make IKEA's standardized products more customized, but also evolve it into a professional business service for IKEA. So they have created a series of professional service providers such as Bemz and Reform. The former is specially made for IKEA sofas and chairs. The design of the chair cover, the latter with its own expertise in the kitchen decoration specifically for the IKEA kitchen cabinet to create more design cabinet doors and countertops.
The limited upgrade and iteration of products through designer open source is not the first of IKEA. This strategy is actually widely adopted in the smart phone industry (through the open source to allow customers and external technology hackers to carry out secondary development of the system). But this indicates that even in the traditional industry like home, the SPA model with a single style as the core has also begun to face the challenges of product diversity and product iteration.
IKEA and Nedali should be glad that they are in minimalist style and mass market, which allows them to have a broad market space to explore in the world. They can still hedge the relatively low product iteration in the popular market with huge scale advantages. Threat. But for domestic home furnishing companies that use IKEA as a benchmark and invest heavily in IKEA but in a stylized market segment, how do they deal with the fleeting iteration risk of the stylized market?
Birth of new species: industry platform
IKEA is opening its industrial resources to the outside world, absorbing the creative power from the client or external designers to join the IKEA platform, providing it with complementary styles or categories that the traditional SPA model cannot produce.
Domestic traditional home furnishing companies are also exploring their own path while studying IKEA. For example, some of them infiltrate the customer's front-end reverse reorganization value chain through customized services, and some create a multi-series and multi-pattern through pattern replication based on imitating the IKEA SPA model. The brand's home industry group.
However, some emerging home furnishing companies have grasped the core of these trends, entered the industry through a completely innovative model closer to the end, quickly integrated industrial resources and achieved exponential growth.
Why is the traditional SPA model efficient in the past? Because it achieves a high concentration of dispersed industrial resources in the vertical value chain. Why do household enterprises have to do more series and multi-brands? Because they need to expand the value chain horizontally to enhance the richness of the product line in style or price. What is the nature of customization? It is through the service link to cut into the customer front end to intercept customer needs.
But they have more or less natural defects in the model: SPA mode can not provide diversified products and achieve full iteration of products; multi-series, multi-brand industrial group model can not avoid the subjective judgment of people The risk of bet errors in the market segment, on the other hand, the lack of coordinated division of operations in each business will also lead to a huge waste of company resources; the whole house customization seems to have become the slogan of the home-customized brand, but in the traditional closed mode How can we provide a comprehensive home furnishing solution with full range of personalities such as size, material, style and price around the extremely differentiated consumer demand?
On the basis of the SPA model, the industrial group model has achieved a certain degree of openness. The customized model achieves pre-blocking of customers through deep services, but they still face further openness in the future to maximize product richness and Product iteration speed, and how to achieve industrial resource integration and collaboration to improve industrial efficiency after opening.
Traditional home furnishing enterprises have carried out a certain degree of practical exploration on the road of openness and integration, but in the end, it is not for them to find the breakthrough point of releasing power for those who are surging, but some destructive innovators. . The latter reorganizes the continuous industrial resources in the original industrial system with a completely innovative model, which has spawned a new home-based industry platform.
The industrial platform gathers specialized industrial resources in an open mode, and provides all-round industrial assets such as big data services, R&D services, supply chain services, channel terminal services or other third-party services for the internal incubation of the platform or externally joined personalized makers. can. The industrial platform is highly professional and integrated in the back-end industry resources and capabilities. It is highly segmented and prosperous in the front-end business, and the platform resources and services are continuously iterated through continuous interaction between front and back.
In 2017, Shangpin Homestead took an important step in upgrading the platform strategy. On the one hand, through the open platform and parallel building materials and non-competition cooperation, it will carry out the alliance and expand the complementary product categories to achieve one-stop matching. In order to comprehensively deepen and expand the customized solution of the whole house furniture based on the open platform, it becomes a small IKEA that can be customized. On the other hand, it launches the self-installed platform “New Home HOMKOO Assembly Cloud” to build a comprehensive home improvement service platform.
Another company established in 2015, this year's sales is expected to reach 30 billion, and 2020 is likely to achieve 100 billion in revenue, its name is Ai Jia life. From the house to the home to provide "home solutions", the business scope covers custom hardcover, personalized soft clothing, electrical appliances, pots and pans, art, jewelry, etc., after three years of founding, the scale of revenue will reach 10 billion, but this The company at the time had only 269 employees.
The reason why it can be small and achieve the exponential growth that usually occurs in the Internet industry is because Aijia has adopted a completely innovative industrial platform model. Take the founder Pan Dingguo's words: "Ai Jia does not raise a designer, does not raise a worker, does not produce a product, but provides the best service and products to users through the platform."
Shangpin home is in the home industry to become a "customizable small IKEA", HOMKOO complete cloud has built a mission very similar to Alibaba