Image source @ Visual China
Wen 丨 to consume
"The value of this hair dryer is also too high, not at all to Lose Dyson", on the Little Red Book, netizens are very satisfied with the appearance of a hair dryer they purchased.
With the rise of the beauty value economy driven by young people, the personal care small household appliance market in 2021 is booming. The data shows that the industry's annual sales have tripled from $13 billion in 2015. The Frost & Sullivan report also shows that the global small home appliance market will reach $144.6 billion in 2023, with a growth rate higher than that of traditional home appliance industries such as refrigerators and air conditioners.
Riding on this shareholder wind, many domestic "net red" enterprises have grown rapidly, and some have even come to the door before listing. Sushi Technology is one of the "lucky ones".
According to its prospectus, the company's main business is the research and development, design, production and sales of small household appliances, the main products cover oral care, hair care, hair care three categories.
The electric toothbrush has become the most popular item of Sushi Technology, relying on the brand effect of the big customer Xiaomi and the traffic support of the head live broadcast room, and successfully topped the sales champion of the 100-yuan electric toothbrush category.
Of course, under the aura, Sushi Technology, which has been established for less than 7 years, still suffers from questions such as "heavy marketing and light research and development", "excessive dependence on millet" and "single product".
Can this brand, which is popular with young consumers, successfully become the "first stock of electric toothbrushes"? Can you gain a firm foothold in the "Thousand Brush Wars" in which many brands participate?
Millet swaddling income, there is a risk behind the scenery?
As one of the "Xiaomi ecological chain enterprises", even if it is close to independent listing, the cognition of Sushi Technology in the public still cannot escape the traces of Xiaomi.
According to the prospectus data, in the first half of 2021, mijia brand electric toothbrushes and toothbrushes and electric shavers contributed 58.86% and 63.26% of the revenue share of Sushi Technology's oral and hair care products, respectively.
Similar to the "predecessors" of Xiaomi's ecological supply chain such as Yun mi technology and No. 9 company, the prospects of Sushi technology are also highly bound to xiaomi.
The back of the T300 package shows that its manufacturer is Sushi Technology
As the number one customer and affiliated shareholder of Sushi Technology, Xiaomi can be said to be indispensable to the company, which has only been established for 7 years, from 0 to listing. In 2020, the related sales between the two reached 831 million yuan, accounting for 60.6% of the revenue of Sushi Technology in the same period. Even in the first half of 2021, which accounted for the lowest proportion in the reporting period, the proportion reached more than half of 56.4%.
Under the promotion of Xiaomi's strong brand effect, the popularity of Sushi Technology in the market has soared. On the other hand, the strong binding relationship also brings no small risk to the enterprise itself.
More than half of the revenue from a single customer means that if the number one customer procurement plan changes, it will have an unpredictable impact on the overall revenue of the enterprise.
Moreover, the sales route of the Mijia brand, which is mainly cost-effective, is also completely different from the high-price route of the Sushi brand. This has also created a huge gap in gross profit between the two.
Taking the company's best-selling electric toothbrush as an example, the gross profit margin of the company's own Sushi brand electric toothbrush was 24.89%, 33.17%, 43.41% and 51.19% respectively during the reporting period. In contrast, the gross profit margin brought by the Mijia brand in the same period was only 22.94%, 17.04%, 13.67%, and 17.56%.
In the profit sharing model of cooperation with Xiaomi, the highest gross profit margin can be nearly 35%?
With such doubts, quxiaofeiba visited the Xiaomi Home offline store located at the entrance of the street in Wuhan. Through observation, it was found that there were four product manufacturers in the store, including electric toothbrushes and electric shavers, from Sushi Technology.
Among them, the Mijia Sonic electric toothbrush T300 and T500 series are from Sushi Technology, while the more high-end T700 series is produced from other manufacturers. At the same time, in terms of price, the latter's 369 yuan is also quite different from the 99 yuan and 169 yuan of the former two.
In the local large-scale supermarket sales in Wuhan, which is not far from Xiaomi's home, there are also a large number of electric toothbrush products with similar pricing to the Mijia brand, which shows that the Mijia brand electric toothbrush supplied by Sushi Technology is indeed taking a low-price sales model.
The price of Xiaomi Home's products is similar to that of electric toothbrushes sold in supermarkets
Volume or price? The two different sales models have brought completely different profitable effects, and at the same time, Sushi Technology has fallen into the "happiness trouble".
For Sushi Technology, which is committed to increasing the proportion of private label revenue, offline channels seem to have never been their main battlefield.
High marketing investment, all spent in the live broadcast room?
Coincidentally, in addition to Sushi Technology, Guangzhou Star Yuedong Co., Ltd., the parent company of another large domestic Internet celebrity electric toothbrush brand Usmile, has also recently launched listing counseling with the intention of impacting the capital market.
Cooperation with head live broadcast rooms and traffic stars to rely on the traffic effect to bring about intuitive sales increase is a common "routine" of two domestic electric toothbrush brands that are well versed in online marketing.
In June 2021, Usmile officially announced that Xiao Zhan became the global spokesperson for the brand. For a time, the topic of #Xiao Zhan endorsement usmile# on Weibo has received extremely high attention, and as of March 24, 2022, the cumulative number of views has reached 1.92 billion.
Just two hours after the official announcement, the sales of four products on the Usmile single platform have exceeded 30 million, surpassing imported brands such as Oule and Philips.
On the evening of February 10 this year, Xiao Zhan and usily launched the first artificial intelligence electric tooth conference once again brushed up on major social platforms, and also let the Internet celebrity brand taste the sweetness of traffic.
Sushi Technology is also deeply favored by traffic, and prefers to push streams between head live broadcasts. According to the company's prospectus, Li Jiaqi, Luo Yonghao and even Wei Ya, who was suspected of tax evasion and tax evasion a few days ago, have mainly promoted the relevant products of Sushi Technology.
In September 2021, Sushi Technology invited Internet celebrity Spicy Yoko to endorse its retro hair dryer, which sold more than 10,000 pieces in one month. In addition to the head anchors, platforms such as Douyin and Taobao are all over the footprints of Sushi Technology, which fully makes up for the disadvantage of its lack of offline shopping channels.
However, compared with the huge marketing strategy, Sushi Technology's investment in research and development is somewhat "insignificant".
In 2020, the company's expenditure on R&D investment was 459.308 billion yuan, and the sales expenditure in the same period was 261 million yuan, which was 5.7 times that of the former, and the sales expense ratio was as high as 19.04%.
Data source: Sushi Technology Prospectus Unit: 100 million yuan
During the reporting period, the advertising and marketing expenses of Sushi were 14.9747 million yuan, 66.1729 million yuan, 185.6373 million yuan and 133.613 million yuan respectively. Among them, the cost in 2020 exceeded the amount of pre-IPO round financing in that year.
Compared with the industry's leading brand Feike Electrical Appliances and Stone Technology, which is also a Xiaomi ecological chain enterprise, Sushi Technology often does not have an advantage in the R& D expense rate.
At the same time, according to the prospectus of Sushi Technology, the company raised about 775 million yuan, mainly for product upgrading, brand marketing and promotion, and research and development center construction. How much of the nearly 800 million yuan will be spent on research and development is still unknown.
Another major brand, Usmile, did not publish relevant data, but compared with Sushi Technology, I believe that the head traffic star who signed a large-scale contract with Xiao Zhan will not spend less on marketing. In the current context of the general rise in the price of KOLs in the middle and waist, the cost of traffic is also increasing day by day, which means that the future marketing road of Sushi Technology and Usmile will be more difficult.
Another big question about marketing investment is, is it really making consumers more satisfied with the product?
Searching for electric toothbrushes on the black cat complaint platform, a total of 3240 complaints, many of which were related to The Usmile quality and after-sales. The number of complaints about Sushi technology products also reached 88, including complaints from customers on March 17 about the fire of the Sushi electric toothbrush purchased on the Xiaomi Youpin APP while charging.
"Quality", "logistics", "after-sales" problems are frequent, in the face of two emerging small home appliances domestic brands with huge marketing investment, it is still impossible to completely seize the minds of consumers.
A thousand brush wars, there is no eternal front-runner
As a blue ocean market for small household appliances, the low penetration rate is the biggest reason why Sushi Technology, Usmile and even thousands of companies behind them want to seize the market. How profitable can this "small" business be?
According to the outer packaging of the Xiaomi electric toothbrush T300 manufactured by Sushi Technology, the package priced at 99 yuan contains components such as toothbrush handle, power shaft protective cover, color ring, brush head, brush head protective cover and so on.
Image source: Changjiang Securities
According to relevant media reports, the cost of the above standard set is about 50 to 60 yuan, and the electric toothbrush with a higher price will not have too much gap in production costs.
According to relevant sources, if the brand premium is not considered, then the electric toothbrush with a cost of about 70 yuan can be sold to more than 100 yuan, and the electric toothbrush with a cost of about 100 yuan can be sold to more than 200 yuan. Coupled with the brand effect, the final price can be magnified to 3-7 times the cost.
The lower production threshold also gives many new brands the opportunity to enter the market. Sushi Technology and Usmile are nothing more than the first wave of players to taste the cake.
On the other hand, with the increase in consumers' attention to oral health, the double improvement of income level and consumption upgrade has helped electric toothbrushes quickly become a high-quality choice for improving the quality of personal life.
Especially for the post-90s generation that has gradually become the main consumer group, the consumption labels of "lazy economy", "focusing on personalization" and "health care" coincide with the demand for electric toothbrushes. Statistics show that the electric toothbrush products of Usmile and Sushi Technology are planted in 1w+ and 8277 on the Little Red Book, respectively.
According to data from an e-commerce platform, the sales of electric toothbrushes in March 2020 were 490 million yuan, an increase of 38.8% month-on-month; the sales volume was 3.116 million pieces, an increase of 48.9% month-on-month.
It can be said that electric toothbrushes are currently one of the hottest segments in the personal care small household appliance market. Euromonitor caliber data statistics show that the domestic electric toothbrush market size reached 7.7 billion yuan in 2020. In 2019, the market penetration rate of mainland electric toothbrushes is 5%, and if the penetration rate can be increased to 15%, the market size will soar to 25 billion yuan.
Of course, from the perspective of the competitive landscape, even if it is successfully listed, it is still difficult for Sushi Technology and Usmile to break the monopoly of imported brands in the short term.
According to the data released by Shengang Securities in July 2020, the top three brands in the electric toothbrush market share are: Philips (33.3%), Oule B (13.2%), and Shuke (5.6%). The combined market share of Sushi Technology and Usmile is only 7%.
According to enterprise investigation data, there are 3475 electric toothbrush-related enterprises in China. Behind the two internet celebrity domestic brands is the fierce competition of the "thousand brush war".
For the product itself, the core of the electric toothbrush is the motor component, which can maintain high cleaning power while protecting the health of the teeth and gums. The change of technology for this component will determine whether the brand product is more competitive. According to the prospectus of Sushi Technology, the motors and lithium batteries in the electric toothbrushes produced by the company account for 21% and 5% of the total cost of the machine, respectively.
At this technical level, Philips and Oule B have the leading position of patent layout, but there is no monopoly advantage in the actual performance level. This may be the direction of the two major brand brands to further increase their market share after the successful listing.
Of course, the trend of product homogenization also means that new brands can be replaced at any time behind. Euromonitor data shows that the average price of rechargeable products in 2016 and 2020 was 277 and 198 yuan respectively, and the average price of rechargeable electric toothbrushes fell by 28.5% in 4 years. This may not be good news for Sushi Technology, whose brand cost performance is not as good as the Mijia brand.
How to form differentiated competition with imported brands such as Philips and Dyson and traditional domestic brands such as Feike and Superman is a problem that the two Internet celebrity brands need to think about before the next wave of electric toothbrush product iteration.
Write at the end
Relying on Xiaomi's support all the way and the brilliance of online marketing strategies, Sushi Technology and Usmile rushed all the way to the threshold of listing. However, the fierce competition of the electric toothbrush track itself makes these companies still feel pressure.
Compared with Usmile's online platform, it has been able to rank among the top three sales performance. Sushi Technology's low market share may worry the investors behind it.
From 205 to 2020, Sushi Technology has obtained 6 rounds of financing, and the disclosed financing amount has reached nearly 400 million yuan. It is worth mentioning that Xiaomi Group, as the number one customer of Sushi Technology, has directly participated in two rounds of financing and is very optimistic about it.
What Sushi Technology may need to think about now is how to reduce its dependence on Xiaomi and how to make up for the imbalance between marketing and research and development.
According to e-commerce platform data, in the first quarter of 2020, the price of electric toothbrushes was in the high-end market of 500-1000 yuan and more than 1000 yuan, and Philips and Oule B sales accounted for 70.4% and 90.9%. Sushi's strategy of obtaining high gross profits at high prices is very difficult.
The SKUs with electric toothbrush prices of 0-100 yuan and 100-300 yuan accounted for 36.6% and 38.6% respectively. The competition in these two price ranges may be the real focus of Sushi Technology and Usmile.
However, relying only on the traffic play, there is no basis for product competitiveness, and it is not easy for vegetarians to go further if they want to gain the favor of consumers.
Resources:
1. "Sushi rushing to run, electric toothbrush market or meet the "Thousand Brush War"" Internet those things;
2. "Electric toothbrush, burned out of the listing road" giant tide WAVE;
3. "Zhi Krypton · IPO | Backed by Xiaomi to grab 1.3 billion yuan a year, what is the future of the electric toothbrush business? Li Xin;
4. "A post-80s, relying on an electric toothbrush, is about to win an IPO" East Forty Capital;
5. "Electric Toothbrush Industry Topic: New Consumption, New Track, New Brand" Changjiang Securities.