Written by / Yang Bocheng
Image source / courtesy of respondents
This article focuses:
1. Mobile phone sales in 2022 are still declining seriously;
2. Affected by the epidemic, dealers continue to shrink their stores, and daily sales decline again;
3. The expansion of Xiaomi's direct sales stores continues, and Hua OV does not move;
4. During the epidemic period, mobile phone manufacturers will focus on offline stores in large shopping malls;
5. Dealers continue to expand their products to sell cosmetics, electronic cigarettes, and Dong'ao souvenirs;
6. Affected by students' home learning, the sales of tablet computers and laptops have soared;
7. The epidemic situation is repeated, and dealers fight "guerrilla warfare".
The spring of the mobile phone industry has not yet arrived.
Not many dealers would have thought that they would have been in the cold winter and had even "accompanied" the epidemic for three springs. Three years ago, the cold winter of China's mobile phone industry had just begun.
Many people had planned to expand in 2020 and open more offline stores, and even many mobile phone manufacturers were ready for a backwater battle, and the sudden arrival of the epidemic forced them to close the door.
"At that time, I planned to rent a few more counters in the coming year, but I really couldn't keep up with the changes." It was not only Liu Yu who discouraged the idea of expansion, but also Zhao Yong, who opened a store in the same area as him, also abandoned this plan.
"Because Dinghao Building was going to close, I wanted to have a store opposite Kemaoduopan, but the epidemic made everyone unable to work normally, and my goods were pressed in the warehouse for almost a quarter." Zhao Yong is somewhat helpless about the impact of the epidemic, but this is not a fact that he can influence.
Liu Yu told DoNews that at that time, it was also just in time for the Dinghao electronic mall to be closed for renovation, and everyone in the building had to move away, and many people could only move to the opposite science and trade electronic city.
In Zhongguancun, at present, only the Science and Trade Electronics City is "fighting alone", and the Hailong Electronic City, Dinghao Electronic City and Zhongguancun e World next to it have been upgraded and transformed, and they are no longer engaged in the store business. Science and trade electronic city has also naturally become the current stop place for many dealers in the Zhongguancun area.
"Don't expect to open a store now, the main thing is to survive first and keep your own territory." Zhao Yong said that since the beginning of the epidemic, his daily mobile phone shipments have been declining, and he thought that the first-tier cities with strong consumption power could bring him some sales, but in the face of the epidemic, everyone is equal.
In addition to Beijing, Liu Yu also has two mobile phone stores in his hometown of Langfang, Hebei, mainly engaged in Apple and domestic mobile phones, which belong to the terminal seller. "In Hebei, many of my peers around me now basically only have one store, some of them have two, and the rest have closed."
Due to the epidemic in Langfang, the region has adopted strict restrictions, and no one and vehicles are allowed to go out without permission, which also makes Liu Yu's mobile phone shop in Langfang temporarily stop business. "It's all closed, and now we can only rely on stores in Beijing to support revenue." Liu Yu was very helpless.
The inability to guarantee normal operations and living, as well as the management restrictions caused by the epidemic, are the main reasons for the closure of these dealers.
Even Shenzhen Huaqiang north, China's largest mobile phone distribution center, has been affected. More and more stall owners are finding the mobile phone business increasingly difficult to do, including new and used phones.
Wang Ran told DoNews that although the monthly shipments in the year before the epidemic have declined, they can basically maintain about 20,000 units, including the sum of domestic mobile phones and Apple and Samsung mobile phones. Earlier, Wang Ran's shipments could reach 40,000 units per month.
"Since the epidemic, the shipment volume has not been good, mainly the epidemic is repeated, once there is a case in the area, it will be completely closed, and now even if part of the goods are put in the home, if the community is sealed, it will not be able to be shipped." Wang Ran said that like the "lockdown" of Shenzhen some time ago, everyone needs to stay at home, and the express delivery is not allowed to be sent, and it is helpless to see a lot of machines losing money.
According to data released by Canalys, China's smartphone sales in 2019 were 369 million units, down 7% year-on-year, and in the fourth quarter of 2019 alone, China's smartphone sales shrank by 15% year-on-year to 85.3 million units.
According to IDC data, the smartphone market shipped 75 million units in the first quarter of 2022, down 13.7% year-on-year.
IDC analysis said that the main reason for the decline is two aspects, one is due to the fragmentation of terminal products, so that more consumers have purchased diversified products such as tablets and wearable devices; second, the uninterrupted epidemic has also led to a reduction in consumer mobility, and more consumers have delayed the purchase plan of products such as smartphones.
In addition, according to the data previously released by the China Academy of Information and Communications Technology, the shipments of domestic brand mobile phones in the domestic market in the first two months of this year fell by 27.9% year-on-year, but still accounted for 80.3% of mobile phone shipments in the same period.
The recurrence of the epidemic has led to a decline in the purchasing power of consumers in different regions, and has also led to some dealers having to cut back on food and clothing.
"We've survived three years and don't know if we can survive another three years." Wang Ran sighed.
First, shrink the store
The recurrence of the epidemic has made many industries no longer smooth. Ah Liang, who works at an Internet company, dismissed the idea of changing his mobile phone this year. "I wanted to change to the 13 series, but I think my iPhone 11 can stick to it anymore. The speed of major 5G and 4G are not very different. ”
You know, the main group of people who buy high-end brand mobile phones are 25-35-year-old white-collar workers, whose purchasing power and financial resources can support their consumption of high-end electronic products, and for college students or low- and middle-income groups, the main purchasing power is concentrated in domestic mobile phones, such as Huawei, Honor, Millet, OV (OPPO and vivo).
"The purchasing power of first-tier cities is still greater than that of second- and third-tier cities, even if they are not, but the profits of international brands such as Apple and Samsung are not very optimistic." According to the current market, the profit of an Apple mobile phone is between 200-300 yuan, far less profitable than selling Huawei, Glory, and OV. Sun Wei has been in the mobile phone business in Shanghai for nearly a decade, and last year, he decisively withdrew from Shanghai and returned to his hometown in Jiangsu to open a store.
It was Sun Wei's decisive departure from Shanghai that saved him from the impact of the Shanghai lockdown, and zhou Zhiqiang also left Shanghai during the epidemic.
"We evacuated Shanghai mainly because the business is not good, the cost of a shop here is even higher than that of Beijing, although the flow of people in Shanghai is large, but the profit is only enough to maintain daily expenses." After consulting with his wife in June last year, Sun Wei resolutely abandoned the façade in Shanghai and returned to his hometown in Jiangsu.
For Sun Wei, the pressure to return to second-tier cities is less than that of first-tier cities, because the cost of operation and living here is far less than that of first-tier cities, although the industry as a whole is sluggish, but at least there can be some balance.
"Here, the main thing is to sell more domestic mobile phones, mainly OV, Huawei also sells, Xiaomi's profits are small and basically not sold." Sun Wei told us that at present, in domestic mobile phones, the profit of OV is generally higher, usually ranging from 800-1000 yuan, and the glory is second, Huawei looks at the specific model. "Folding screen mobile phones like Huawei, Honor, and OPPO can make money when they are just released."
In difficult times, there are also many dealers who are still happy to be "scalpers", because only in this way can the profits of their stores look better.
Glory and OPPO's folding screen mobile phone, at the beginning of the sale due to production capacity difficulties, the profit of a mobile phone is basically around 2,000 yuan. Even if the peers string goods back and forth, there can be a profit of about 500-1000 yuan. In their view, folding screen mobile phones are like Moutai wine, not for customers to use or drink, but to make money tools.
"Yeah, three years have passed, and the business in the store is not as good as a year, and now it has added some business." Zhou Zhiqiang left Shanghai longer than Sun Wei, and at the end of 2020, he retired from his shop in Shanghai and returned to Shijiazhuang, Hebei Province. Taihe Electronic City is the largest electronic distribution center in Shijiazhuang, similar to Beijing Zhongguancun or Shenzhen Huaqiang North, but the scale is quite different from the two.
Zhou Zhiqiang, who had just returned to Shijiazhuang, experienced a second outbreak in Shijiazhuang, which forced him to stay at home. "Because the market has been closed, and the control of the districts is very strict, it is impossible to send express delivery to the community, and life is stopped again."
Fortunately, the epidemic was controlled after the Spring Festival in 2021, and Zhou Zhiqiang's operation was only interrupted for two months, which was better than the beginning of the epidemic, but it will take time to fully recover to the epidemic-free era. For the loss of mobile phone inventory during the sealing period, it is necessary to bear it alone.
Second, move to large shopping malls
At present, the impact of the repeated epidemic continues to plague offline stores, not only dealers, but also the sinking of manufacturers, many manufacturers have to shrink the original city and county sinking expansion plan, instead of expanding shopping malls (large shopping malls) located in first-tier or second-tier cities.
DoNews found that in the past three years of the epidemic, the mobile phone stores in different Shopping Malls have not been shut down due to the epidemic, but the traffic is considerable. Mobile phone manufacturers are like McDonald's and KFC in the catering industry, and they can always see the LOGO of "red, orange, green and blue" in the same location.
People seem to have focused their strategic focus on ShoppingMall, but although its passenger flow is objective, the cost has increased accordingly.
Offline stores are attacking the city, and the first to walk is Xiaomi. According to Xiaomi's 2021 financial report, its offline retail stores increased from more than 3,200 at the end of 2020 to 10,200. Hua OV has been reduced to varying degrees, but what is surprising is that the honor brand independent from Huawei is not inferior to other brands in terms of store opening speed.
The main reason is that most of the OV system is direct operation + franchise, Huawei has to change the offline market strategy because of the impact of sanctions, and Xiaomi directly changed the offline playing method, giving up joining and changing to direct operation. This has formed a direct sales store based on Xiaomi and a direct sales + franchise model based on Huarong OV.
Therefore, for the offline channels, the advantages and disadvantages of each company are obvious, the advantage of direct operation is to be able to control the price centrally, the disadvantage is that the profit point will be very small, and the advantage of the direct operation + franchise method is that dealers at all levels can profit from it, the disadvantage is that the online and offline prices are not uniform, and the dealer is prone to cause the phenomenon of stringing goods because of profits.
But the current problem facing mobile phone dealers is not as simple as profits, but the fact that the entire mobile phone market is constantly depressed.
Third, the sequelae of chasing heights
"Like my friend's shop, he opened four or five stores in the county before, and now there are two left, and if there is no epidemic, all of them will have to be closed." Zhou Zhiqiang said that his business situation in second-tier cities is quite optimistic, but in the sinking market like the county seat, almost everyone is closing stores.
Dong Dahai intuitively felt that the business in the sinking market was more difficult to do than in 2019. "Everyone is experiencing change, now you go to see the third and fourth-tier cities, mobile phone stores are not in the minority, the original mobile phone street is basically a variety of mobile phone LOGO or mobile phone shop brands, now almost all have become other formats."
It can be seen that domestic mobile phone manufacturers are invariably "chasing high-end", and the problems brought about by the development of high-end are also followed, first of all, sales, followed by consumer cognition - domestic mobile phones are so expensive in the end.
As we all know, domestic mobile phones have indeed been much worse in innovation in recent years, but they are still in a hurry to make quick gains on some issues. The hardware is constantly piled up, and new models are released every three to five, which makes many consumers dazzled, but at the same time, it also raises a question, why change the machine?
Mobile phone manufacturers are constantly "chasing high sales", while the consumer replacement cycle is constantly lengthening, and the two curves that should intersect have finally become parallel lines.
A year after Huawei was sanctioned, the retention rate of its old models hit a record high, and a second-hand Mate 30 Pro 5G version model has not fallen for even half a year, mainly because of the Huawei brand and the limited chip after the sanctions.
"No phone has a retention rate like this, and even Apple's iPhone 6 series, which had the best retention rate that year, is not so strong." Zhao Yong sighed.
Before Huawei was sanctioned, the premium and shipment of mobile phones have maintained a high level of growth, which is due to the marketing of the Mate 30 series on early sale, and also benefited from the fact that its folding screen mobile phones have been continuously speculated by mobile phone dealers and scalpers at high prices, and it is inseparable from its accelerated sinking. We can look back at the overall sales volume in 2019 and we can see that the sales of Xiaomi and OV are accelerating their decline.
Therefore, after Huawei's success in impacting the high-end, Honor, Xiaomi, and OV have also begun to try to continuously impact the high-end, Honor released the Magic series, Xiaomi released the Xiaomi 12 and Mix series, OPPO released the Find X series, vivo released the X series, which includes folding screen mobile phones. However, as of now, among the folding screen mobile phones that have been released, no manufacturer has been able to announce sales positively.
We believe that domestic mobile phones to break through the high-end is not overnight, nor can it be done by releasing several folding screens, but to let consumers perceive the "novelty" of the product and the actual application scenario.
"Although the profits of domestic mobile phone manufacturers are very good, the sales volume is really not very good now." Zhao Yong was also helpless, and he even used the collusion behavior that was originally a violation. "The market is really not good, I hope everyone understands each other."
In this industry, if the machines of each family are not easy to sell, there will basically be a default operation method, that is, to sell some machines to cities with high prices in stalls or offline stores, so as to obtain profits.
Once this practice is found by the manufacturer, it will face certain penalties, but the punishment moves of each manufacturer are basically the same - fines, suspensions, downgrades, and will also assess the losses and impacts caused to determine the final penalty plan.
Fourth, change and transformation
Like Liu Yu, Zhao Yong, in addition to having a mobile phone store in Beijing, also runs an authorized store for Huawei and Glory in his hometown of Xingtai, Hebei Province, but for the terminal dealers, the supply of huawei and Glory to him has always been limited. "High-end machines basically have to be two or three days or even a week later than the release time to get the goods." Sometimes even if you get the goods, there are only a few units. ”
This year, the pressure on Zhao Yong has also increased. In addition to Hebei, Beijing's sales volume is also shrinking, and even the frequent customers who often change machines every year have also lengthened the replacement cycle. "More people choose second-hand products to upgrade, and the sales of new machines have indeed dropped a lot."
Zhou Zhiqiang told us that the overall impact of the epidemic has always existed, and they are now fighting a real "guerrilla war" - living in the constant recurrence of the epidemic, the epidemic recedes when the epidemic comes, and the epidemic retreats when it retreats.
Of course, the epidemic has also brought them new growth points other than mobile phones. "Like students if they study at home, parents will come to buy tablets or laptops, the first growth point is the first epidemic in 2020, and the second growth point is the second epidemic in Shijiazhuang in 2021." The two epidemics have caused sales of tablets and laptops in Zhou Zhiqiang's store to soar, and even out of stock.
It can be seen that many dealers are seeking change and transformation in the new environment.
In Liu Yu's circle of friends, in addition to mobile phones, there are more categories that are not related to mobile phones, such as electronic cigarettes and ice piers. "The sales of mobile phones are not good, and I have to find a way to make money, and now I think selling e-cigarettes seems to be more profitable than mobile phones." Liu Yu said with a smile.
Not only e-cigarettes and Winter Olympic souvenirs, but also some mobile phone dealers have also sold cosmetics. In the quotation group of a mobile phone dealer, cosmetics occupy the mainstream. "It's normal, but there are more e-cigarettes sold, and many of my friends around me have sold e-cigarettes." Zhao Yong said.
More and more dealers are using different formats to make up for the profit deficit caused by the decline in mobile phone sales.
We seem to explain every year that the present of the year will be worse than ever, the cold winter is still continuing, and for the mobile phone industry, it is true that it has not ushered in the spring. The impact of repeated epidemics will continue to affect the survival of physical stores, which is bound to affect the offline business of mobile phone manufacturers.
In the process of talking with these five dealers, everyone seems to have a common voice of open source and throttling, constantly expanding new formats, and accumulating more surplus grain.
The spring of the season has arrived, but the spring of the mobile phone industry is still far away.
Note: At the request of the interviewee, Zhao Yong, Zhou Zhiqiang, Liu Yu, Sun Wei and Wang Ran are pseudonyms.