The "abnormality" of BBK is hidden in the education hardware

Image source @ Visual China

Wen | Silver Arrow Finance

In recent days, BBK has been pushed to the cusp of the storm in the soaring stock price that can be called "abnormal".

In the morning session of April 18, BBK was even more rare in the "earth and sky board" with the opening and closing of the limit, and harvested the sixth consecutive up and down board in nearly a week. According to the information of Tianyan, the stock price fell sharply around 3 p.m., and it was almost about to fall again.

Similar abnormal fluctuations have long attracted the attention of regulatory authorities. On April 13, BBK was identified by the Shenzhen Stock Exchange as an abnormal fluctuation in stock trading in accordance with regulations due to the cumulative deviation of the closing price increase of more than 20% in two consecutive trading days on April 11 and 12, and then issued an announcement to explain.

01 "Playing the rest" of education hardware, or will face the "dimensionality reduction blow" of Internet manufacturers

It may be said that educational hardware belongs to the category of "playing leftovers" for backgammon.

Founded in 1995, BBK has gone through nearly 27 years of development. From the initial food enterprise, it has slowly expanded its business and become a business group spanning the three major industries of supermarkets, department stores and electrical appliances.

At least until 2021, BBK still occupies an unshakable position in the field of education hardware, although it is also facing competition from brands such as Shushulang. However, after the "double reduction" policy is implemented, it may be difficult to maintain this advantage.

With the decline of the K12 education and training industry, most of the major online education companies have set their sights on education hardware after a period of confusion. One of the hottest market segments, probably from last year set off a "lamp war" of intelligent learning lights, in addition to the favor of line education companies, many Internet manufacturers are also involved in it, as if it is a new outlet.

According to incomplete statistics, as of July 2021, in addition to traditional education hardware manufacturers such as BBK and Shushulang, companies such as Ape Tutoring, NetEase Youdao, and iFLYTEK have released new learning machine products. In addition, Huawei, Xiaomi, Tencent, Baidu, Tmall, ByteDance and other Internet technology companies have also launched products related to intelligent learning lights.

Although BBK has accumulated products and word-of-mouth advantages in education hardware for many years, in the face of the new market environment, there may be the following two aspects of the lack -

1. Lack of artificial intelligence and algorithms.

The addition of Internet technology companies is likely to introduce high-tech concepts including artificial intelligence, cloud computing, and IOT into the industrial chain of education hardware. Especially in the traditional business philosophy of selling hardware and maintaining revenue through paid software and courses, it has become a history with "double subtraction", the tool attributes of education hardware have returned, and the direction of product competition will become more refined.

In BBK's education hardware products, in addition to traditional projects such as course learning, image teaching, and mock exams, technologies such as "point reading" and "repeat reading" do not have too high barriers and thresholds. Once the education hardware enters the field that Internet technology companies are best at, it may be difficult for BBK's brand advantage to play.

2. Homogeneous competition intensifies, and marketing pressure may increase exponentially.

Taking the intelligent learning lamp that is being chased by Internet manufacturers as an example, its main functions focus on adaptive light adjustment, sitting posture reminder, AI job inspection and other aspects. Even if there is innovation in the extension function, the form and function of each product tend to be similar, which can easily cause a large number of homogeneous competition.

Although BBK has relatively mature channels such as offline department stores and electrical city, it may be difficult to distance itself from Internet companies in terms of online marketing. If you fall into the internet habit of burning money to do the market, surviving competitors and then harvesting the market, the marketing pressure it brings is enough to bring greater cost pressure to BBK's business.

In addition, there are still risks and hidden dangers that cannot be ignored in the education hardware itself.

02 The development potential is worrying, and the education hardware is just a "flash in the pan"?

Looking at the market and consumers' concerns about education hardware, its risks and hidden dangers are mainly manifested in the following three aspects :

1. Education hardware may involve policy risks of "subject training".

After K12 online education and offline training were almost completely wiped out, the state did not relax the control of the education industry. After entering the era of strong regulation, any education-related industry needs to maintain sufficient caution.

According to the relevant policy provisions, for whether it involves "subject training", the main division criteria are "the training method focuses on the training of subject knowledge explanation, listening, speaking, reading, writing and other discipline ability training, with pre-study, teaching and consolidation exercises as the main process, and teachers (including virtuals, artificial intelligence, etc.) teaching demonstration and interaction as the main forms".

If this regulation is strictly adhered to, nearly 90% of the educational hardware on the market, including all kinds of learning machines, may be eliminated. Although the Ministry of Industry and Information Technology issued a document in 2016 saying that it is necessary to dig deep into the application of education hardware and other products to accelerate the intelligent transformation of the education industry, such a policy guarantee is difficult to bring too much comfort to education-related enterprises that have just experienced a huge storm.

Therefore, on September 1, 2021, NetEase Youdao will jointly launch the "Human-Taught Youdao Dictionary Pen" in conjunction with the People's Education Electronic Image Publishing House to seek more secure product protection. And ByteDance, Tencent, Ali and other Internet manufacturers will also choose to enter the market from the intelligent learning lamp with stronger tool attributes.

Therefore, how to effectively avoid possible policy risks will become the mainstream direction of the development of education hardware at this stage.

2. After the drainage attribute is transformed into a tool attribute, the education hardware may face industrial change.

Before the "double reduction" policy was implemented, education hardware belonged more to the terminal carrier of online courses, paid services and other charging items, which was essentially more like one of the drainage means of online education.

For example, online education companies such as ape tutoring and homework help have launched a number of tool-like intelligent products such as finger reading machines, wrong question printers, and self-service Q&A machines. Leaving aside the specific efficacy, the main purpose of launching such tool products is to build a new traffic entrance through offline products in the case of the rising cost of obtaining customers through Online Channels on the Internet and the increasing number of K12 competitors.

It is foreseeable that under the continuous supervision of relevant policies, education products will also fade the drainage function and gradually return to pure tool attributes. The related industrial chain also has a high probability of falling into resource restructuring and optimization.

This may also mean a more competitive market. And unlike drainage products that pay more attention to content services, tool products should consider more sunk costs such as research and development, trial and error, and the risk and uncontrollability will be greater.

3. The consumption enthusiasm of consumer groups is insufficient, and the potential for sustainable development is worrying.

The users of traditional education hardware products are students, but the decision-makers who decide whether to buy or not are parents. Because there is a certain level of opposition between the two for the appeal of the product, it leads to the uncertainty of product reputation and quality.

Just as most parents expect that education hardware can be achieved, such as DingTalk, Feishu and other products on the "monitoring" of workers and work data and other effects, the past education hardware products also follow similar needs to design. After returning to the pure tool attribute, whether it can still meet the needs of parents and maintain sufficient consumer enthusiasm is a matter worthy of careful consideration.

Moreover, considering the relatively fixed functional limitations of tool products, how to effectively extend in the future also requires relevant enterprises to explore a more reasonable path. For now, the sustainability potential of education hardware alone is not reassuring.

Therefore, the sudden explosion of education hardware is not a panicked attempt by training institutions and online education companies in the process of seeking self-help. Although it is a great joy for everyone to become a success, but failure can only be blamed on luck, and it is impossible to blame others.

And the continuous rise and fall of BBK's stock price is difficult to say that it will not be the same as the education hardware track, but it is just a fleeting flash of chance.

Resources:

"Change Express: BBK (002251) On April 18, 9:49 to seal the up and down board" - Securities Star

"BBK Commercial Chain Co., Ltd. Stock Trading Abnormal Volatility Announcement" - Securities Times

"Intelligent learning lamp market has produced new products, and the education hardware war will be upgraded? Whale Media