In 2020, due to a sudden epidemic, Chinese unlocked the culinary talent hidden in his bones.
Small household appliances such as mini yogurt machines, home-style air fryers, and freshly ground coffee machines have been transformed from the bottom of the shopping cart to the on-the-go state, bringing people in home isolation the expectation and happiness of food.
Tracing the source of these home appliances, most of them come from a place, Shunde District, Foshan City, Guangdong Province, the famous "small home appliance kingdom" in China.
Here is not only located in the United States, Galanz and other home appliances companies leader, there are also like Xinbao shares, Xiao Xiong electrical appliances and other small household appliances in the field of rising stars.
Xiao Xiong Electrical Appliances started from the kitchen creative small household appliances, ate the early e-commerce dividend, and became the largest increase in the home appliance sector in the first half of 2020 with the "cute" shape out of the circle.
After the epidemic, the home appliance industry as a whole fell into short-term consumption weakness, and the revenue and net profit of Xiao bear electrical appliances fell for the first time since 2017, and the stock price also fell by 2/3.
Why can't Bear Electrical Appliances sell? Will lack of follow-up be the norm for Cubs? If you want to return to the growth track, what shortcomings do the Cubs need to make up for? This article will answer these questions.
Little Bear appliances can't sell?
With the high value of the bear all the way to the glory of the bear electrical appliances, 2021 brakes.
In 2021, Xiaoxiong Electric appliances achieved operating income of 3.606 billion yuan, a year-on-year decrease of 1.46%, and net profit of 283 million yuan, down 33.81% year-on-year. This is the first time in five years that The revenue and profit of Xiao bear electrical appliances have declined.
Is the decline in revenue growth due to the high base in 2020?
In 2020, the outbreak of the epidemic suddenly, most residents were forced to stay at home, because the time at home is too long, many people have a strong demand for homemade food, only 618 shopping festival, Xiao Xiong electrical appliances achieved sales of 250 million yuan, in the second quarter, Xiao Xiong electrical appliances revenue rose by 75.23% year-on-year.
Higher performance growth expectations superimposed on market sentiment, Xiao Xiong came out of a wave of less than half a year rose more than 3 times, the market value of the most more than 25 billion yuan.
In the second half of the year, the performance has been cashed in, the investor sentiment has calmed down with the epidemic, and the stock price of Xiao bear electrical appliances has gone downhill like a stone, rolling down all the way. As of April 19, 2022, the share price has fallen by 70% from its highs.
Prior to the disclosure of this annual report on the double decline in revenue and profit, in March this year, Xiao bear electric threw out a stock buyback plan to boost confidence.
The key to attracting smart capital money lies in investors' expectations of the company's growth.
In the long term, in the five years from 2015 to 2019, the compound growth rate of Xiaoxiong Electrical Appliance revenue was 38.76%, and the revenue growth rate of Xiaoxiong Electrical Appliances in 2020 was 36.16%, which was basically the same as in previous years, and there was no explosive growth.
That is to say, if there is no epidemic, Xiao bear electrical appliances may have moved from a high-growth period to a low-speed growth period earlier. At this inflection point, will the future revenue of Xiao Bear Electric be up or down? Can it return to the high-growth track?
This should be analyzed from both price and sales.
In terms of price, the bear has always been positioned to be easy to use and not expensive, and the overall unit price is low. However, there are many types of small household appliances in the kitchen, and changes in product structure will have a greater impact on the average price of products, which also involves the competition of products, which will be described below.
In terms of sales volume, the sales volume of Xiao bear electrical appliances fell from 45.1374 million units in 2020 to 38.9527 million units, and sales began to become slower.
Sales are slower, on the one hand, the inventory turnover days are lengthened, and the inventory turnover days of Xiao bear electrical appliances in 2021 are 85.25 days, which is 15 days and 9.3 days longer than in 2020 and 2019, on the other hand, the goods that are produced but have not yet been sold, that is, the proportion of inventory goods in inventory is getting higher and higher, 64.2% in 2021, an increase of 7.4 and 9.6 percentage points over 2020 and 2019, respectively.
In other words, the product is not so good to sell.
Contrary to the decline in sales, Xiaoxiong Electric has been adding new production capacity.
In 2018 and 2019, the total fixed assets and projects under construction of Xiaoxiong Electric Appliances accounted for 13.55% and 12.64% of the total assets, respectively, and by 2021, this proportion has increased to 17.76%.
In addition to these fundraising projects when it was listed in 2019, Xiaoxiong Electric also announced that it intends to raise no more than 600 million yuan in the form of issuing convertible bonds for the construction of a smart small household appliance manufacturing base and continue to expand production.
There are three listed investment projects directly related to production, of which two have just reached a usable state at the end of 2021, one is expected to be used by the end of 2022, plus the investment direction of convertible bonds, according to the relevant announcements, after the production is reached, the design capacity of these new projects is 47.71 million units.
So, will the bear have idle capacity? We look at both the Cubs' own strengths and weaknesses and the track.
The price of "cuteness"
The small household appliance industry can be divided into traditional small household appliances and creative small household appliances.
The main products of traditional small household appliances, such as rice cookers, hot water kettles, microwave ovens, etc., have strong rigid demand, mature channels, and the market share of leading enterprises such as Midea and Suber accounts for a large and stable market share.
In general, the technology content is relatively low, and it is more novel in function and design, such as egg cookers, yogurt machines, wall breakers, etc., designed for the needs but not necessary needs of young people in their daily lives.
The selling point of Xiao Bear Electrical Appliances, which can also be said to be the core competitiveness, lies in creativity and appearance, which are easily imitated and copied.
On Taobao, "looking for similar" products, the original price of 110 yuan of the bear heating lunch box can find 60 yuan flat replacement, only 5 out of a thousand reviews gave a bad review.
When enjoying the dividends of high value prompting consumers to impulsive consumption, creative small household appliances must have the ability to continue to lead the trend. Whether it is appearance or creativity, trends are easy to become obsolete, and creative small household appliances must pay a higher price for this.
First, the popularity of products is difficult to predict, and it is easy to mismatch between production and marketing and inventory prices.
In 2020, the first major category in the sales of small household appliances in the small bear electrical appliance kitchen is the electric category, in 2021, the revenue of this category fell by 31.03%, becoming the fourth largest category, and then Western-style small household appliances directly doubled in revenue in 2020, but only increased by 1.8% by 2021.
The consumption of small household appliances is not stable, and it is difficult to predict product sales and make production arrangements accordingly.
For the trend expectation is not accurate, or the product is outdated, the general enterprise will take the means of price reduction to "clear inventory", at this time, it is necessary to make a price reduction provision for the "non-aesthetic" products that have not yet been sold, which will swallow up the net profit.
Therefore, the proportion of inventory price reduction provision of Xiaoxiong Electric Appliances is higher than that of other kitchen appliance manufacturers such as Midea and Jiuyang. From its own point of view, the proportion is also increasing.
Second, the product is easy to copy, and The bear appliance must maintain high exposure.
Xiao Xiong electrical appliances started online, is a typical "Tao brand", known as the first share of Internet home appliances. As the mobile Internet dividend fades, the cost of online customer acquisition becomes more and more expensive, and the cost of maintaining high exposure will only become higher and higher.
In 2021, part of the reason for the decline in net profit of more than 30% is that sales expenses increased by a quarter year-on-year to 553 million yuan, accounting for 15.3% of total revenue, higher than the same industry level.
The official explanation said that the increase in fees is due to the increase in fees due to the increase in competitive pressure on traditional e-commerce platforms and the higher promotion costs of new platforms such as Douyin.
Specifically, in 2021, among the sales expenses of Xiao bear electrical appliances, the brand promotion fee was 42.034 million yuan, a year-on-year decrease of 28.4%, while the market promotion fee was 309 million yuan, an increase of 48.5% year-on-year.
Neither the annual report nor the prospectus provides a more detailed explanation of the marketing promotion fee. Generally speaking, brand promotion fees and marketing promotion fees, one focuses on brand awareness, and the other focuses on short-term sales effects, such as bringing goods in live broadcast rooms.
It can also be seen from the sharp increase in market promotion fees that although sales have declined in 2021, Xiao Bear Electrical Appliances has also spent a lot of effort.
In summary, the early channel advantage of Xiao Bear Electrical Appliances is no longer there, and the cost of maintaining the advantages of creativity and appearance is quite high. What is even more tricky is actually the dimensionality reduction strike of the old opponent.
The battlefield expands and the opponents increase
Creative small household appliances themselves are non-rigid products, nine out of every ten households in the country may need air conditioning, not necessarily three will need egg cookers, coupled with the low threshold of products, fierce competition, and low ceilings of single products.
From the perspective of increasing revenue, expanding into new categories will be a more effective strategy than increasing the market share of a single product.
With small kitchen appliances as the mainstay, Bear Electric Appliances has gradually increased the proportion of small household appliances and small household appliances for mother and baby, and has continued to launch new SKUs to superimpose social media channel advertising to increase consumer touchpoints.
As mentioned above, in the early stage of category expansion, the superimposed growth of marketing expenses of new and old products will directly affect corporate profits.
The expansion of the category boundary will surely meet such larger, more well-known and more market-oriented opponents as Midea, Suber and Jiuyang.
From the perspective of market space, there is still a large room for growth of small household appliances as a whole.
According to the "Research Report on the Market Prospects and Investment Opportunities of China's Home Appliance Industry" released by the China Business Industry Research Institute, as of 2021, the average number of small household appliances in the mainland is only 9.5 per household, while the United Kingdom, the United States and other developed countries have reached about 30 per household.
On March 23, the United States restarted the tariff exemption policy, and domestic sweeping robots, air purifiers, air fryers and other home appliances were re-exempted from the 25% tariff, which means that the domestic brand's overseas plan has less obstacles.
While traditional kitchen appliances are in a mature period, Aowei cloud network data shows that in 2020, the retail sales of traditional kitchen small household appliances fell by 11% year-on-year, so it is also reasonable for the United States and The Soviet Union to share a piece of the creative home appliances.
Mei su jiu has air fryers, yogurt machines, egg cookers and other creative small household appliances, and Xiao Xiong also has traditional home appliances such as rice cookers, and the boundaries are becoming less and less clear. When confronted head-to-head, can the Bear please? What shortcomings need to be filled?
Cub's strength lies in creativity, but as mentioned above, ideas with low technical thresholds are easy to copy, and it is necessary to maintain the speed of high-frequency product pushing and iteration.
There are two directions for pushing new and iterating: developing new products and upgrading existing products for long-tail scenarios or a certain group, adding new features or solving pain points.
The yogurt machine of Xiao Bear Electric Appliances, because it is easy to store, clean and low price, has become a hot product, which belongs to the first type.
Similar to Jiuyang shares, in view of the pain points that the soybean milk machine is difficult to clean, it has developed the technology of washing the soybean milk machine without hand washing, and successfully upgraded this product to a hit under the "lazy economy", which belongs to the second type.
This requires in-depth analysis of the use case and strong research and development capabilities.
Judging from the creation of a popular yogurt machine and the ability to sell users well online, Xiao Xiong does not lack the ability to tap demand.
Let's look at R&D.
Xiao xiong electrical appliances' investment in research and development is gradually increasing, from 76.515 million yuan in 2019 to 130 million yuan in 2021, accounting for 3.6% of revenue from 2.85%.
The frequency of pushing new ones is also very high. According to the Southern Metropolis Daily, Xiaoxiong Electric has 10 research and development teams, and after the listing, the research and development capacity has increased from 100 new products a year to 150 new products, that is, a new product can be launched every two or three days.
However, browsing the new product page of the official flagship store of Xiao bear Taobao can be seen that most of the new products are only partial adjustments, such as the original product shape and color, yogurt machine, egg cooker, bean sprout machine and other patent application times are before 2015, and the follow-up research and development is only an improvement on the basis of the original organic type.
From the results backwards, the research and development of Xiao Xiong Electrical Appliances has gone wrong, either the direction problem or the ability problem.
epilogue
For Xiao Xiong Electrical Appliances, the expansion of the category is from the long tail market to the mainstream small household appliances market, although in the invasion, it is a differentiated competition method, such as a mini rice cooker suitable for one or two people, but this degree of innovation is not enough to constitute a creative moat.
When it comes to products with high price bands, such as smart rice cookers, sweeping robots and other categories, Xiao Xiong also needs to cross the barrier of brand positioning.
Home appliances, as durable consumer goods, are not only a business about the number of people, but the impact of scientific and technological progress on brands and industries is far from being comparable to marketing.
For the United States and The Nine, creative small household appliances can be done by hand.
For both sides, it was not a war of equal difficulty from the start.