In 2020, after the outbreak of the black swan event of the new crown epidemic, a "cooking competition" between young people began, making small household appliances such as air fryers, electric egg beaters, and yogurt machines instantly become explosive products on e-commerce platforms. At that time, many people speculated that the small household appliance industry, which has been tepid, was about to usher in the wind outlet.
However, at the end of 2021, Idle Fish released a list of "Top Ten Useless Commodities in 2021", which were listed as: air fryers, treadmills, e-books, curling irons, breakfast machines, Polaroids, wall breakers, fascia guns, beauty instruments, and fitness rings. Air fryer, breakfast machine, wall breaker... It is the small kitchen appliances that were once very popular.
Little Bear Electric (002959. SZ) as a domestic small household appliances head enterprise, the performance also suffered Waterloo in 2021.
According to the financial report, in the whole year of 2021, the operating income of Xiaoxiong Electric Appliance was 3.606 billion yuan, down 1.46% year-on-year; the net profit attributable to the mother was 283 million yuan, down 33.81% year-on-year.
Red Star Capital Bureau will take Xiao bear electrical appliances as an example to observe what kind of changes have taken place in the domestic small household appliance industry in the past two years. As a leading enterprise, what are the challenges and risks faced by Xiaoxiong Electric Appliances?
Image according to Visual China
Revenue side:
Small appliances, can not sell
Most consumers are no strangers to small household appliances, rice cookers, hot water kettles, microwave ovens, etc. are small household appliances; but this belongs to the traditional small household appliances, with just need and mature channels and other characteristics.
Therefore, the market has long presented the old player Beauty (000333. SZ), Jiuyang (002242. SZ), Suber (SZ: 002032.SZ) three-legged competitive situation.
The main reason why the "rising star" Xiao Bear Electrical Appliances can break through from it is the long-tail positioning of the product and the early e-commerce dividend.
First of all, from the perspective of product positioning, in 2006, Xiao Xiong Electric Appliance was established, positioning itself in the creative small household appliances. Initially, the main yogurt machine, egg cooker, bean sprout machine and other niche kitchen appliances.
The entire small household appliance market has many categories, and although the market scale of rice cookers, microwave ovens and other products is large, the product concentration is higher, and the market is mainly occupied by these veteran head players.
Therefore, Little Bear Electric chose the long-tail track and took the route of creative small household appliances. Although the market for single long-tail small household appliances is small, from the overall scale, there is a large room for development in the overall market of long-tail small household appliances.
Since then, Xiao Bear Electrical Appliances has created long-tail subdivision explosive products through multi-category and multi-SKU, and the high category coverage rate ensures that Xiaoxiong Electrical Appliances can fully leverage the long-tail market and achieve rapid business growth.
Followed by the e-commerce dividend, Xiao Xiong Electrical Appliances is one of the earliest small household appliance manufacturers to implement the network authorized sales model on Taobao, relying on online e-commerce channels to achieve rapid revenue growth in the early stage. Since then, the online channels of Xiao Bear Electrical Appliances have been continuously stabilized, and the financial report shows that from 2015 to 2017, the online channel revenue of Xiao Xiong Electric Appliances accounted for about 90% of the total revenue.
In general, "differentiated positioning + e-commerce dividend" has allowed Xiaoxiong Electric appliances to successfully gain a foothold in the domestic small household appliance market.
From the perspective of corporate revenue, from 2016 to 2019, the revenue growth rate of Xiaoxiong Electric Appliances was 45.5%, 56.17%, 23.96% and 31.7% respectively; the revenue growth rate slowed down from 2018.
The epidemic in 2020 has led to an increase in residents' stay-at-home time and promoted high demand for emerging kitchen small appliances.
At that time, Xiaoxiong Electric also seized the opportunity to launch new products such as meat grinders and air fryers, using online live broadcasts and other methods to grasp the high growth dividends of online channels during the epidemic. The financial report shows that the revenue growth rate of Xiaoxiong Electric Appliances in 2020 has increased to 36.16% again.
Source: Company Financial Report, Red Star Capital Bureau
However, after entering 2021, the company's operational difficulties began to stand out.
According to the financial report, in 2021, Xiao Bear Electric Appliance achieved revenue of 3.606 billion yuan, down 1.46% year-on-year. This is also the first time since 2016 that Xiao Bear Electrical Appliances has experienced negative revenue growth.
In terms of sales volume, the financial report shows that the sales volume of Xiaoxiong Electric Appliances fell from 45.1374 million units in 2020 to 38.9527 million units, down 13.7% year-on-year, and sales began to become slower.
In terms of inventory, the financial report shows that the inventory of Xiaoxiong Electric Appliances increased from 8.5849 million units in 2020 to 9.4195 million units in 2021, an increase of 9.72% year-on-year.
Sales have decreased, inventories have increased, and total revenue has declined, and the small household appliances of Xiao bear electrical appliances have obviously begun to "sell" in 2021. The financial report shows that it is mainly electric kitchen small household appliances and electric kitchen small household appliances that "drag down" the revenue of enterprises.
According to the financial report, from 2019 to 2021, the revenue of electric kitchen small appliances was 573 million yuan, 865 million yuan and 597 million yuan, respectively. The revenue of this business fell off a cliff in 2021, and the revenue growth rate changed from 51.09% in 2020 to -31.03% in 2021. The proportion of total revenue has also decreased significantly, from 23.64% in 2020 to 16.55% in 2021.
Source: Company Financial Report, Red Star Capital Bureau
The revenue growth rate of electric kitchen small household appliances also decreased from 37.41% in 2020 to -18.84% in 2021, accounting for 9.15% in 2021 from 11.11% in 2020.
Behind the decline in the performance of Xiao Xiong Electrical Appliances, the epidemic has gradually been controlled, the rhythm of people's lives has begun to return to the past, and consumers' enthusiasm for small kitchen appliances has also cooled down.
This also reflects that the mainland kitchen creative small household appliances market as a whole has entered a weak period. According to Aowei Cloud Network data, the retail sales of small kitchen appliances (12 categories) in 2021 were 51.4 billion yuan, down 14.1% year-on-year; retail sales were 240 million units, down 13.5% year-on-year.
Expenditure side:
Spelling sales, it doesn't work
Small household appliances are an industry with a very low threshold.
Because the technical threshold is not high, there are many players in this market. There are not only established enterprises such as Midea, Jiuyang and Changhong, but also cross-border players such as Xiaomi.
Under the competition of the industry, the phenomenon of "heavy marketing, light research and development" of enterprises will be more serious.
According to the financial report of Xiaoxiong Electric Appliances, the sales expenses of Xiaoxiong Electric Appliances from 2017 to 2020 were 247 million yuan, 286 million yuan, 396 million yuan and 440 million yuan, respectively, with an increase of 69.83%, 15.74%, 38.52% and 11.20% respectively, while the revenue growth rate of Xiaoxiong Electric Appliances was 56.17%, 23.96%, 31.70% and 36.16% respectively.
It can be seen that in addition to the catalytic enterprise revenue after the outbreak of the epidemic in 2020, the growth trend of xiaoxiong electrical appliance sales expenses is basically consistent with the revenue growth rate, and heavy marketing is a key step for enterprises to expand market share.
By 2021, enterprises will increase marketing investment again, from 440 million yuan in 2020 to 553 million yuan in 2021.
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.
Source: Earnings Report, Red Star Capital Bureau
But it took effort to please users, and the negative growth of revenue in 2021 made the company's marketing play ineffective.
Under the dual dilemma of industry competition and demand cooling, the effect of Xiaoxiong Electric Appliances' future marketing investment may become weaker and weaker.
Also because of the low technical threshold, after the introduction of new products, a large number of homogeneous products will quickly appear in the market.
For example, in the search for "air fryer" on Taobao, there are many brands such as Midea, Jiuyang, Xiaoxiong, Changhong and many brands that are not well known to consumers; these products are also highly similar in appearance design and product function.
Source: Taobao
Therefore, if small household appliance companies want to break the predicament, they need to pay attention to innovation and constantly introduce new products; at the same time, they can enhance their product strength and stand out from many followers. This means that although the threshold for research and development of small household appliances is generally not high, in the fierce market competition, attaching importance to research and development is still the key to the foothold of enterprises.
The founder and chairman of Xiaoxiong Electric Appliances also said: "Compared with larger home appliances, small home appliances are a more active and open subdivision industry, with a lot of room for innovation. In my opinion, differentiated innovation is a strategy that is more in line with the characteristics of the small household appliance industry. The launch of our first yogurt machine product is essentially a differentiated innovation. All along, we rarely compete hard with our home appliance counterparts. Even in the future, differentiated innovation is still the main development strategy of Xiaoxiong Electric Appliances. ”
However, in terms of research and development, compared with the revenue and expense of 553 million yuan in 2021, Xiaoxiong Electric Appliances' R&D investment is less than a quarter of its marketing investment. At the same time, the growth rate of enterprise research and development in 2021 is lower than the growth rate of marketing.
Light research and development is also reflected in the adjustment of the number of employees, the financial report shows that in 2021, the number of R & D personnel of Xiaoxiong Electric Appliances decreased by 47 people, a year-on-year decrease of 14.73%. Compared with this, the sales staff increased by 112 people, an increase of 14.34% year-on-year.
Source: Company Financial Report, Red Star Capital Bureau
The brand strength is not as good as the old enterprises, the price war will only "self-damage eight hundred", in the limited market cake, Xiao Xiong Electrical Appliances is now a little difficult every step.
Market side:
Going to sea, can you break the game?
Creative small household appliances are not just needed, the threshold is low, the idle rate is high, and it is also very involuted, so these domestic enterprises must be a gray cloud in the future?
In fact, not necessarily, due to many overseas countries, such as the United States, Japan and other countries, the penetration rate of small household appliances is relatively high, the market space is relatively large, coupled with the government's policy support for cross-border e-commerce in recent years, domestic companies have chosen to "go to sea" and try to break the situation.
For example, Xinbao Shares (002705.SZ), which is also a leading domestic small household appliance company, its main business comes from OEM and export.
According to the financial report, in the whole year of 2021, the domestic sales revenue of Xinbao Shares was 3.3 billion yuan, a slight increase of 9% over the same period last year, while the foreign sales revenue was as high as 11.6 billion yuan, an increase of 14%. It can be seen that overseas business has become the most important source of revenue for Xinbao shares.
At present, the overseas business scope of Xiao bear electrical appliances has been expanded to the United States, Singapore and other countries. According to the financial report, the overseas operating income in 2020 was 209 million yuan, accounting for 5.71% of the total revenue. But in general, the current overseas business has not yet become the revenue support point of the enterprise, Xiao Xiong Electric appliances want to quickly gain a foothold overseas, the need for enterprises in channel construction and product strength focus on strength.
Overseas channels are also inseparable from the domestic set of online marketing to burn money; and as for product strength, enterprises need to study more innovative products that meet the needs of local consumers.
In general, the way out of the sea of Bear Electrical Appliances is still "not a climate". This could be a new opportunity as well as a new challenge.
brief summary:
The "eating ash" small household appliances that can be seen everywhere on idle fish, and the performance growth of head enterprises have been weak, all of which remind the small household appliance industry that the cold winter has arrived. The "whim" of young people will eventually find it difficult to support the future of small household appliances.
When the hustle and bustle dissipates, in this track with limited market space, low industry threshold and high competitive pressure, the situation of players today may be more difficult.
Red Star News reporter Yu Yao Liu Mi
Edited by Tao Yueyang