Text | Zhou Tian Finance
Original production by Zhou Tian Finance
In the past two years, the stock market has been fiercely competitive, and brand differentiation competition seems to have become the only rule. Not long ago, Xiaomi SU7 new car was launched, and the price was set from about 200,000 yuan for its debut, crushing competing products at the same level......
There is no shortage of wealth in the current environment, with rising deposits, high savings rates, insufficient aggregate demand, and unstimulated potential consumer demand.
To make the consumption cake bigger and expand domestic demand, it is not only about pricing, but also about starting from the front link, and getting the help of financial tools before purchasing, so as to break through the ceiling of consumer psychology and truly increase the unit price of customers.
The consumption demand of blue-collar groups, such as non-credit card groups and income fluctuation groups, is also strong, and it is a huge reclaimable area. Weak links in the supply chain, such as small and medium-sized distributors, are also under financial pressure at key procurement points, which also makes them unable to move forward. Both constraints make incremental user acquisition difficult and boost demand, which requires a two-pronged approach.
Despite the current difficulties, we still see some signs of industry breakthroughs, and some brands are growing against the trend:
- According to data from BCI, a research institution, in the first quarter of 2024, the number of Honor mobile phone activations increased by 12% year-on-year to more than 10 million units, ranking first in market share.
- In the first three quarters of 2023, 3Trees' revenue reached a record high, with revenue of 9.41 billion yuan, a year-on-year increase of 18.42%, and a net profit attributable to the parent company of 554.5 million yuan, a year-on-year increase of 84.44%.
- As the fastest-expanding tea track player in 2023, the number of stores will increase from about 1,000 in January 2023 to more than 3,000 in December 2023.
Their industries vary, but they can all be called kings of adversity.
So, how did this group of adversity kings achieve crossing?
01 Promote consumption at both ends of industrial chain finance and consumer finance
The secret that these brands have in common is the deep use of innovative tools. Treat dealers and retailers as a community of interests, embed digital finance into their own full-link sales, and stimulate consumption.
Taking Bawang Chaji, which has the fastest expansion, as an example, after it was connected to MYbank's Dayan system, it obtained full-link digitalization from cashiering, payment and settlement to multi-platform operation, the system automatically reconciled accounts, and the efficiency of financial management stores was improved from 1 person to 100 stores to 500 stores.
But efficiency gains don't stop there, and credit money is being injected into corners that were previously underappreciated.
Today, brand enterprises can subsidize loan interest to small and micro enterprises in the upstream and downstream of the industrial chain, and to promote the sales of new products, they will discount the interest of dealers who sell new products; The flexibility of digital financial tools has given brands the ability to fight accurately, and the expansion and growth of enterprises against the trend are inseparable from such precise blood transfusions.
Not only that, in order to tap the full potential, the vitality of both the industrial chain and the consumer needs to be stimulated at the same time. This is a topic that has not been broken through in the past, but we have seen innovative exploration in Glory.
As a player in the consumer electronics industry with the deepest use of innovative tools, Honor provides dealers with credit services through MYbank on the one hand to stimulate purchases, and on the other hand, it provides consumers with interest-free installments and lowers the consumption threshold with Huabei installments.
The release of new machines and high-end products is the most important profit realization window period of the year for dealers, but at the same time, the pressure of stocking is extremely high, testing the financial strength of dealers.
A person in the mobile phone industry told Zhou Tian Finance that for a new mobile phone of 5,000 yuan, dealers need to invest 1 million yuan in advance to buy 200 units, which is enough to buy two suites in the county. Few dealers in the sinking market can step through such a high capital post, and in the past, business may be lost in vain. But today, in order to maximize the potential of consumption, dealers in the sinking market should not be abandoned.
At present, dealers in the central and western provinces are an incremental market that has enabled Honor to climb from a market share of 4% to a market share of 19.5%, and it is also a sinking customer that is difficult for many financial institutions to serve. However, under MYbank's quota release and interest discount policy, dealers who lacked funds in the past have been activated to take delivery of goods. According to the data, in 2023, the sales volume of dealers participating in interest discount activities in Shaanxi Province will increase by 30% month-on-month.
Not only the confidence of dealers, but also the confidence of consumers has also been stimulated. Judging from the data, Honor's online and offline channels have fully accessed Huabei installment, which has cumulatively driven the sales of Honor mobile phones to exceed 1 million units, and 40% of consumers have upgraded their mobile phone configurations on the original purchase intention, driving the increase in customer unit price, which has also become a key tool for Honor to achieve high-end breakthroughs.
With the help of innovative tools to promote both ends of supply and demand, there is also a veteran domestic brand of water purifier Angel, as a product with a unit price of 1,000 yuan, the current market penetration rate is not high.
According to the statistics of Guanyan Tianxia, in 2022, the penetration rate of water purifiers in South Korea, Japan, the United States, and the European Union will be 95%, 80%, 80%, and 82% respectively, while the penetration rate of water purifiers in China will only be 23%. Liu Kuizhuang, vice president of Angel, believes that the penetration rate of water purifiers in first- and second-tier cities is relatively high, and the way out lies in actively expanding the market in third- and fourth-tier cities.
If you go to the third and fourth tier cities, you will encounter the same problem as Honor, and there are financial difficulties for dealers to purchase goods. Therefore, in 2020, Angel connected to MYbank's supply chain finance solution Dayan system, and among the first batch of 500 dealers, the loan availability rate was close to 90%, and the purchase amount from dealers has increased by more than 20% in the past three years.
At the other end, Huabei staging is also exerting force. Among the consumers in Angel's Tmall flagship store, about 40% of the users who use Huabei to place orders in installments, which is half of the total GMV. This also means that the purchase threshold is lowered, and the water purifier is accelerating the penetration process.
Huabei installment and MYbank Dayan system provide a complete set of comprehensive digital financial services, and at the same time activate consumers and long-tail dealers downstream of the supply chain, and promote the superposition and multiplication of consumption.
02 Huabei staging is expected to become an artifact in the offline consumer market
In the entire consumer finance market, the current proportion of offline installment is very small, which is a huge market gap, and better integration of installment and sales will be the next new trend of consumer finance.
Taking the mobile phone industry as an example, the release of new products will trigger a huge market heat, which is a good sales opportunity that cannot be missed. However, for dealers and consumers, it is an extraordinary expense in a short period of time, and it requires strong technical capabilities to support real-time financial needs without breaking through the risk control logic.
In particular, real-time quota increase for offline consumption scenarios is a huge breakthrough in the field of consumer finance. An industry insider engaged in risk control told Zhou Tian Finance that the difficulty of real-time quota increase for offline formats lies in the fact that the offline environment is complex and there are many transaction links that are difficult to control.
In fact, Huabei installment is using real-time risk control capabilities in the scene, and consumers can achieve real-time quota increase in milliseconds if the amount is not enough in payment, breaking through the daily fixed quota limit.
There is another pain point. Unlike online installment products, offline installment promotion is highly dependent on the recommendation of salespeople. Once the experience of "recommending half a day but not enough" is generated, it will discourage the cashier next time. Over time, the offline installment market, without the cooperation of the sales staff, will never be able to do it.
In the past, Home Credit Consumer Finance did financial education through offline promotion in major mobile phone stores to guide customers to choose installments. Nowadays, the market gap is exposed, and it is time for the high-tech innovation team to enter the market as soon as possible.
At this time, the innovative tool that can meet the needs of the industry and raise the amount of accurate blood transfusion in real time has become very timely, and Ant Consumer Gold intends to deepen the industrial chain more refined.
Going offline is a major strategic goal of Ant Spending in 2024. Zhou Tian Finance learned that this year will accelerate the penetration into the stomatology, ophthalmology and other offline medium and large consumption scenarios. According to the different characteristics of various industries, consumers can obtain medium and large credit lines in scenarios when trading, so as to improve the full rate of consumption scenarios.
Huabei installment can be deeply integrated with offline merchants, improve conversion efficiency, and make Huabei an effective marketing tool for merchants to promote conversion, growth, and unit price.
03 Deep integration of phases and brands: lock customers to develop new products, promote high-end, and have huge imagination space
Offline formats are likely to have access to more accurate and real-time innovative tools, which is likely to bring a new wave of market opportunities.
A few days ago, the person in charge of Ant Consumer Finance revealed to the brand at a merchant exchange meeting that based on the development characteristics and trends of the cooperative brands in the past, the installment service will be gradually upgraded to a comprehensive solution to help merchants grow on the basis of financial instruments.
One of the scenarios is that, compared with the past installment discounts, which were mainly discounted with brands like Honor, Ant has helped more offline participants join the trend of interest discounts through technical means.
Specifically, in addition to the independent configuration of interest discounts for brand merchants, Huabei installment can also support the flexible discount configuration of the brand's offline multi-channel sales system, from brand owners, distributors to retailers, multi-role joint discounts, which is conducive to sharing marketing costs and improving the marketing ROI of all parties.
Huabei staging is not only a tool, but also a position. For example, Honor has opened up sales channels on the Huabei channel, using channel traffic for sales, and opening up a "new position" for the brand in addition to providing customized financial services.
This is not simply "traffic flooding", but the application of digital intelligence capabilities and powerful computing power in business scenarios to push new products to the people with the highest conversion rate. In the past six months, Honor has had two new product launches and has worked closely with Huabei in installments.
According to He Jinqiu, director of the business department of Glory Mall, Huabei's accurate identification and computing power of customer groups have brought qualitative changes to Honor Hair, such as Glory Magic 6 series in Huabei channel, compared with the previous series, UV increased by 30%, but sales and GMV increased by 400% and 500% respectively.
This set of data shows that good operation does not only rely on piling up traffic, but improves the conversion rate of people, and at the same time, the growth of sales amount is greater than the growth of sales, which means that the unit price of customers is increasing, which is the biggest gain of Honor to cooperate with Huabei in stages.
With the help of a national-level tool like Huabei, this is already a sales pillar that cannot be ignored.
In October 2023, the State Administration of Financial Supervision and Administration issued the Notice on Financial Support for the Recovery and Expansion of Consumption, requiring all kinds of financial institutions to deepen the consumer finance market segment, develop diversified consumption scenarios, improve the quality of retail services, meet the reasonable consumer credit needs of residents, and better serve the real economy through differentiated financial services.
With the implementation of various policies and measures to promote consumption recovery, the role of consumption in driving economic growth has been significantly enhanced. According to the National Bureau of Statistics, in the first three quarters of this year, the contribution of final consumption expenditure to GDP growth reached 83.2%, and in the third quarter alone, the contribution of final consumption expenditure to GDP growth reached 94.8%, both at a historical high level.
The trend has come, the innovation tools are polished, and we are exploring a new journey of high-end manufacturing and the rise of innovation ecology.