Text | Dong Gui talked about science and technology
In the past few years, the domestic sweeping robot industry has surpassed three times.
First, the development of the industry has surpassed most of the times. At the beginning of 2020, the epidemic broke out, and many industries were affected and their operations were difficult; However, sweeping robot companies have ushered in performance improvements.
In 2020 and 2021, Ecovacs' revenue increased by 36% and 81% respectively, and its net profit increased by 431% and 213%. Roborock, revenue increased by 7% in 2020, and net profit increased by 75%.
The outstanding performance has also attracted an influx of investors. From April 2020 to July 2021, Ecovacs' share price rose 15 times in more than a year; Roborock's share price has also risen nearly 4 times.
Second, domestic players have surpassed the originator of the industry. The originator of the global robot vacuum is the American company iRobot, which reached 83% of the global market share in 2012. But after 10 years, the market share in 2022 will only be 30%. And it's going to sell itself to Amazon.
The market that iRobot lost was seized by Chinese players. Ecovacs in Australia, Cloud Whale in South Korea, and Dreame in Germany all have a tendency to catch up with iRobot. It can be said that the back waves of the Yangtze River push the front waves, and the front waves are slapped to death on the beach by the back waves.
Third, the market value of the second largest in the industry surpasses the boss. Roborock, which ranks second with an income of 8.6 billion yuan, has a market value of more than 60 billion yuan; Ecovacs, which has a higher revenue of 15.5 billion, had a market capitalization of only 40% of Roborock at the beginning of April. After the recent rapid rise, the market capitalization is still less than 70% of Roborock.
How did the three transcendences happen?
01 The golden rod of the epidemic
The first time it surpassed was the epidemic, after working from home, the demand for cleaning increased intensively. But it was also missed by the pandemic.
For example, after the end of the epidemic, although Roborock's revenue in 2022 will still grow, its net profit will decline by 15.6%; Ecovacs is even more surprising, with net profit falling by 15% in 2022 and 64% in 2023, returning to the state of 2020.
The performance of the performance, fed back to the stock price, is naturally a round of tragic roller coaster.
Roborock's stock price fell 80% at the end of 2022, and then gradually rebounded nearly twofold; Ecovacs' share price continues to decline, and in February 2024, it is only about 15% of its high.
02 The time, the place, the people
The second transcendence benefited from "technological breakthroughs", "online marketing", "supply chain advantages" and "rapid iteration".
First of all, we must rely on technological breakthroughs to create products.
Sweeping robots, if you want to sweep everywhere, you have to have an eye. As a result, in terms of "eyes", just like autonomous driving, there is also a big battle between vision solutions and laser solutions. iRobot, like Tesla, opted for a vision solution, using cameras and algorithms. The advantage of this solution is that the hardware cost is low, but the algorithm requirements are high.
Moreover, iRobot has registered a number of patents for vision solutions, resulting in domestic companies having to find another way. As a result, the laser scheme came out, which has lower requirements for the algorithm and the disadvantage is that the hardware is more expensive. It doesn't matter if it's expensive, some are supply chain rolls.
Ecovacs and Roborock completed the research and development of their respective laser solutions in 2013 and 2016 respectively. Moreover, it also promotes the development of the "global planning" function, so that the sweeping robot can sweep more cleanly, and can also expand the autonomous coverage, which better solves the needs of users.
Next, it's time to sell the product. Fathers were usually more frugal, sweeping and mopping the floor by themselves. But young people are different. Due to the high degree of overlap between online groups and potential consumers of smart home appliances, the online market is the main sales channel for the sales of sweeping robots.
For example, according to Zhongyikang's calculations, the online/offline retail sales of robot vacuum cleaners in mainland China in 2017 were 5 billion yuan and 600 million yuan respectively.
If you want to play online marketing, it is obviously more advantageous for domestic players who are more familiar with domestic e-commerce and users. Ecovacs relies on its online advantages to develop rapidly, while iRobot's online channel proportion continues to decline. In 2019, iRobot's online share dropped to fifth, less than 5%.
How important is marketing? Among Ecovacs' suppliers, Alimama ranks second. Roborock, which can emerge suddenly, is naturally inseparable from the Internet channels and user reputation created by Lei Jun and Xiaomi. The sales expense ratio of domestic companies has also gradually increased.
Another advantage that domestic robots can beat the originator is the price advantage. For products with the same function, domestic brands are 15% cheaper and 30% cheaper. Not to mention that there is a "price butcher" like Xiaomi, the Mijia sweeping robot that cooperated with Rock Technology back then directly cut the price by more than half.
The price advantage comes from the cost performance of the domestic supply chain. Although we are talking about rising manufacturing costs and manufacturing factories going overseas, from 2010 to 2018, Chinese factories are worthy of their reputation. Apple knows that it is really fragrant, but iRobot has placed its production bases in Malaysia and Mexico, missing out on the Chinese manufacturing dividend.
But if you think that domestic sweeping robots are cheap, that's not right. Now, there are many high-end domestic products, with more advanced functions and higher prices than iRobot.
The reason for this situation is that with the "R&D iteration efficiency" of domestic products, we try boldly and change if it doesn't work. For example, sweeping and mopping are integrated, and domestic products are three or four years ahead of overseas. Base station, automatic cleaning and other functions are also ahead of overseas competitors. Of course, behind this is the stay up of countless R&D personnel and engineers to work overtime and respond quickly.
To sum up in one sentence, domestic sweeping robots rely on "time, place, and people" to realize the transformation trilogy from "following yesterday", to "today's competition", and then to "leading tomorrow".
03 First hard then easy vs easy first and then hard
Ecovacs is much older than Roborock. The former was founded in 1998 and the latter in 2014. But the two companies also have similarities, both started from "making wedding dresses". At the beginning of its establishment, Ecovacs OEM for overseas enterprises, and then had its own brand; Roborock, initially OEM for Xiaomi, and then also expanded its own brand.
It can be said that both sides realize that brand, technology, and channel are very important. The change in the gap between the two companies stems precisely from the above factors.
For example, the influence of channels in the wave of going overseas is particularly important. In 2023, Roborock's overseas revenue will account for 50%, and Ecovacs' overseas revenue will account for about 40%.
In recent years, going overseas has become a prominent science, but in 2012, Ecovacs formulated a strategy to go overseas, adopting the model of "difficult first and then easy", and successively developed markets in Germany, the United States, Japan and other countries. However, perhaps out of consideration for brand building and sales control, Ecovacs chose to "build its own channel" overseas.
Overseas markets have become the magic weapon of Ecovacs' rapid growth in the past decade. However, when Roborock also went overseas, the situation was different.
The founder of Roborock was born in the Internet and preferred the asset-light model. Therefore, in terms of going overseas, the dealer model of "easy first and then difficult" has been adopted, and mature cross-border distributors such as Unigroup, Muchen, and overseas local distributors have been used to quickly distribute goods.
The advantage of self-operation is that the system is controllable and directly reaches users, but the disadvantages are naturally high cost and slow construction; It is easier for dealers to distribute goods, but the disadvantage is that the profit will be divided into a part and it is not easy to manage.
The choice of self-management and distribution has occurred in many industries. For example, in the field of duck neck, Juewei duck neck adopts the method of joining to quickly distribute goods; Zhou Heiya adopts a self-operated method and has a good reputation, but its development is slow.
There is no absolute superiority or inferiority between the two. Just like Roborock is also recycling some of its own rights, Ecovacs is also increasing its partners. The trade-off between the two channels is, what is the business environment?
If the overseas market is a wave of wind that will not come again if it is missed, it is necessary to seize the opportunity; If the competition of the industry has reached the era of "quantity is king", then it is obvious that the dealer model is more advantageous.
Another example is brand and price, which are also factors that make the difference between the performance of the two sides.
Domestic sweeping robots once walked on the route of "consumption upgrading". After all, people who are willing to try it are not very price sensitive. The overall products of Ecovacs are also moving towards the high-end, hoping to create a technology-led image.
However, with the increase in market penetration, especially after the impact of the epidemic on consumption, the sweeping robot industry has entered a downward trend in prices from consumption upgrades. In the first half of 2023, the prices of most products will drop by 15%-20%.
High-end,For non-rigid products such as sweeping robots,It's quite out of place。 Cost performance is even more important.
Last year, Roborock developed new products, occupying the price band of 2,000-3,000 yuan. Ecovacs, on the other hand, has adopted a price reduction method to achieve short-term sales improvement, and still maintains a high-end positioning as a whole, "the layout of low-price segment reduction in the domestic market is missing".
The different choices of overseas channels and domestic prices have led to a huge difference between Ecovacs and Roborock in terms of performance.
04 Strategy is close to reality
Recently, there has been a news circulating that there have been some changes in the governance structure of Ecovacs, and the old money has returned.
When the market heard this, the stock price rebounded nearly twice.
Is there any difference between old money and small money? The former started as an OEM and made a small amount of money and emphasized efficiency. The latter started from the second generation and engaged in high-end technology.
I attended a Ecovacs product launch at the West Bund Museum, which was full of art.
Ecovacs said in its annual report that it "candidly reviewed the lack of strategy", but it seems that there is nothing wrong with sticking to the strategy of high-end brands and self-built sales systems. It's just that the world has changed.
The global pandemic and the fluctuating economy have changed the mindset of consumers. Just as Pinduoduo defeated consumption upgrades, cost-effective, and even low-priced, began to become the choice of global consumers.
The inexplicable geopolitics has also made operators in overseas markets even more uneasy. I want to go, I have to go, I have to go, I want to go quickly, but I am afraid that I will not go soon.
To put it simply, in the Wuka era, there was not much room left for the "long term", so it had to be closer to reality and put the ideal back for the time being. Therefore, entrepreneurs with rich experience in "combat" and can roll up their trouser legs and step on the mud can bring a premium.
When Ecovacs' playing style is becoming more and more "stone-like", and the stone is also making up for the "Ecovacs-like" system, will the fierce competition between the two sides be like an herbal tea war, which will overwhelm second-tier players?