Recently, home appliance enterprises ushered in the half year examination. With the release of performance forecast in the first half of 2020, it can be said that several companies are happy and a few are worried. Bear Electric Co., Ltd. (002959. SZ, hereinafter referred to as “bear electric”) in the half year performance forecast of 2020 shows that in the first half of this year, the company’s sales revenue was about 1.723 billion yuan, with a year-on-year increase of 45%.

According to Aowei cloud network, the whole household appliance industry will be severely damaged by the epidemic in 2020, but the small household appliances will be relatively less damaged under the sudden attack of “black swan” because of its small size, no installation, light service and high sales flexibility.

On July 23, bear electric’s share price rose to 165.90 yuan, the highest since its listing. At the beginning of August, the market value of Xiaoxiong electric appliances, which landed on Shenzhen stock exchange for nearly a year, once exceeded 23 billion yuan.

The logical support of “consumer” appliances is behind bear’s performance and share price. But at the same time, the characteristics of “consumer” household appliances, such as “fast update and iteration, low price”, also bring challenges to the operation of enterprises.

“Consumer goods” in small household appliances market

Bear’s main business is the research and development, design, production and sales of creative small household appliances. Its main products are kitchen appliances, household appliances and other small appliances.

According to relevant data, the main consumers of bear electric appliances are young women aged 25-35, and urban white-collar workers, government employees, doctors and teachers in the first, second and third tier cities.

"Consumer" household appliances bring challenges to enterprises

As a “creative small household appliances + Internet” enterprise, Xiaoxiong’s products are mainly sold on mainstream e-commerce platforms such as tmall mall, Jingdong Mall, vipshop, Suning e-commerce, and emerging e-commerce platforms such as pinduoduo and Ping’an haoyao through online distribution, e-commerce platform warehousing and online direct selling.

According to the “IPO prospectus” (hereinafter referred to as the “prospectus”), the average prices of various products of the company from 2016 to 2018 were 73.72 yuan, 81.10 yuan and 82.14 yuan per set, showing a gradual upward trend.

From the perspective of consumer purchase, the annual consumption amount range of online direct selling e-commerce customers of Xiaoxiong appliance is mainly 0-100 yuan, followed by 100-200 yuan. The annual consumption amount range of e-commerce customers with online distribution and consignment is mainly 100-200 yuan, followed by 0-100 yuan.

A number of female consumers told reporters that the main reason to buy bear electric appliances is that it is cheaper than similar small appliances.

Li Xin (not her real name), a girl who has just arrived in Changsha to work, said that she wanted to buy a small household appliance for cooking for her temporary residence, and the electric cake Dangle of Xiaoxiong Electric Co., Ltd. just met her needs.

Li Xin specially mentioned that during the promotion period of the shopping platform, Xiaoxiong Dianbing can be bought within 100 yuan, which is much lower than the price of similar products, which is very important for her with limited budget.

Hu Yuan (not her real name), another Beipiao girl after the ninth five year plan, confessed that she wanted to make a simple and quick “lazy dinner” after work. When searching for “one person food” appliances on the shopping platform, she found the multifunctional pot of bear electric appliances.

Hu Yuan said that she did not know little about bear electric appliances at that time. She only saw that the price of the product was relatively cheap and the consumer’s evaluation was good, so she chose the product.

However, Hu Yuan is not satisfied with the use of the product experience, she told reporters: “this kind of pan fried dishes is easy to paste, only the function of cooking noodles is more convenient, so my use frequency is not high.”

Zhang Yanbin, assistant president of Aowei cloud, said: “from the product side, the low price of Xiaoxiong electric appliances gives consumers room for trial and error, and consumers dare to try and buy such creative small appliances psychologically.”

Although the price of the products is relatively lower than that of the electric power, the small household appliances are also regarded as the products with “short life cycle and fast update iteration”.

Huaxi Securities research paper shows that: “the renewal cycle of everyone’s electricity is generally 8 to 10 years or even longer, while the renewal cycle of small household appliances varies from months to years.”

Specifically, the renewal period of electric kettle is 1-1.5 years, that of toaster is 1.5-2 years, and that of soybean milk machine and coffee machine is 2-3 years and 2-5 years respectively.

In terms of product update iteration, bear electric told reporters in the interview: “the product iteration cycle of bear electric is 2-3 years. From product planning to mass production, it takes 150-180 days. ” In 2019, bear will launch a total of 100 new products.

Zhang Yanbin pointed out that the logic of bear electric appliances as “consumer appliances” is: “low price small appliances attract consumers to buy. After consumers use them for a period of time, more innovative products appear, and they will eliminate their small appliances and replace them with new ones.”

“In this process, the faster consumers eliminate the old products, the faster the enterprise’s product renewal iteration will also be accelerated, at the same time, it can also extend the development cycle of enterprises and enhance the stability.” Mr Zhang said.

“Consumer” appliances meet challenges

In April this year, bear electric set up a wholly-owned subsidiary, Guangdong Xiaoxiong Baby Products Co., Ltd., which is mainly engaged in the R & D, design, processing, manufacturing and sales of baby and child products, household appliances, electronic products and their accessories, and daily necessities.

The reporter found that the official flagship store of baby bear in Jingdong started operation in October last year, and there are more than 50 kinds of maternal and infant products. The official flagship store of teddy bear also launched six new “mother and baby feeding” products this year.

In the teleconference and performance presentation meeting in May this year, bear electric said that maternal and infant products are “emerging demand, which to some extent represents the direction of consumption upgrading”, and is expected to develop more than 10 new products every year.

In this regard, Hong Shibin, an industry observer, told reporters that if “consumer” household appliances enterprises want to stimulate consumers’ purchasing behavior, they should try every means to innovate and upgrade their products in terms of technology, and enhance their “appearance” from the appearance.

“Frankly speaking, continuous updating of iterative products poses a great challenge to the R & D capability of enterprises.” Hong Shibin said so.

According to the annual report of cubs in 2019, the research and development expenses of bear electric appliances in 2019 will be 76.5153 million yuan, an increase of 61.45% compared with that in 2018.

However, it is worth noting that in 2019, bear’s R & D investment accounted for 2.85% of the operating revenue, while the sales expenses accounted for 14.73% of the operating income, which was more than five times of the R & D investment.

In response to the changes in R & D investment of enterprises, bear electric responded: “the company’s early R & D costs are relatively limited, mainly in short-term effective projects. At present, based on long-term consideration and the company’s existing conditions, it will increase the investment in basic R & D and absorb talents. “

Talking about the future measures in product research and development, bear electric told reporters: “the company will strengthen the mining of market demand, enhance product design ability, and optimize the existing product structure.” At the same time, bear electric has also developed a variety of incentive systems and ways for R & D personnel to fully mobilize their enthusiasm.

On the one hand, the product renewal iteration brings technical challenges to enterprises; on the other hand, the relatively low price of bear’s products also causes the industry insiders to worry about product quality and service quality.

“When the unit price of small household appliances is particularly low, we need to pay attention to whether the cost of the product can bear a series of expenses, and whether the quality of the product is well controlled.”

In fact, on the “black cat complaint” website, there are many complaints about bear electric, such as “explosion of bear electric wall breaker during use” and “explosion of bear electric oven”. There are also consumers’ dissatisfaction with bear’s after-sales service and factory repair.

In Hong Shibin’s opinion, consumers’ complaints about product quality and after-sales service are one of the issues that bear electric needs to focus on. Because “in the long run, they will affect consumers’ repurchase rate and consumers’ loyalty to the brand”.

Editor in charge: Tzh

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