Will Skyworth stores keep robust in time of slump in home appliance industry?
Since this September, the Chinese football team has performed well in the World Cup qualifiers against Korean and Iranian teams. Skyworth, a sponsor of China Football, also drew much attention from the public, realizing its value in brand sponsorship.
In addition to sponsoring China Football, Skyworth has been engaged in setting up O2O direct-sales stores, which might change the traditional channel mode of Chinese home appliance industry.
Skyworth Caravan Tour, with an expectation of touring in 47 cities countrywide, starting from Taiyuan of Shanxi and Xinxiang of Henan in mid-July 2016, has finished about half of its tour in 2 months.
This tour is aimed at promoting Skyworth’s O2O community stores. Over the past 6 years, Skyworth has accumulated much experience in operating household appliance community stores, and has been devoted to serving customers quickly and conveniently by opening up O2O direct-sale stores.
O2O has been very popular in the field of home appliance, internet and technology. Many appliance manufacturers and retailers such as Alibaba, Suning, Gome, JD, Haier and Midea have had their O2O projects. Among these manufacturers, Haier adopted customized internet mode and Midea introduced smart home white goods concept.
However, Skyworth, has put its efforts to set up O2O direct-sales stores for product marketing, while other appliance manufactures that once relied on supermarkets such as Suning and Gome started to depend on e-business platforms such as Alibaba and JD. Some other manufacturers may build their own online marketing channels, but the operation effect is not so good due to lack of experience in online operation.
With the emerging of e-business and the raising of rentals for physical stores, many physical supermarkets and department stores such as Qingdao Sunshine Department Store, Chongqing MIXC Parkson Shopping Center and Dalian Jiuguang Department Store are put at a disadvantaged position or even suffer bankruptcy. This happened because on one hand more and more people are enjoying the convenience brought by online shopping, and on the other hand those markets cannot provide services in communities.
According to the Bluebook on Circulation: Report on Commercial Development of China (2016-2017) jointly released by the National Academy of Economic Strategy, CASS and Social Sciences Academy Press on September 5th, in the next 5 years, about one third of Chinese commodity trading markets will be culled out, one third of such markets will be transformed to wholesale and retail experience-type shopping center, with the last third successfully realizing O2O trading mode.
Under the impact of online shopping, traditional marketing mode is no longer suitable for household appliance enterprises. Customers no longer need to pay for physical stores that charge high prices to guarantee their own benefit.
Skyworth’s O2O direct-sales stores adhere to a commercial mode in which the enterprise and the owners of direct-sales stores are linked directly, which is a challenge for both the enterprise and distributors. In the past, household appliance enterprises only need to control the highest distributor, but cannot spare much effort to maintain distributors that directly interact with customers.
O2O direct-sales stores are different from physical stores in any normal sense. Presently Skyworth has set up over 3,000 O2O direct-sales stores in China and this number will reach ten thousand in the future. Estimated according to the workload and coverage of so many direct-sale stores, the front-end and back-end staff of Skyworth’s staff will be very busy with services.
Building O2O direct-sales stores is a breakthrough for both Skyworth and home appliance industry. It demonstrates a company’s core operating value and determination of kicking off the traces of traditional business pattern.
O2O direct-sales community stores must succeed
In the market of home appliance especially color TVs, the demand of younger people for such product is scant, but the supply is quite large. Besides, customers have much more choices for one kind of product compared to 10 years ago. Take TV as an example, they can choose exported TV, internet TV, LCD TV or LOED TV.
Other than lack of customers and business, rising rent and deficit, the major reason of physical stores’ closing down is that they have got used to benefiting from customers rather than establishing a deep link with the users.
Through the Skyworth Caravan Tour, we sent our products to communities, so as to directly contact with users and know of their demands, which made up the disadvantage of traditional business pattern.
Sponsoring China Football may be Skyworth’s one strategy to develop future customers in present younger group. But that is not enough for Skyworth to keep robust at present under the circumstances of current depressed home appliance industry.
Therefore, we must also set a firm foundation for present business. That is why we build O2O direct-sales stores. We believe that O2O direct-sales stores will bring home appliance enterprises a successful channel transformation.
We believe that even for many household appliance distributors struggling in second and third-tier cities, the closing down of department stores and supermarkets does not mean the ending of physical stores, for O2O channel will also bring physical stores an opportunity to resume prosperity.
Opening up O2O direct-sales stores is one of Skyworth’s ideas. In the future, many household appliance dealers, distributors and enterprises may also apply this idea to jointly seek for a way towards prosperous home appliance markets.