The impact of the epidemic on the economy is self-evident, and smartphones have also been deeply affected. The frequent new phone launches in the past are no longer grand. Xiaomi, Honor, and VO have all chosen to live broadcast online. In addition, the industry has also suffered to varying degrees. In addition to the impact on supply chains such as chips, screens, and storage, there is also pressure on processing plants and offline channels.
A fact that may be overlooked is that the offline channels of smartphones are undergoing unprecedented retail changes, and the epidemic has also accelerated the offline reshuffle of the mobile phone industry. In fact, Xiaomi, Honor, and VO have successively made adjustments to offline channels and introduced supportive policies to deal with this unprecedented cycle of industry shocks.
For example, Xiaomi Group recently decided to issue one-time epidemic inclusive incentives to stores with sales in March 2022, and at the same time issue epidemic subsidies to stores that cannot operate normally due to the epidemic. Starting from 2020, Xiaomi Group has issued a total of subsidies to stores 5 times, with a cumulative amount of 120 million yuan.
For another example, Honor Mobile, which has restarted its business, recently launched an employee stock allotment plan. After the independent restart, Glory followed the example of Huawei's employees in buying internal virtual shares, and launched its own employee allotment plan, aiming to bind employees and partners with the same values, and also relieve its financial pressure. On April 3, 2022, a person who was certified as an employee of Honor stated on a certain platform that Honor required employees to buy shares in the company, and each department had allocation quotas, and some employees were even asked by their supervisors to buy with loans. Honor Company responded that there is no compulsory purchase of shares and it is all voluntary for employees.
After the restart, Honor has successively released new phones such as V40 and Play 5T. After the "whale fall" of Huawei mobile phones, Honor has regained Huawei's brand potential and inherited Huawei's dealers and channels. With the blessing of the legacy of Huawei mobile phones, , Honor is developing rapidly in 2021, but unfortunately it encountered the epidemic. The uncertainty of the environment has also made Honor full of uncertainty, which is why its employee stock rights plan has encountered opposition.
In addition, the resource integration of OnePlus mobile phones and OPPO. In June 2021, OnePlus will officially integrate with OPPO. At the level of supply chain and R&D, OnePlus and OPPO are originally a family. The real difficulty is the integration of sales channels. At the Ace press conference, the person in charge said that OnePlus had previously focused on online channels, but the current breakthrough point in its channel strategy lies in offline channels. As early as February 2021, OPPO also launched the "County Clearance Plan", striving to achieve an OPPO store in every site across the country, and integrating OnePlus into the OPPO channel is a matter of course.
Xiaomi's epidemic subsidies, Honor's share subscription, and VO's channel integration are all aimed at offline channels. They are all working hard to consolidate the stability of their ecological channels and reduce operating risks caused by the impact of the epidemic. In a sense, the epidemic is also accelerating the brewing of great retail changes in the mobile phone industry, and even bringing industry reshuffle to offline retail.
What are the trends of smartphone channel changes and retail changes? In my opinion, there are two points:
1. Evolutionary logic: Bound interests to fate, and then to ecological co-construction and sharing
Speaking of the channel construction of smartphones, VO and the previous Huawei have a long tradition. Of course, they also have their own focus. However, in the new competitive environment, whether VO and Honor can continue the glory of the previous channels is a question. is a problem. The essence of VO and Huawei's traditional channels is the deep "interest bundling".
This time, Honor’s employees’ plan to purchase original shares also includes dealers. According to media reports, Honor has notified core dealers to purchase Honor’s original shares, with subscription amounts ranging from 5 million to 50 million. In the context of Huawei having to cut off its arms to survive, Honor's interest bundling with dealers is even more radical than VO - Honor dealers are also Honor's "shareholders", and Honor has a "destiny bundle" with dealers. However, , this bundling also hides a certain imbalance in risks and benefits, because although more than 30 channel dealers and retailers are shareholders of Honor, structurally speaking, they only enjoy "dividend rights."
The share allotment plan between Honor and dealers is actually a continuation of the interest bundling between VO, Huawei and channels. However, in the period of explosive growth in the smartphone industry, this method of equity bundling or joint ventures is indeed It worked, but in the past two years it has begun to fail or decline. This is because, on the one hand, smartphones have passed the industry explosion period, their growth has slowed down, and they have entered stock competition; on the other hand, under the impact of the "cost-effectiveness" of Xiaomi, Redmi, etc., it is difficult for vivo, OPPO, and Honor to maintain their high levels of the past. Gross profit status. Due to changes in many factors and the impact of the epidemic, many offline stores are also facing transformation challenges.
In a word, relying solely on smart phones, it is difficult to support offline channels covering the whole country.
In fact, in the past two years, the smartphone channel has begun to try some kind of transformation and upgrade. The first thing is to learn from Xiaomi in the category. Huawei, which has encountered a black swan, used to have offline channels just like Xiaomi Home, displaying and providing more products other than smartphones. The channel construction of Xiaomi in the past two years has been quite effective. The most important reason is that it has enough categories and products to support the sales efficiency of offline retail. E-commerce's subversion of the efficiency of traditional retailing is based on "cross-subsidies" and the blurring of category boundaries. This is why Xiaomi has been able to quickly establish nationwide channels in the past two years.
Last year, Xiaomi began to subsidize the epidemic for offline channels. Xiaomi still handed over a total revenue of 328.3 billion yuan in 2021, a year-on-year increase of 33.5%. It can be said that it has also built ecological value with Xiaomi and channel partners. related. According to data, Xiaomi’s mobile phone business shipped 190 million units last year, with a market share of 14.1%, a year-on-year increase of 30%. It is the fastest growing among the top five shipping brands in the world. At the same time, Xiaomi’s 2021 IOT and consumer products, with revenue of 85 billion, a year-on-year increase of 26.1%. Among them, Xiaomi TV shipped 4.2 million units in the first quarter of Q4 last year. Xiaomi has been the domestic TV champion for three consecutive years. Last year, Xiaomi smart air conditioners also shipped more than 2 million units, a year-on-year increase of more than 70%.
For Xiaomi channels, they have not only enjoyed the growth dividends of Xiaomi smartphones, but also the growth dividends of Xiaomi IoT and consumer goods. In a sense, VO's traditional channels are responsible for the sales function, and Xiaomi Home's "new retail" is "customer value co-construction and sharing" based on sales.
For Xiaomi, the "epidemic subsidy" is a "warming together" with dealers. Xiaomi is taking on the responsibilities and responsibilities that the brand should have, but more importantly, it is actually the result of the co-construction and sharing of the value of Xiaomi and its channel ecology. . For Xiaomi, dealers are not only a simple channel, but also a bridge to reach customers and maintain customers. Dealers and Xiaomi are not only a community of interests, but also partners in ecological co-construction and sharing.
VO Huawei, Honor and Xiaomi represent the three stages of the brand's offline channels: sharing benefits; sharing benefits, fate is bound; ecological co-construction and sharing.
2. How to build and share together? Online empowers offline, "digital economy + real economy" transforms into "digital real economy"
China's smartphones have gone from being competitive in 2010 to the current balance of giants. Whether Xiaomi, which was once the best at online, Huawei, which has advantages in operator channels, or VO, which is deeply involved in offline retail, are learning from each other and infiltrating. For example, Xiaomi, Honor, and VO are all developing e-commerce platforms, and they are also competing with each other on Tmall and JD.
If online and offline were clearly coupled before, they will gradually merge after the epidemic. As far as smartphones are concerned, in the future there will no longer be a distinction between the online digital economy and the offline real economy, but a "digital real economy."
A case of Xiaomi last year is a representative case of future trends: In October 2021, Xiaomi Home and Meituan Flash Sale launched a pilot cooperation to promote Xiaomi Home to "take out food". Currently, there are more than 3,000 stores across the country, covering Beijing and Shanghai. In 276 cities including Guangzhou, Shenzhen, etc., Xiaomi Home’s mobile phones, smart wearables, smart homes, personal care and other products can be delivered on the same day after users search “Xiaomi Home” through Meituan.
This kind of channeling online brand potential and traffic into offline channels is also an effective attempt to build and share the ecosystem.
The cooperation between Xiaomi Home and Meituan may seem simple, but the requirements for brands and channels behind it are very high, which requires Xiaomi and Xiaomi channels to fully connect many details such as inventory, funds, and customer systems. For consumers, this also means a unified shopping experience. In addition to the cooperation with Meituan Flash Sales, Xiaomi is also trying to "localize" online traffic. Users place orders online on Xiaomi Mall APP, WeChat mini-programs, etc. Everyone can enjoy door-to-door delivery services from nearby stores - this new retail attempt has alleviated the pressure of reduced customer flow during the epidemic. At the same time, it is also a useful attempt to alleviate the conflict of interests between online and offline, brand and channel.
Whether it is VO and Honor, or Xiaomi and Redmi, or even all consumer brands have this problem: online e-commerce channels are self-operated by brands, and online development will erode offline channels. The relationship between online and offline Conflicts of interest will hinder the development of the brand. Xiaomi’s attempt to more effectively channel online brand potential into offline entities, combine supply and marketing, and promote new retail in the “digital real economy” is worth learning from.
Xiaomi’s attempt will also be followed by VO and Honor. VO and Honor will not only learn from Xiaomi’s category expansion, but also learn from Xiaomi’s attempt to integrate online and offline.
In fact, in the past, the e-commerce effect of VO was not ideal because its offline interests were too deeply tied up. If the brand was self-operated, it would impact the interests of offline channels. However, offline channels have been moved online. E-commerce will also lead to involution among dealers. Among mobile phone brands, the ones that have studied Xiaomi the most and have done the most similar things are Huawei and Honor. Whether it is category expansion or channel upgrading, Honor is tit for tat with Xiaomi. However, Honor’s problem is that timing and environment do not match it. Unfriendly, Honor’s strategy in 2021 is too radical, eager to win, and the pressure to take risks is finally transmitted to channels and dealers. Under the influence of the epidemic, it will undoubtedly make things worse.
The epidemic is accelerating the reshuffle of the mobile phone offline industry, and it will also accelerate the retail changes in the mobile phone industry. However, in the future, it may no longer be a simple mobile phone industry, it should be "mobile phone x AIOT".