On China’s biggest home appliance exhibition----Shanghai Appliance World Expo, e-commerce platforms are demonstrating its power: in 2013, Tmall’s Home Appliance Center and Jingdong Mall have become the partners of the Appliance World Expo Organizing Committee. And for the first time, the Jingdong Mall has an Exhibition Hall of its own. In the realm of home appliance, however, what comes out of the e-commerce’s expansion is not a new baron but the weakening role of channel distributors. In other words, the industry’s core competitiveness is shifting from “channel” to “brand”.
Over the past decade or so, China’s home appliance sales market is ruled by the channel, which can be shown by the on-going unbalanced talk, more or less, between the manufacturing system and the traditional channels. During the recently-held ”China Channel Distributer Meeting, 2013”, Tan Biao, the general manager of Tmall Home Appliance Center, points out that with the channels evolving and diversifying, brands tend to grow its power while channels are bound to get diversified, pushing branding to a dominant role. The e-commerce platforms including Tmall have long been striving to use a minimum cost to provide the customers a brand which combines quality product and sound service, during which the brands that finally win wide recognition are to play a major part throughout the e-commerce’s expanding and planning process.
Tan Biao said, as for the local channels and social channels, what’s high on their agenda is how to learn to serve brands as well as those upstream partners, while selling comes second. Only in this way can different channels find out their unique strength. Prior to the e-commerce era, people may think “my resources cannot be replaced”; the “e-commerce era”, however, is transforming the landscape. A channel, either local or country-wide, if unable to work with the upstream to explore the future, is bound to be abandoned by the industry.
The development of Tmall Home Appliance Center is a testimony to the above concepts. As some brands keep expanding, their market shares will also grow.
It is learned that in 2012, many major home appliance brands on Tmall’s platform have enjoyed an above 100% or even 200% growth rate. According to the statistics provided by Tmall’s Home Appliance Center, from Jan. to Nov. in 2012, among all the major home appliance brands on its platform, Haier’s sales revenue has grown 577% year on year, Hisense increased 469%, 415% for Sony and 398% for Sharp…
Every year, on Nov. 11th, the so-called “Double 11” will come as a major shopping carnival when e-commerce platforms launch large scale promotional campaigns. In 2010, “Double 11” had seen only one home appliance brand’s sales revenue exceeding the RMB 100 million mark, and in 2011 the number is 4. In 2012, however, more than 28 home appliance brands had succeeded in pushing their sales revenue over RMB 100 million. According to Tan Biao, mainstream brands are enjoying a positive and rapid development in Tmall’s Home Appliance Center. Sales of RMB 100 million may be a drop in the ocean to home appliance brands, especially leading brands in the industry, but it shows the fast speed and sweeping trend of the evolution. He says: “we can see that the entire home appliance industry is beginning to use the Internet and make every effort to integrate into it”.
With fast development of brand owners, the status of manufacturing enterprises and distributors is being redefined. Tan Biao said that, without rethought and exploration in the distribution channel by the electronic commerce, then distribution firms, including the most important regional retailers, would not have reflected on the relationships with manufacturing companies, and many enterprises that are able to provide diversified services to consumers would not have given too much thinking in how to enhance the consumers` experiences. He said, “what we are doing today is not to kill the traditional distribution channels, but to engage their method, including the experiences from the regional distributors so as to build an innovative force in various channels and engage them together to do R&D better and offer better brands, products for the consumers. That’s our ultimate target.”