A few days ago, the Orion flagship store on Tmall suddenly announced the closure of the store, saying that it would suspend operations and remove all products. For a while, Hao Liyou was listed as a hot search by netizens, and everyone was asking what happened to Hao Liyou after 27 years in China.
In fact, talking about breaking the sky is nothing more than the words “internal and external troubles”.
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Internal worries: Upgrading the Tmall store is just an appearance
1. Worry about operation
For enterprises in the snack food industry, offline channel sales account for a large proportion of overall revenue. According to data provided by the international consulting agency Frost & Sullivan, the offline sales of snack foods in 2020 will exceed 1.06 trillion yuan, accounting for 82%, much higher than the 18% of online sales.
Orion has a huge offline sales network in China, and there are more than 1,500 dealers in the country alone. Such data is enough for it to secure its position as a giant. However, such a large offline operating system cannot stop the decline in its revenue in China, and under the impact of the epidemic, it is difficult to continue to develop offline business with little effect. Orion can only seek breakthroughs in the emerging online market. Among my country’s online e-commerce platforms, Tmall and JD.com occupy more than half of the market share. The data for 2021 shows that Tmall has a 30% market share and JD.com has a 25% market share.
Here is a set of online operation data. As of December 23, which will also be the day when Orion’s Tmall flagship store announced its closure, the cumulative number of followers of Orion’s self-operated flagship store on Tmall was 14,774; Qihao’s self-operated flagship store on JD.com had 3.32 million followers.
In the six years since its opening in 2016, the cumulative number of followers has reached 3.32 million, with an average annual increase of 550,000, while the Tmall flagship store has only more than 10,000 people.
Then, under the background that Orion chooses an operator to operate its flagship store, it is undoubtedly the best choice to change the operator, so as to use a more efficient online operator to explore its online potential and save its continued decline in China’s revenue.
2. Strategic concerns
Judging from Orion’s official reply, it suddenly closed the Tmall store in order to better serve customers, and chose to change operators and upgrade the store. Remember to focus on the sentence “serving customers”, which will be tested later.
Judging from the interpretation of Orion’s logo, Orion Global Group has a future plan for global development. However, as an enterprise with an international vision and committed to serving customers, there have been incidents of double-standard price increases and double-standard materials one after another.
It can only explain one problem, that is, Orion has lost itself in the stable income of nearly one trillion won every year. In terms of market strategy, adopt the tactics of “killing eight hundred enemies and harming one thousand”. Both chill consumers in the local market.
3. Worry about hematopoiesis
Orion’s 2021 public data shows that in the Chinese sector, Orion’s puffing business revenue in 2021 will be 2.62 billion yuan, pie business revenue will be 2.3 billion yuan, biscuit business revenue will be 900 million yuan, and chewing gum + candy business will be 410 million yuan.
Having been in China for 27 years, Haoliyou can be said to be a delicacy that is popular all over the world. However, in the current trend of low-sugar and low-calorie healthy consumption, “zero-sugar, zero-fat, low-calorie” snack products have become a new hot spot, while the high-calorie Orion core product pie does not have the upper hand.
Orion has launched a “healthier” mineral water that rivals Evian, but its effect is far inferior to its core flagship product. Some users commented that “there is no advantage except that it is cheap, and you can’t drink tea with empty mouth”, which is enough to show that the product is a failure.
Moreover, with the improvement of consumer consumption level and the continuous enrichment of nutritional knowledge, people began to consciously pay attention to product ingredients. Statistics show that only 8.8% of Chinese consumers never look at product ingredient lists. For Orion, which has a record of double-standard raw materials at home and abroad, in the case of insufficient hematopoietic capacity, the impact of upgrading the awareness of consumer groups will have a much greater impact on Orion than other snack companies.
02
Foreign aggression: All heroes in the Chinese market are rising together, but Haoliyou is powerless
As we all know, Orion has four main markets: China, South Korea, Russia and Vietnam. No matter how Orion repeatedly jumps up and down on the double standard of materials and price increase, the Chinese market is still the largest market of Orion. In 2021, Orion’s revenue will be approximately 12.116 billion yuan, of which the revenue in the Chinese market will be 6.25 billion yuan, accounting for 51%.
However, today is different from the past. In the Chinese snack market, the rapid growth of Chinese snack brand enterprises has become the biggest foreign trouble for Orion. For example, the top 10 listed snack companies such as Three Squirrels, BESTORE, Juewei Food, and Chacha Food. The data shows that among the top 10 snack food listed companies, their total revenue in 2021 will be 45.05 billion yuan, and the revenue of 2 companies will decline; the total net profit will be 3.51 billion yuan. In the context of healthy eating, “new snacks” represented by healthy nutrition are gradually encroaching on the relatively stable domestic snack market.
If the frequent presence of excellent snack companies is the first blow to Orion, then the layout of snack companies will be the second blow to Orion.
In the 10 years since Orion entered China, its revenue in China has exceeded 5 billion yuan, and its growth rate in China has left many latecomers behind. However, in the later Internet era, a large number of snack brands quickly grew into industry giants by taking advantage of the Internet. Take the three squirrels as an example. It is an industry miracle that the three squirrels started from the Internet nut category in 7 years and quickly reached 10 billion. Now the three squirrels continue to increase distribution channels. By the end of 2021, the three squirrels have 140 investment companies. Food stores, 925 alliance small stores, a total of 1065 offline stores.
Moreover, under the premise that performance improvement urgently needs motivation, Internet-based snack food brands no longer stick to online and self-built channels, and use distribution channels as a major means to break through the plight of performance growth.
Even if there is no conflict with Orion’s main business, snack brands that flexibly use online and offline resources will affect their income in China.
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Summarize
On the one hand, it is the declining income in China, and on the other hand, it is the rapid growth of Chinese snack brand companies. Under the background that Orion’s offline channels tend to be stable and the contribution of income growth is not large, it has become the most thought-provoking issue for it to make efforts online and make up for its shortcomings. The sudden closure of the Tmall store became the first target of surgery.
Moreover, it is foreseeable that in the future, Orion will continue to pay close attention to online channels and actively seek changes. Only in this way, Orion, which has been driving for 27 years, will not sink in the red sea of the Chinese market. At least it can Slow down sinking speed.
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