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Text/Leng Zelin Wen Yehao
Source/Photon Planet (ID: TMTweb)
In front of Chengdu’s SEG Plaza, several statues with historic lacquer surfaces still maintain the posture of answering the phone, but the popular scene of the past is gone forever.
As the largest communication street in the southwest area, Taisheng South Road currently only has shops with dilapidated signboards and communication counters that seem to be evacuated in the future.
And when you step on the second floor of SEG Plaza, you may be even more surprised. It seems that it still maintains the “scenery” of the last century, with dim lighting and narrow space. At first glance, each store seems to be always crowded with another. shop. And the clerk sitting in the “cubby” always looks mysterious and whispers something to the customer, and from time to time, he pulls out a few things from the stack behind him or from the glass cabinet in front of him. Nothing seems to have changed.
But on another street in the city, everything seems to have changed again – in the most prominent shops in the palatial shopping complex, there are often a few large wooden display tables, which are placed at a distance from each other. There are several latest products, and the headlights, chandeliers, and spotlights in the store are mixed with the exclusive lighting of the new products, for fear that consumers will miss the small design of any product.
In the two scenarios, the same mobile phone has completely different treatment, which makes people sigh that “organic” is impermanent. For mobile phone dealers, this is both the best of times and the worst of times. Batches of small and medium-sized dealers and street mom-and-pop shops with limited capacity are gradually being eliminated from the market, while large dealers are moving towards shopping malls. expansion.
The decline of mobile phone mom-and-pop shops
On the eve of the Spring Festival in 2022, Yang Yi and his wife Liu Qi closed the mobile phone store they opened in Taizhou, Zhejiang, and were going to Hangzhou to find a new way after the Spring Festival. This store has been with them for 8 years. Closing due to declining sales.
Around 2016, when the couple’s mobile phone store was the most popular, the mobile phones in the store did not need to be sold at all, and even the supply was in short supply. At that time, Yang Yi was very excited and said to his wife: “The mobile phone business is the right choice, we can do this business. In a lifetime, even if ordinary people don’t buy a car or a house, they must change their mobile phones, and as long as everyone has needs, there is room for us to survive.” Yang Yi also found a relative to partner with him to open a local mobile phone store, business Still hot.
However, he still underestimated the cruelty of the market. When they were about to open a new store, they realized that the bright moment in the mobile phone industry was passing away. Since the global smartphone sales reached an all-time high of 1.47 billion units in 2016, the subsequent shipments began to shrink gradually, and offline channels also began a new round of reshuffle.
“One shop raises three generations” was once an iron rule that Li Bo believed in. Adhering to this logic, he sold several vacant houses in a town in Suining, Sichuan, built a shop in a local commercial street, and opened a mobile phone store.
At first, due to the good location, there was another mobile phone store on the same street, but Li Bo’s store was able to sell several orders almost every day. In addition to the newly opened film business, the business status has been good.
Li Bo, who made the first pot of gold, also learned from his peers to hire a clerk, and he became a shopkeeper himself, drinking tea and playing mahjong when he had nothing to do. Just when Li Bo thought he could become a “winner in life” by selling mobile phones, he found that fewer and fewer people entered the store.
At first, he pointed the finger at the newly opened Apple store in the local area, so he rushed in a batch of iPhones and accessories, thinking that things would improve. However, with the mobile phone industry entering the stock market, Li Bo’s stores are no longer as brilliant as they used to be. Although there is no such concept as “stock market” in Li Bo’s mind, seeing that the number of people entering the store every day has dropped from the original double digits to a few people, and even no transaction in a single day has become the norm, he gradually realized the industry’s recession.
On the other hand, when mobile phone manufacturers transform into high-end and increase ASP, the small town market where Li Bo is located is slightly separated from the high-end process of the track – a few local people with high-end demand only recognize Apple and Huawei, and more customers It is students who have not yet achieved financial independence, and the group who buys smartphones for the elderly at home also accounts for the majority.
Obviously, in such a market, it is impossible to sell high-end mobile phones that cost five or six thousand yuan. In the end, the idea of opening a branch was declared bankrupt, and Li Bo also resigned from the clerk and walked back to the store from the poker table.
The heavy pressure forced Li Bo to learn from his peers, relying on false reports of selling prices, entering refurbished machines and other sidelines to forcibly raise the transaction price to grab profits. However, under the cold winter of mobile phones, even if the profit per order increases by a few hundred yuan, it cannot smooth the decline in the number of orders.
In the end, Li Bo closed down the mobile phone shop and switched to a micro-business based on the mobile phone channels accumulated in the past, and the shop was transferred to a young man who returned to town to start a business. The story of Li Bo and the mobile phone may have come to an end. In the cold winter, the mobile phone mom-and-pop shops are far more than Li Bo’s family.
Liu Dong, an agent of vivo in Jinhua, Zhejiang, told Photon Planet that when vivo had the most in Jinhua, there were 1,800 contracted dealers, but now there are only more than 800, and almost all other brands are facing the same situation.
The mobile phone mom-and-pop store, which was once lively but could not adapt to the high-end transformation, has become the “background board” of the times. However, this does not mean the decline of the offline mobile phone scene. On the contrary, batches of offline dealers who have stepped into high-end products with their products have become the protagonists of the new offline story of mobile phones.
“In the past few years, the mobile phone channel has obviously been concentrated in the head. We found that the shrinking of the stores of various brands are mainly small and medium customers or mom-and-pop stores. Almost all the remaining large customers are doing well, and they are chain stores. , the integration of resources and system capabilities are relatively strong. For example, in Zhejiang, vivo has a V58 Club, and these customers are basically living well.” Liu Dong said.
Regardless of whether these dealers are active or forced, high-endization has increasingly become an important issue for various mobile phone manufacturers. With Huawei’s fading out of the 5G mobile phone market, who can share the cake of China’s high-end mobile phone market outside of Apple has become the direction of everyone’s concerted efforts.
Open a store in the CBD
For the pursuit of high-end glory, since the return in 2021, there have been few new small and medium-sized customers or mom-and-pop stores, but have undertaken the core customers of Huawei in the past.
“Huawei’s core customers in the past have strong financial strength. To make the brand bigger, Glory must choose dealers with sufficient financial strength. Even if the store does not make money in the short term, it must be able to carry it together. Small and medium-sized dealers may open for half a year. The store is closed, which will directly affect the brand’s consumer groups within a few kilometers.” said a glory dealer.
The Honor store operated by the above-mentioned dealer has just realized no loss after more than a year. The reason why he did not choose to close the store is that he hopes that Honor can also lead the dealer to gradually leap from one field to many fields like Huawei in the past, so as to achieve Achievement leaps, life takes off.
However, some Xiaomi dealers have a different mentality. Yan Kuan, a mobile phone dealer, told Photon Planet that it is difficult to become a home of Xiaomi now. After all, the gross profit of Xiaomi’s products is lower than that of other brands.
He calculated an account for us. At present, Xiaomi’s comprehensive gross profit margin is close to 12%. If a store only achieves a turnover of 500,000 yuan and a gross profit of only 60,000 yuan, excluding rent and labor costs, it can basically achieve capital preservation. “Xiaomi’s advantage is that SKUs are abundant, while the disadvantage is that its gross profit is relatively low, so don’t always want to be rich and rich, but small profits are still easy to achieve.”
Yan Kuan has opened two Xiaomi authorized stores and one Xiaomi Home since 2018. Both authorized stores are located in local old-fashioned business districts, while Xiaomi Home, which has higher requirements for opening a store, is opened in a more crowded area. New business district, close to Starbucks and Pizza Hut.
Specialty stores are different from “miscellaneous” mom-and-pop stores, and mobile phone manufacturers often put forward requirements on location. “If you open a store with a poor location, the manufacturer will not let your investment go to waste, and will also give you a location with a larger passenger flow and a higher evaluation to ensure that the overall operating level is not bad.”
However, even though Yan Kuan won several key local points, the reality still poured cold water on him. By 2019, only one of Yan Kuan’s three stores was still open, and the other two were closed due to losses and strategic adjustments. The only one millet home has a turnover of about 1.5 million a month, and the profit after all expenses is about 30,000-50,000 yuan.
Although the surviving Mi Homes performed well, and even considered one of the best stores in the eastern part of the province, the premise was that there was only one Mi Home in the prefecture-level city. In fact, more mobile phone stores located in shopping malls have either been unable to get rid of losses for a long time, or are in a state of not making any losses.
Just when Yan Kuan was about to “lie down”, high-endization became a new path for mobile phone manufacturers, which also gave Yan Kuan a lot of confidence. “Business in the low-priced segment is not easy to do. With the same 17 points, there is a big gap between a mobile phone that sells for 6,000 yuan and a mobile phone that sells for 1,500 yuan. If the product is made at a high price, the return rate for the same points will be much higher.”
With this in mind, in the first half of 2021, when mobile phone manufacturers brought up the rhythm of opening stores in shopping malls, Yan Kuan and his dealer friends followed and rushed to open stores in shopping malls.
However, after swarming into the mall, Yan Kuan once again realized that the problem is far from being as simple as he imagined – there are many people entering the store to experience, but the actual transaction volume is very small, especially for high-end models.
High-end mobile phones that could not be sold quickly accumulated, and even caused an inventory crisis. According to Yan Kuan, some brands only focus on opening stores and pushing new products for full distribution, but do not consider the actual sales capabilities of dealers.
A mobile phone dealer in Ningbo, Zhejiang told Photon Planet that a large local dealer used to focus on the Huawei brand. After Huawei faded out, it went to other brands. It was found that the brand is very difficult to pay a premium at this stage, and high-end mobile phones are not easy to sell. This year The vast majority of stores were closed almost overnight.
According to Liu Dong, when vivo entered the core business circle of Jinhua to promote the NEX series of high-end mobile phones, it was directly closed to customers. When he told a customer the price of the NEX series, the other party directly asked: “Are you crazy? Now, who would dare to buy it at such an expensive price?” In the end, he negotiated with the other party for a long time before convincing him to passively buy some goods and put them on the shelves.
Yan Kuan, who opened Xiaomi’s home, also opened two vivo stores in local shopping centers in 2021. At that time, because the mobile phone was not easy to sell and the financial pressure increased sharply, he had to sell the high-end phone at a breaking price. “For example, the price we got is 3,998 yuan, and the final selling price may be 3,798 yuan or 3,698 yuan.” Fortunately, the sales of the vivo X70 Pro+ were relatively stable, and after a little stabilization, he did not cut prices to clear the inventory.
The general practice of agents of major brands for high-end mobile phones is to first distribute the goods to major customers with good local locations, many stores, and exquisite decoration. High-end mobile phones tend to sell better in these stores. But once they can’t be sold, the hoarded goods can only go to small and medium-sized customers. Small and medium-sized customers will refuse at this time. They will complain why they didn’t find me when they were selling well. accept. In the end, the agent can only dispose of these residual goods through negotiation, intercession, price reduction, etc.
It can be seen that even if Huawei mobile phones fade out, other domestic mobile phones want to break through the high-end, it is not as simple as many people think. However, it is not without such a possibility, and the market situation is also undergoing some subtle changes.
Looking for high-end antidote
“Those who gain high-end will win the world, and those who lose high-end will be hard to defend,” said Jia Jingdong, vice president of vivo brand.
In his view, although the growth rate of the mobile phone market is slowing down, the stock scale and usage time are still increasing. In fact, it is a transition from an incremental market to a stock market.
Smartphones are still an indispensable communication tool for people. The industry is far from a recession period. There are still a lot of user experiences to be optimized and user services to be supplemented. “There are still many opportunities.”
High-end is a position that domestic mobile phones must win, but this is by no means an overnight thing. Therefore, before achieving their goals, each family is looking for a path that suits them.
In the process of entering the core business circle, Xiaomi can often get lower prices than its friends, because the low gross profit margin of Xiaomi has been deeply rooted in the hearts of the people. .
A Huawei dealer shared a case with us: when they were negotiating with a shopping mall for rent, they reduced the rent from more than 90,000 to about 80,000. However, considering labor costs and the market environment, they believed that the risk was still relatively high. At this time, another dealer suddenly joined and directly won the store at a price of 90,000. A few months later, Xiaomi also entered the mall with prices below 80,000.
In addition, Xiaomi is also willing to export its online mall traffic to offline since 2021. Previously, mobile phones purchased by consumers in Xiaomi mall were uniformly shipped by the headquarters. Now consumers can choose to buy mobile phones from Xiaomi mall by themselves. Nearby store delivery or in-store pickup.
For OV, once the stores in the core areas are not profitable, they will choose to subsidize them and work with the dealers until they do not lose money. Taking vivo as an example, one of the two stores opened by Yan Kuan has a monthly rent of 40,000 yuan, and vivo subsidizes it by 50%, which is 20,000 yuan. In addition, OV also has certain subsidies in supply and decoration.
Subsidies at various levels are not easy to make money for dealers who are eager to rely on high-end models to break through, but they can also help them survive the most difficult times.
In the first half of this year, a dealer of vivo opened a store in Baolong Plaza, Yiwu, Zhejiang. Initially, it was in a state of loss due to poor sales. Therefore, vivo subsidized a certain percentage of the rent. The situation has finally been reversed. From the original sales of 20 to 30 units a month, it can now sell hundreds of units. Slowly, it does not need to rely on subsidies, but instead builds blood to survive.
Although a thick haze still hangs over the mobile phone industry, as far as dealers are concerned, things seem to be slowly getting better. From the perspective of the industry as a whole, a large part of the reason comes from the increment brought by the new product sequence.
The inflection point is approaching
In fact, since entering 2022, major mobile phone brands have seen some good signs in terms of high-end. The rescue of dealers ultimately comes from the market persuasion of mobile phone manufacturers’ high-end models.
“This year, our vivo X80 series has formed a scale, and has established a firm position in the market of more than 3.5K.” Jia Jingdong said. Third-party data reports and real offline market performance also verify his claims. Data shows that vivo X series new products have gained high recognition in the online and offline markets, and vivo’s high-end market share in the second quarter of this year has reached the highest point in nearly a year.
Another report from Counterpoint also shows that vivo ranked second in China’s high-end mobile phone market with a 13% share in the second quarter of this year, second only to No. 1 Apple. “Driven by the success of the X80, vivo saw a 504% year-over-year growth in the high-end price segment ($600-$799, or about RMB 4,150-5,550),” the report said.
In fact, the perception of offline channels is also the same. On the day of our survey, Liu Dong received a call from a local dealer, who told him that the X80 had been sold out and requested to be replenished as soon as possible. In the past few months since the launch of the vivo X80 series, many customers have fallen into the situation of “hard to find a machine”.
“Some customers told me that they were reluctant to sell this product, because after selling it, it would be out of stock. This is something I have rarely encountered in recent years. It can be said that how many are sold.” Liu Dong’s first experience On to “Happy Troubles”.
Not only the X80 series, but in the first half of 2022, vivo launched the X Fold, a folding screen mobile phone, as another flagship product of vivo that hit the high-end market, and its performance was particularly outstanding. Two months after its launch, the phone won the double champion of cumulative sales and sales of folding screen mobile phones on the Jingdong platform during the 618 period, and the cumulative sales champion of folding screen mobile phones on the Tmall platform.
Why is vivo able to maintain a strong growth momentum despite the slowdown in the industry’s growth? “vivo’s strategy is to first stand firm, form a scale, and then continue to move upward.” Jia Jingdong said, “Only by planting the cause well and persevering can it be possible to do better than others.” The product is the cause, and the brand is the result— – This is a sentence that vivo has repeatedly emphasized from top to bottom.
These 8 words sound simple, but easier said than done. At the end of 2019, vivo began to determine the brand and product strategy internally. For four and a half months, the management talked until two or three o’clock in the night almost every day, focusing on a theme: What kind of products does vivo want to provide users?
After this discussion, vivo has identified four long tracks of design, image, system and performance, aiming at cutting-edge technologies in the next 5-10 years, matching users, products and usage scenarios, and forming the dual brands of vivo and iQOO operating strategy.
For example, the products of the vivo brand focus on image and design to meet consumers who have high demand for appearance and shooting; iQOO focuses on powerful performance to meet the needs of game lovers. Each product series under the two brands also has different Positioning and product focus.
The leadership brought by technological innovation, coupled with products with accurate positioning and unique selling points, will ultimately provide continuous impetus for vivo’s high-end development.
After multi-pronged and concentrated efforts in products, channels, services, brands, etc., the market has begun to use sales to prove the correctness of the high-end attempt, and it seems that it is now ushering in the inflection point of high-end domestic brands.
After many times of bad apprenticeships and still sticking to high-end, these offline agents and distributors who have worked hard with major brands finally saw a glimmer of light. It is this faint dawn that is enough to resist the chill that everyone is passing on at the moment.
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