Source: China Appliance (CHEAA-run magazine)
In the past two years, Aux, a rising air conditioner manufacturer of China, has been dazzling industry insiders with its fast pace in innovation and expansion. In the first half of 2017, Aux saw a year-on-year increase of 154% in domestic sales volume, and 60% in export value. Ranked top three by domestic sales, number one by both domestic and export sell-in volume, and number one by online sales, Aux is asserting its industry position.
With strong track record at hand, Aux is targeting the biggest challenge of air conditioner industry-offline channels.
On August 1, Aux’s 26 marketing centers all across China started to receive orders from dealers at the same time. At its campaign site in Shandong province, Aux offered 1 million RMB in cash to reward dealers with outstanding performance in the first half of 2017. Air conditioners have been selling like hot cakes in 2016 and 2017, leaving the market short of supply. This, plus Aux’s increased brand recognition and product quality, drove a spike in Aux’s orders, with received payment surpassing 1 billion RMB at this nationwide campaign alone, making another Aux phenomenon.
What does Aux have up its sleeves?
At this nationwide campaign, Aux’s highlight on offline channels was hinted with its release of a self-developed channel management system. It is learned that, built upon an internet platform, this system allows purchasing agents and dealers to see the progress of orders, payments and inventories in real time, connecting value chains of stake holders and improving efficiency greatly. With this system, Aux integrates its offline channels, further accelerating its turnover speed.
Aux plans to build a TOP client club, by inviting regional dealers with top sales or esteemed industry positions to be its members. By offering exclusive product models to TOP clients and establishing TOP level terminals, Aux is developing its TOP culture.
Besides, Aux is expanding into third-tier and fourth-tier markets, by placing 50,000 wall ads, 600 bus body ads and more than 100 bus station ads covering more than 100 cities in 15 provinces of China. What’s more, it is remodeling its 1000 retail terminals to be more experience-oriented and interaction-oriented.
Behind Aux’s channel strategies
Traditionally, China’s air conditioner manufacturers rose through in-store channels, with leading players dominating 70% of clients.
But there’s no fixed mode in success. In the past few years, Aux claimed number 1 position online with the largest online market share. Doubts rise along with its success. Would Aux’s priority on online channels hinder its further development? Aux’s young management team gives us a response: “We have plans up our sleeves and are just waiting for the moment.”
Looking back, we can see how Aux’s have been preparing for its moment. First of all, Aux put a heavy weight on product development. Thanks to its efforts, almost every model it placed on market made a hit, with appealing style, quality and performance. This dazzled the industry. In Nov 2017, Aux’s smartest air conditioner plant is set to come on stream. With 7 million units to be rolled out every year, this plant will further enhance Aux’s competitiveness.
The marketing strategies mentioned in the beginning of this article are Aux’s way to expand its popularity, recognition and customer loyalty. Statistics from key e-commerce operators show that orders going to third-tier and forth-tier cities are mostly placed by users located in a different city, in another word, migrant workers. In the past few years, Aux has been spreading its name to this group of people.
Despite its efforts in products and campaign, Aux has been reforming its channel management system, with two versions developed in the past two years featuring inventory management and distribution management respectively. With a platform capable of accelerating turnover, reducing inventory and managing terminals, Aux’s moment has come.
Ready to rise
A surge in sell-in volume in fiscal year 2017 (Sep 2016-Aug 2017) aside, uncertainties emerge amid the government’s tightening grip on housing market, and a slide in raw material price. Of all uncertainties, one thing is for sure-the soaring demands of third-tier and forth-tier markets. Statistics from All View Cloud suggest that, retail sales volume of air conditioners in third-tier and forth-tier cities in FY 2017 has grown by 27%-35% year-on-year, faster than that of other level cities. Put in another way, it was the need of third-tier and forth-tier markets that drove up the general rise in retail sales volume alongside weather. Industry experts believe that air conditioner’s era of third-tier and forth-tier markets is coming.
At third-tier and forth-tier markets, stores set up by leading online channels such as JD.COM and Suning are multiplying. Online and offline channels are integrating, dealing a blow to the price system and purchase and distribution mode of traditional channels. This trend of bricks and clicks is making a change to distributors at third-tier and forth-tier markets.
At this moment, the fully-prepared Aux demonstrates to nationwide distributors its new operation mode featuring a deeply reformed channel management system. With this platform, it is ready to embrace changes in channels.