Source: China Appliance Magazine
According to the Report on China’s Online Shopping of Home Appliances in 2017 released at the 10th China Online Home Appliance Shopping Summit, the size of China’s B2C online home appliance shopping market (with mobile terminals included) rose by 27.6% year-on-year to hit 490.6 bn RMB in 2017. The penetration of online shopping of home appliances reached a record high of 26.5%, with that of TVs taking the lead at more than 40%. In value terms, the “big four home appliances” including air conditioners, refrigerators, washers and TVs totaled a growth of 50.4% year-on-year in online sales.
White goods taking the lead
Zhu Jun, Secretary General of China Household Electrical Appliances Association (CHEAA), says, China’s home appliance industry is embracing its best time thanks to the fast development of economy, society, technology as well as industry. In this context, online home appliance shopping surge as e-commerce platforms improve their services and user experience. According to the report, “the big four home appliances”, with a robust growth of 50.4%, totaled an online sales value of 174.6 bn RMB in 2017, of which panel TVs posted 54.2 bn RMB, air conditioners 64.8 bn RMB, refrigerators 29.9 bn RMB and washers 25.7 bn RMB.
White goods saw the fastest growth of online sales value in home appliances in 2017, with that of air conditioners at 119%, refrigerators 52%, and washers 47% compared to a year ago. Major appliances within kitchen appliance category, for example, hoods, ranges and sterilizing cabinets, totaled a growth rate of 54.6% for the same period. Online sales of TVs, a major appliance within black goods, slowed sharply with barely any growth.
The dynamics of e-commerce platforms remained steady in 2017, with JD.com, Tmall and Suning topping the list, leaving little space for other players in the market. Of the top threes, JD.com stood strong as the largest home appliance online shopping platform with a market share of 60.8%. Following it, Tmall and Suning took almost the remainder of the market.
Embracing a new retail mode
With the fast development of logistic industry and the IoT technology, a new retail mode featuring clicks and bricks is adopted by more and more manufacturers and distributors as a way of enhancing competitiveness.
Zhu Jun says, powered by the expansion of mobile internet and smart technology, this new mode is a transformation aimed at improving distribution efficiency. Enterprises putting more weight on traditional retail channels need to change their strategies in response to this tide of transformation, for example, integrating the flows of information, fund and logistics to improve the efficiency of the manufacturing system. What’s more, the new retail mode targets at meeting personalized needs with high efficiency, as consumers born in the 1980s and 1990s become the main stream. This emerging consumer group also features a preference of high-quality goods, prompting the opening of more experience stores.
Xu Lei, General Manager of Sales Expansion Division of JD.com Home Appliances, reveals that experience stores will be a key area of focus of JD.com down the road. In 2018, JD.com plans to step up its deployments in third-tier to six-tier markets with more stores of JD.com, and first-tier and second-tier cities with more experience stores. JD.com hopes to elevate user experience by offering better services, logistics and products. According to Min Weihan, operation director and marketing director of E-commerce Division of Hisense, “Hisense plans to break down the concept of new retail, fully understand it and then infiltrate it into the operation of Hisense, and implement if to all links and positions across Hisense’s sales.”