Deyang is a small city in the southwest, there is a “cell phone street” in the center of the city, once all kinds of cell phone stores, the store name is usually called “xx communications”, this street is the city’s primary place for people to buy cell phones.
On holidays, each store must be decorated with lights, drums and gongs, red carpets on the sidewalk, easy to place around, shopkeepers shouting at the top of their voices, various banners and signboards also look lively and have a face.
Today most of the stores on this street are still selling cell phones, but compared with the usual hot sales scene is very different. Some have been closed, the door on the few hanging store transfer sign; some are downsized, isolated, cold and clear in front of the door; and once the largest cell phone store in this small city has been transformed into Yiwu Commodity City.
Most of the cell phone stores have been replaced with Apple, Xiaomi, OPPO, Vivo, Glory and other brands of franchise stores.
Once hot big stores around the world
These stores are usually decorated with a lot of effort, and the hypermarket more cramped counter, where the cell phone products are placed piecemeal, neat and bright site also brings a stronger sense of technology.
Even so, the existing cell phone stores are relatively cold, in the Qingming holiday, this street are no cell phone stores in the big promotion.
After all, the store-style cell phone stores have fallen, the times abandoned you, not even a greeting.
- Offline is king
Old Du in this small city engaged in the second-hand cell phone industry has been more than 20 years, in this “cell phone street” on a slightly older building, from a small door into the largest second-hand cell phone store in Deyang, where he has a store.
In this industry for many years, he has long practiced a skill. He can tell if the machine in his hand is a refurbished one by touching it; he can also take you through the alleys behind the “cell phone street” to buy genuine and low-priced cell phone accessories; he can also get new machines from dealers and give them to friends and relatives on behalf of the goods.
With the cell phone business, he and his wife brought up their two daughters to college. Today, he obviously feels that business is not good, whether it is a new or second-hand phone.
Lao Du told Luminous Finance that next to the second-hand market, there used to be a cell phone store with an area of several hundred square meters, but it has been vacant for two years. The landlord wants to rent it out for 400,000 yuan a year, but no one can accept this price, after all, selling cell phones has not earned so much profit in the past.
The offline channel is the king of the era, then go to the dealer model, manufacturers will take the goods to dealers at all levels, and finally appear to the hands of consumers.
So there were offline 3C retail stores like Gome and Suning, as well as chain cell phone retailers like Dixon, Dadi Communications and Leyu.
In 2014, Dixon went public in Hong Kong, when Dixon opened nearly 3,000 stores nationwide, and now the number has been cut in half.
These cell phone stores are able to “eat at both ends,” as they not only earn money from consumers, but also from operator subsidies.
Operator subsidies are an important source of income for businesses, usually including rent subsidies, package commissions and terminal subsidies, an industry insider said, once the operator’s rent subsidies alone can reach up to 80%.
This kind of subsidies in the 3G era to 4G era into the peak, consumers ushered in a wave of replacement, operators in order to seize market share, often charging cell phones to send activities.
Around 2013, the three major operators strongly involved in the cell phone retail market, the previous business hall for business-oriented began to change its face, additional display cabinets, into a small cell phone stores.
Huang Ting (a pseudonym) remembers when she had just graduated from high school, her parents took an excited her to a telecom-owned store to buy a cell phone, when she looked at a new Vivo machine, priced at 2,499 yuan, can only use the telecom phone card, if you want to buy a universal version of the phone, you need to increase the price by a few hundred yuan.
The salesperson told her that if she bought the phone, Telecom would return the full amount of the phone purchase to her Wingspay (Telecom’s app) account in subsequent years, which could be used to top up her phone bill and make purchases, etc.
With such a great offer, Huang Ting did not hesitate to buy the new phone.
Cell phones that can only use one carrier’s phone card are called carrier-tailored phones, and consumers who buy a new phone also need to agree to pay their bills continuously with one carrier, often called contract phones.
The carrier channel has become a must-have for manufacturers, and Chunghwa Kulian started out relying on the carrier channel for sales, with some cell phone manufacturers having a carrier channel share of 70%.
Of course these stores are stationed in the mainstream shopping areas and streets of various cities, but there are also some small cell phone stores, opened in various alleys, neighborhoods and even vegetable market entrance.
About 10 square meters of small stores, the decoration is relatively simple, usually sitting inside a middle-aged man, where a collection of cell phone repair, film, buy accessories, sell cell phones, charge all kinds of services.
These cell phone stores have also become a hotbed of cottage phones, cottage phones mostly rely on such small stores to flow around the country. At that time, domestic cell phones have not yet gotten rid of the poor quality, cottage label, selling the best, when the Samsung, Motorola, HTC and other foreign brands, but the price is not everyone can afford to spend.
Of course, there are also manufacturers to build their own sales channels, such as OPPO and Vivo, crazy to open stores to seize the offline market, and now in the country’s sales outlets have reached more than 200,000.
With the advantage of offline channels, as well as online viral marketing, the business of the two blue and green factories also ushered in strong growth.
In those years of the war of domestic brands’ cell phones, offline channels were also quite popular in the market, and once Jia Yueting’s LeTV cell phones gave higher rebates to sales staff than other cell phone brands in order to expand their channels.
2010-2016 was the most rapidly growing period of China’s smartphone market.
Lao Du said that at that time, his second-hand cell phone business was also very good, with a maximum monthly income of 20,000, which was not a small number at that time.
The retail price was not as transparent as it is now, and the selling price was basically in the hands of the retailers. Lao Du recalled that in those years, there are stores will sell refurbished machines to make high profits. In the past, when he recycled used cell phones, he often received some refurbished machines, when Lao Du would ask in passing: where did you buy this phone from? The answer you get is from a certain big box store.
“Ordinary people simply will not find the big stores will also sell refurbished machines, but we know at a glance.” The old Du said, “These years gradually less and less, basically are the genuine phone.”
The gray profit of selling refurbished machines will not last for a few years, after all, the share of offline cell phone retail is beginning to be eaten by e-commerce.
- E-commerce coming
In 2020, Beijing Zhongguancun Dinghao Electronics City unloaded its bright red signboard, the 17 years of operation of the electronics city, witnessed the ups and downs of China’s electronics industry, will be completely shut down in October.
Once, Zhongguancun’s Dinghao, eWorld, Hailong, Science and Technology Trade and several other electronic malls united area, known as China’s “Silicon Valley”, countless young people with dreams to come here to dig gold. 17 years later, few people here have asked for. Zhongguancun Electronic City
Zhongguancun Electronic City
The décor here now looks old, and young people no longer like to shop in the electronics city, they gather online and connect together through the Internet.
The turning point of fate has long been buried.
Ten years ago, the launch site of Xiaomi 1 was packed with people, while outside the venue was crowded with a group of fans who failed to enter the venue, Lei Jun as the keynote speaker in order to enter the venue also found a few colleagues to escort. Xiaomi’s MIUI community operation strategy was a great success, with 500,000 forum fans feeding into the Xiaomi phone.
Xiaomi 1 as a dual-core large-screen phone, using a higher configuration at the time, the same configuration of Samsung, HTC, LG and other cell phones are priced at more than 3000 yuan, while Xiaomi only sold 1999 yuan, when Lei Jun announced this price, fans on stage excitedly chanting his name.
In order to keep the price down, Lei Jun made a bold statement, ready to cut all intermediate channels, Xiaomi 1 only take the network direct sales model sales.
This decision set the tone for Xiaomi’s retail strategy for the next few years, and created the “Internet miracle” for Xiaomi. Xiaomi 1 eventually sold 7.9 million units, and Xiaomi’s overall shipments reached 18.7 million units in 2013.
Xiaomi’s success drew a lot of attention.
In the years after this, major companies began to come down to do cell phones, Meitu, 360, one plus, LeTV and other cell phones have been online ….
Everyone is discussing the “Xiaomi model”, many brands want to build their own network sales channels, offline channels once became the brand’s non-primary choice.
The company’s subsidies are also beginning to be subsidized. 2014, the State Assets Supervision and Administration Commission requires the marketing fees of the three major carriers to fall by 20% in three years, which means that the cell phone stores that once relied on carrier subsidies will no longer have a good time, cell phone manufacturers are also choosing to increase the proportion of e-commerce retail.
Jingdong, Suning, online 3C channels have become the new cell phone sales channels, less all kinds of channel merchants, e-commerce based on online advantages and e-commerce subsidies, cheaper than the cell phone store, choose to buy digital products online consumers are increasing year by year, 2017 Jingdong 3C category sales growth of well over 100%.
The emergence of e-commerce also makes cell phone prices more and more transparent, consumers learn to check prices from the Internet, no one will be willing to be offline “cut leeks”, we also gradually understand the functions and values of cell phones, the era of selling goods by virtue of the sales staff three inches of incompetent tongue has passed.
The retailers also know the prices well, and the prices they get from the internal goods can be checked in real time from the Internet. Take Xiaomi note9 for example, the phone configured with 8+128G is priced at 1,499 yuan, and the retailer’s internal purchase price is at 1,160 yuan.
“Now the general profit of the phone is only four or five hundred, only the high-end machine profit can be thousands.” An industry insider said.
After deducting the rent, water, electricity and labor costs, the profit left for offline retailers is not high.
In 2016, the domestic cell phone war has not come to an end, cell phone manufacturers have to face another problem: China’s smartphone shipments have reached the peak, from 2017 onwards, smartphone shipments have been on a downward trend, the stock era of cell phones has come.
Lei Jun has written online that 23% of cell phone users do not change their phones for three years, which surprised him. He also called on everyone to “be kind to yourself and get a new phone, it’s not expensive.”
This also shows that today’s cell phone features are not revolutionary upgrades, cell phone users are less willing to update.
The advent of the stock era has also accelerated the fall of the domestic cell phone war. Now the new pattern has been formed, Apple, Huawei, Xiaomi and OV have occupied the minds of users, according to the total domestic shipments in 2020, these five brands have occupied 91% of the market share.
Such changes are also reflected in the retail end, as players become fewer, manufacturers are strengthening their control over the channel end, after all, there are not many brands for stores to choose to sell.
The rise of domestic cell phone brands, Xiaomi, Glory and other brands have seized the low-end market, cottage phones almost extinct in the market, those low-end stores in the community and vegetable markets are gradually no longer profitable, a large part of them have disappeared in the street corner.
In the era of year-on-year decline in cell phone shipments, brand operation is extremely important, the cell phone manufacturers are creating their own business card, once equally placed in a store cell phone brands, are starting to stand on their own.
- Back to offline
At the end of the 20th century, Steve Jobs was having a headache with Apple’s financial reports. At that time, he returned to the helm of Apple soon, and the market share of Apple computers in the United States was too low.
At that time, the sales channels of computers in the U.S. were held by various licensees and chain stores, but the professional ability of the sales staff varied, and it was difficult to highlight the excellent performance of Apple computers.
Steve Jobs decided to open an Apple Store, where only Apple products would be displayed, not only to let users know about Apple’s top ideas, but also to convey his brand concept.
He was personally involved in the design of the Apple Store, where his minimalist philosophy was integrated with a simple, bright space designed solely to showcase products.
In 2001, Apple’s first directly operated store opened, with more than 7,700 visitors and $599,000 spent in just two days after opening. by the end of 2001, the number of Apple directly operated retail stores exceeded 27, and then began to spread around the world. Apple Experience Stores
Apple Experience Store
The phone comes out of the display case, and instead of lying quietly in the glass counter, with salespeople taking it out and explaining it, it waits for consumers to experience it for themselves. Instead of rushing you to buy, store staff patiently teach users how to use the Apple phone for as long as you want to experience it.
In the first few years, on weekends, Apple experience stores were always crowded with attentive service, superior products, and a comfortable environment, allowing those who would not otherwise have access to Apple to understand more about Apple’s products as well as the system and strengthen their brand perception.
For a long time after that, once Apple released new products, the street scenes of fruit fans around the world going to the physical stores and queuing up overnight would trigger people’s amazement.
The line of sight turns back to the domestic brands, once the domestic cell phones are either all cottage machines, or still struggling in the low-end line, there is no extra energy to build the brand, even if OPPO, vivo firmly grasp the various sales channels in China, but their sales model still tends to be traditional.
In 2016, Jack Ma announced at the Wuzhen Yunqi Conference that new retail was a major trend for the future and would thereafter profoundly change China’s retail industry.
What is new retail? Ma explained it by saying that online and offline will be deeply integrated and service providers will use technologies such as big data, cloud computing and logistics technology to create a new form of retail.
The new retail of cell phones is also coming, and the offline channel has become a hunting ground for the giants.
Even though the proportion of online sales of cell phones keeps increasing, data from the Foresight Economist shows that more than 60% of people will still choose to buy cell phones offline in 2020, and consumers still tend to make decisions on cell phones after seeing the real thing, which is the main reason for cell phone giants to return to offline.
In 2016, Xiaomi opened the first Xiaomi House, thus opening the layout of offline retail channels. Xiaomi has since also hired the design firm that designed the first Apple retail store for Steve Jobs to take charge of the flagship store design.
In the directly operated Xiaomi Home experience store, not only are Xiaomi’s cell phones placed, but also various types of Mijia smart hardware, with emphasis on scene marketing, where space has become a brand new concept.
As the French philosopher Lefebvre said in his book “The Production of Space”, the focus of contemporary production is shifting from the “production of things” to the “production of space itself”. Space has become an important object of consumption.
In early December 2020, Xiaomi Home opened its flagship store in Chengdu Wanxiangcheng, the 1,000th store of Xiaomi Home, and just four months later, on April 3, 2021, Xiaomi held the opening ceremony of the 5,000th Xiaomi Home in Shenyang Dayue City.
Huawei’s first authorized experience store also opened in Wuhan in March 2019, attracting many Huawei fans to punch the card on that day. oppo and vivo also changed their previous thinking of sinking, upgrading their brands while improving the quality of their offline stores.
Nowadays, when strolling around the city, there are fewer and fewer cell phone stores in the past, replaced by franchise stores of various brands. The store in the cracks
The seam of the store
Many of them are the transformation of the former cell phone stores.
Xiaomi China President Lu Weibing had set a goal to make every county in China have Xiaomi House in the next year, according to Xiaomi this speed is believed to be reached soon.
In the Xiaomi House retail system, Xiaomi introduced a new retail system that uses big data to allocate goods, and the phones belong to Xiaomi’s inventory before they are sold to consumers, ready to fundamentally solve the problem of inventory backlog at the retail end.
Zhao Ming, president of Glory, has proposed the concept of Retail 3.0, a business model of “brand symbiosis and manufacturer co-construction”, but it has not brought a more disruptive retail approach.
Manufacturers are hoping to build a new retail concept and bring innovation to the retail industry, but the giants are still feeling their way across the river, and the next step may be a reef.
- The Trouble of New Retail
At the beginning of 2021, just behind Xiaomi and Glory chose to open stores like crazy, OPPO quietly closed its super flagship store in Shanghai Huashi Plaza.
The 5G concept marketing store, covering an area of about 500 square meters, served as a breakthrough for OPPO’s brand promotion, and was decorated in a simple and advanced way, but the venue was too empty, and the cell phone became a supporting role instead. oppo Shanghai flagship store
OPPO Shanghai Flagship Store
Due to the high cost, most of the experience stores opened in popular shopping areas are not very profitable, this store flagship store to OPPO has been bringing losses, the onset of the epidemic is unable to bring offline traffic, in order to control costs only to close down.
How exactly should offline retail stores be profitable?
Retailers need to face high rents, rising labor costs, not to mention that many stores today are choosing to open in popular shopping areas, then the cost is exponentially increased. And once the high subsidies of operators have been significantly reduced, which requires the profits of offline sales can cover these fixed expenses.
In addition, inventory is also a major source of pressure. Nowadays, manufacturers are busy occupying the whole level of users, releasing a variety of models every year, in each price point in the close fight, which means rapid replacement, then the manufacturers have to have a full range of scheduling capabilities from the supply chain to the retail end.
After the chip outage, Huawei’s shipments plummeted, and there was a shortage of goods everywhere, triggering anxiety at the retail end. Now the chip problem has not been completely solved, which is not a small challenge for offline dealers. Lei Jun has said that Xiaomi’s hardware profit of about 5%, in pursuit of high cost performance, Xiaomi left retailers profits are not high, many businesses are not willing to join Xiaomi.
The current offline cell phone retail is still in the era of competition with e-commerce retail, once it was believed that the growth of e-commerce has tended to saturate, but Huang Zheng came out of nowhere with Poundland, relying on tens of billions of subsidies to make a big price cut on Apple, attracting countless people.
The so-called deep integration of online and offline retail has not yet reached the desired level.
Service is also an important part of the offline retail experience, a large number of store expansion, manufacturers can only choose to join the store, then the service capacity must have declined.
Once Apple’s after-sales service was the most praiseworthy, and in the past two years Apple stores have sunk to third and fourth-tier cities, which has also exposed service defects and has been exposed to consumer deception in recent years.
Lao Du said, now Apple’s after-sales center he can just go in and brush, but Huawei strict control, a camera shot inside, so he did not dare to “make a move”.
All of the above are problems that need to be solved in the new cell phone retail.
The decline of cell phone stores is just a microcosm of China’s retail history, and we will find that not only cell phones, but also traditional retailers are almost all facing this dilemma.
Recent Comments