1 billion role models | Whole house intelligence in 2021, whole house customization in 2017: Looking at the key breakthrough points of the industry from "Green Rice United Innovation"

Author | Zhen Zi, Shi Yaqiong

Source | 36氪Pro (ID: krkrpro)

In the smart home market in 2021, a wave of whole-house smart products may be about to take place.

This is a trend worthy of attention, but for the entire home furnishing industry, rushing to the secondary market is no longer a new thing - after all, a similar situation occurred among traditional home furnishing manufacturers in 2017.

That year, home furnishing companies including OPPEIN, SOFIA, and Shangpin Home Furnishing went public one after another. One of the important reasons supporting these companies to go public was that they evolved from a single point to a "whole house customization" business route driven by real estate reforms and new consumer demands.

With the current whole-house intelligence, many manufacturers are spontaneously carrying out "whole-house" layout, hoping to enhance their business imagination through the linkage of more smart home products.

Moreover, in terms of business digital progress, most smart home companies including Lumi , Orvibo , Broadlink , etc. have been established for about 10 years, have completed at least US$100 million in financing, achieved hundreds of millions of yuan in revenue, and are impacting or preparing to impact the secondary market.

Focusing on the logic of whole-house customization, we found that the capability dimensions of whole-house smart manufacturers are also mainly along the three aspects of technology/products, channels, and brands . In this era, we selected one of these manufacturers, Lumi Lianchuang, for disassembly.

Green Mi Alliance has cooperated with Xiaomi since its early days, launching product packages and continuously expanding the "whole-house smart category". With the support of Xiaomi's brand and audience, it launched its own Aqara brand and expanded and managed channels.

In terms of direct manifestation, the company's founder and CEO You Yanjun introduced that Lumi Lianchuang's annual revenue has exceeded 1 billion. To some extent, it is a relatively unique research object in terms of products, channels, and brand building in the context of smart home and even the entire home industry.

This article will take Lumi Lianchuang as an example to explore the following issues:

1. Why is whole-house intelligence in 2021 similar to whole-house customization in 2017?

2. What is the judgment logic for whole-house smart manufacturers?

3. What are the characteristics of Green Rice in terms of products, brands and channels?

4. What are the possible growth points for smart homes in the future?

“Whole house intelligence” in 2021, “whole house customization” in 2017?

0. Potential IPO boom

After nearly 10 years of rapid development, the smart home industry may gradually usher in a listing boom in 2021.

In the early days, the smart home industry had two main difficulties: a narrow user base and high barriers to entry. These two factors complement each other. A typical example is Bill Gates' home, which was once called "the smartest house in the world" by some people because of its intelligence, and the high cost of this house is no longer news.

In China, the situation was similar in the early days. "At that time, most people who were interested in smart homes were high-end people who were fanatical about technology," said a venture capitalist who has been paying close attention to the smart home industry.

On the industrial side, the evolution history of smart home in China can be roughly divided into the embryonic stage (1994-1999), the start-up stage (2000-2005), the wandering stage (2006-2010), the breakthrough stage (2011-2020) and the harvest stage (after 2020).

Many of the leading smart home manufacturers are also growing in the breakthrough period and expanding in the harvest period. For example, Yunmi Technology, Huami Technology, and Roborock Technology have already gone public. Another example is Lumi Lianchuang, which was established in 2009 and shifted from the B-end to the C-end in the early days. It is now also a well-known smart home target in the primary market.

Another example is Oreebo, which was founded in 2014 and completed Pre-IPO financing at the end of 2019. It has previously announced that it has entered the listing guidance period. Chuangmi Technology announced in April this year that it had completed a 200 million yuan Series B financing.

From the perspective of industry logic, we found that whole-house customization manufacturers represented by Oppein and Sofia have many overlaps with the whole-house customization industry in terms of product, channel, and brand measurement dimensions .

Since 2017, many whole-house customization manufacturers have been listed one after another, which may be the situation in the smart home field in the future. It can be said that the experience of these whole-house customization manufacturers provides a priori premise, allowing us to analyze the trend of whole-house intelligence at this time.

1. Whole-house customization and whole-house intelligence are similar businesses

To discuss whether there is a basis for comparison between two industries, we can judge from the two aspects of cause and goal. Cause refers to the driving factor, and goal refers to the fundamental problem that the industry currently wants to solve.

First, full customization, as the name implies, is a model in which home furnishing manufacturers enter the market with single-point products (such as cabinets, wardrobes, etc.), and then expand to other categories and provide packaged solutions. This model can be designed according to consumer requirements to meet their personalized needs for home furnishings.

From the reasons, the biggest key points of change in whole-house customization and whole-house intelligence come from both the real estate industry and consumers.

Therefore, the goal of whole-house intelligence and whole-house customization is to approach the issue with a more comprehensive solution approach and meet the C-end's demand for home consumption from the aspects of products, sales, and implementation.

When the needs are determined and the goals are consistent, the next information that needs to be pulled together is what benefits the manufacturer will gain from this model? And how should the specific implementation path be constructed?

For traditional home furnishing manufacturers, customized home furnishings are low-frequency, durable consumer goods, and customers are unlikely to repurchase them at will. Therefore, expanding product categories, increasing the total package price, and expanding from single-category customization to whole-house customization are the only way for this industry.

Similarly, in order to meet C-end demand and increase its own profit margins, whole-house intelligence is also taking the solution route of expanding product categories and increasing general contracting prices.

But the difference between consumer electronics and traditional home products is that consumers do not have to be too bound by factors such as budget and spatial location, and can constantly match and upgrade products according to their own preferences.

For smart home manufacturers, when they enter the target customer group with solutions and then continuously innovate products based on the existing home ecosystem, they will get the ticket to expand into the customer's home ecosystem.

Therefore, whole-house customization and whole-house intelligence mean the evolution of home consumption for consumers, and it is also a natural upgrade of business model for manufacturers . From all aspects, the two have a basis for comparison.

2. 2017 and 2021

History is a mirror. If we choose a key time point from the whole house customization, 2017 will be the first one.

Turning back the clock to four years ago, the year of listing of customized home furnishings has arrived. This year, Oppein Home Furnishing, Shangpin Home Furnishing, Zhibang Cabinet, Wellhome Home Furnishing, and Gold Medal Cabinet all went public, and Suofeiya was listed on the Shenzhen Stock Exchange as early as 2011. Various players in the industry have intersected in the capital market.

The next question to be answered is, why 2017? Admittedly, for a company to go public, its own development rhythm is the main factor. At that time, many manufacturers had been established for nearly 30 years and had gone through the corporate development cycle of productization, commercialization, and scale. IPO was naturally on the agenda.

But from a more macro perspective, the changes in the real estate industry cannot be ignored. Overall, the overall growth of the real estate industry was on the rise at that time.

According to the National Bureau of Statistics, in 2015, the sales area of ​​commercial housing was 1284.95 million square meters, an increase of 6.5% over the previous year; in 2016, the sales area of ​​commercial housing was 1573.49 million square meters, an increase of 22.5% over the previous year. In 2017, the sales area of ​​commercial housing was 1694.08 million square meters, an increase of 7.7% over the previous year.

According to statistics from Soufun.com, in terms of quantity, the total number of renovated houses in China in 2017 was about 20 million. As a post-cycle industry in real estate, the home improvement market has enjoyed a driving effect and also provided fertile ground for the customized home furnishing market.

This is the dividend of the times enjoyed by customized home furnishings.

Fast forward to this moment, at the beginning of 2020, under the regulatory policies based on "housing for living, not for speculation" and "deleveraging", the real estate industry, which has been running wild for 20 years, is considered to be transitioning from the golden age to the silver age.

According to statistics, in 2019, the sales area of ​​commercial housing was 1715.58 million square meters, a decrease of 0.1% over the previous year. In 2020, the sales area of ​​commercial housing was 1760.86 million square meters, an increase of 2.6% over the previous year. Overall, the market growth rate has shown a clear downward trend compared with previous years.

However, the trend of fine decoration is still obvious . According to statistics from the China Building Decoration Industry Association, from 2016 to 2019, the overall growth rate of the domestic fine decoration market remained above 25%. In 2019, the scale of newly launched projects in the domestic fine decoration market reached 3.193 million units.

Players in the real estate industry will inevitably need to come up with new ideas. Whole-house intelligence is a trend that meets the needs of C-end consumers, and can be connected with scenarios such as smart communities. It can also be integrated into the needs of fine decoration, and its importance is also highlighted.

In addition, as mentioned in the previous article, most of the current relevant manufacturers in the field of whole-house intelligence have been established for about 10 years, and many companies have achieved revenue of several hundred million yuan.

Therefore, considering the industry characteristics and the company's development rules, we believe that the smart home track around 2021 may be just like the traditional home track in 2017 - continuous IPO opportunities should be certain .

But no matter what, going public is only a milestone in the life cycle of a company, and long-term value is the key to judging a company. In the following article, we will learn from history and discuss the value dimensions that deserve attention under the trend of whole-house intelligence.

3. Learn from history: the trinity of products, channels and brands

If you want to select research objects from the many traditional home furnishing players, OPPEIN, SOFAIA and Shangpin Home Furnishing are three companies that cannot be missed in whole-house customization.

First of all, the market value of Oppein and Suofeiya is much higher than that of their peers, especially Oppein, which is currently worth about 90 billion yuan, and is in the leading position. Suofeiya's market value is about 30 billion yuan. Shangpin Home Furnishing is the first manufacturer in the industry to call for customized home furnishings.

Among them, the development paths of OPPEIN and SOFIA are quite similar. Both started from a single point and extended to whole house customization, but OPPEIN started with cabinets while SOFIA started with wardrobes.

Shangpin Home Delivery started with the transformation from mechanical software design, and based on its design expertise, launched five free services: "on-site measurement → design drawing → quotation → delivery and installation → warranty".

Later in 2008, it developed the prototype of whole-house furniture, that is, forming different products according to consumer needs, and then forming product combinations (such as TV cabinet combinations, shoe cabinet combinations, sofa and coffee table combinations) for set sales.

From a commercial perspective, products, brands and channels in whole-house customization are an inseparable trinity.

Although whole-house intelligence is more flexible than whole-house customization, for customers who want to experience whole-house intelligence from the beginning, various types of products need to be connected to achieve the effect of intelligent linkage.

However, the linkage foundation of various products is not perfect nowadays, so the product that consumers buy first will largely affect their subsequent continuous consumption. From this perspective, the technical capabilities, product experience, channel coverage, and brand promotion capabilities of whole-house smart manufacturers need to be built in all aspects.

Based on these three dimensions, we believe that Lumi has some unique characteristics of the times in terms of technology selection and product entry points, channel construction and management, and even brand cooperation.

Whole house intelligence: the upgrade of smart home

1. Seize the first wave of dividends

Last year, an investment institution made a very interesting observation, that is, looking back from 2020, the hardware companies with the highest revenue established in the past six or seven years are most likely Xiaomi ecosystem chain companies.

Some consumer electronics companies worth paying attention to in recent years

Source: Xianfeng

2014 is a critical time point. It can be seen that most of the Xiaomi supply chain companies in the above table were also established around 2014. Previously, Xiaomi executives also mentioned in an interview that Lei Jun proposed the slogan of "grabbing the company" that year, which provided Xiaomi with a "huge opportunity" to quickly deploy the Xiaomi ecological chain .

From the perspective of the entire industry, 2014 was undoubtedly still the early stage of smart home in China. At that time, the number of people accepting smart home was small, and the industrial chain was not mature. It was quite difficult for new brands to stand out.

If we break down the industry chain, smart home can be divided into upstream parts and core technology providers, midstream single product manufacturers and smart home system solution designers, and downstream sales channels. In addition, there are platforms that do not directly provide products but aim to connect various products.

Among them, midstream product manufacturers and system solution designers, that is, smart home companies in a narrow sense, also cover many smart home manufacturers on the market.

Smart Home Industry Chain

Source: GF Securities

The key is to integrate the supply chain, which is mainly upstream. For hardware products, supply chain management includes the procurement and selection of upstream components. The choice of components and the foundry to cooperate with affect the manufacturer's product costs on the one hand, and determine whether the product can be stably mass-produced on the other .

Xiaomi's name undoubtedly lends support to this wave of ecological chain companies - when new companies negotiate cooperation with component agents and foundries in the name of Xiaomi, they will inevitably be more likely to leverage the latter.

You Yanjun, founder and CEO of Green Mi Alliance, told 36Kr that at that time many suppliers had reached a consensus that "Xiaomi = hot-selling product" and were willing to negotiate directly with companies in the Xiaomi ecosystem for orders in the millions based on trust. In addition, Green Mi Alliance will continue to help factories carry out automation transformation in subsequent cooperation to improve efficiency together.

Low cost means flexible pricing, and it also gives more people the opportunity to experience smart home products. But this is only one of the important prerequisites. In an era when smart homes are still not widely known, finding a user base that matches the product's tone and is broad enough, and then pairing it with high-quality and low-priced products, is part of the logic for the emergence of hot products.

Most Mi fans are willing to try out new technology products, have a wide range of users, and are slightly sensitive to price. As a result, many companies in the Xiaomi ecosystem have obtained many key conditions for creating hit products .

A well-known history is that Lumi Lianchuang was formerly known as Lutuo Technology, which was established in 2009 and mainly engaged in the research and development and application of wireless building control systems, aiming to help B-end buildings save energy and intelligent transformation. As the market was not yet mature at that time, the company introduced Xiaomi financing in 2014 and joined the Xiaomi ecological chain.

In 2015, its joint launch of the Mijia smart home set with Xiaomi was an unavoidable milestone.

This set sold over a million copies within one year of its launch. The set includes a multi-function gateway, human body sensor, door and window sensor, wireless switch and other products, and the price is only 199 yuan. 36Kr learned through interviews that in the past, such products were often bulky and not suitable for home scenes;

In terms of cost performance, the batteries of such products in the past were not durable and the prices were often thousands of yuan. So at that time, products like the set, which were cheap, designed to be suitable for family scenes, and passed quality control inspections, matched the preferences of the Mi fans group, and had the rationale to become a hit.

Regardless of the number of products in the set, this set from Lumi Lianchuang also brings the significance of a blockbuster product - it not only helps the company receive the first wave of positive feedback on revenue, but also provides a foundation for subsequent product expansion.

In the entire Xiaomi ecosystem, many companies started with hit products and then expanded their product categories. For example, Chunmi expanded from water purifiers to kitchen appliances, and Yunding Luke expanded from door locks to home security. The characteristic of Lumi Lianchuang may be that it started with sensor products and expanded to lighting, security and other scenarios in the future.

Back to the whole house intelligence, the ideal picture is the linkage of various products in the home scene. The manufacturer's continuous expansion of product initiatives is also the key to achieving whole house intelligence .

2. Upgraded products: starting from the system

In addition, some industry insiders believe that Lumi's differentiation also lies in the logic of whole-house intelligence starting from the system.

As mentioned above, the set released by Lumi in 2015 includes a multi-function gateway, human body sensor, door and window sensor, wireless switch, etc. The gateway and switch can directly connect and control other smart devices.

Yunmu Capital, which is familiar with the development history of Lumi, told 36Kr that in 2015, the products, technologies, and business ideas of smart homes were not mature. In particular, from the perspective of underlying technology, the only wireless transmission technology that could achieve low power consumption, low cost, and networking capabilities was Zigbee.

Nowadays, Bluetooth is also interconnected, but its high power consumption and high cost make it unsuitable for industrial control and home networks that require low cost and low power consumption, and its transmission range is also limited .

And he believes that most manufacturers who promote Bluetooth are more single-product, hoping to focus on a certain product (such as mobile phones), which is different from the starting point of Lumi Lianchuang. Lumi Lianchuang chose Zigbee technology at the beginning, which is also a manifestation of entering the smart home industry from the system.

Currently, Lumi has also adapted to multiple protocols, but Zigbee is the underlying technology that it has been optimistic about from the beginning. Lumi CEO You Yanjun believes that the experience that smart home ultimately brings to users is the collaboration of multiple devices.

Collaboration requires stable connections between devices. It is obviously not enough to have only a single device. Basic smart home components such as gateways, sensors, and controllers are indispensable.

This is the subjective idea of ​​​​Lumi Lianchuang in providing basic equipment for smart homes. In terms of objective conditions, Lumi Lianchuang chose Zigbee technology and the route of "providing basic equipment for smart homes" when turning to the C-end due to the technical background of its previous founder You Yanjun as an expert in the field of automation and control, as well as the experience accumulated in the research and development of wireless building control systems during the early period of smart building transformation.

Today, Lumi has created popular products such as smart door locks based on infrastructure products such as sensors and controllers. By breaking down its product logic, we can find that smart door locks are actually an extension of its smart home basic equipment ecosystem .

Brands and channels that complement each other

1. Brand: external halo and self-construction

Similar to whole-house customization, brand, as a strong driving factor supporting product sales, is a battleground when whole-house intelligence is implemented.

As mentioned above, Xiaomi’s tone is more focused on mass consumers. Coupled with its simplicity and low price, it has also attracted more young consumers to become fans.

To some extent, this overlaps with the young group who are willing to experience smart homes, especially whole-house intelligence - the group that is willing to experience the entire set of smart feelings in the entire home space before more people is likely to have more characteristics of the younger generation of technology enthusiasts.

Therefore , the support of the Xiaomi brand is very important in the early exploration stage of Lumi Lianchuang.

However, with the change of development stage, the independent development energy brought by private brands to home furnishing manufacturers cannot be ignored, which has long been verified by whole-house customization manufacturers. After all, the brand determines the decision-making cost of users and also affects the possibility of extending from a single point to multiple points and forming a whole-house smart.

In order to build dozens of smart devices into a complete experience of whole-house intelligence, a complete service chain from user experience recognition, solution customization, installation and debugging to after-sales operation and maintenance must be established. Service will become a more important part of brand recognition. This is also one of the purposes of Lumi Lianchuang to build its own brand and establish a service provider system.

Specifically, the effects it hopes to achieve include the following two points:

You Yanjun believes that providing services from an offline perspective is the core layout of the Aqara brand. This will also extend to the next topic, that is, channels.

2. Closed loop between online and offline

(1) Brand linkage channel

For consumer electronics manufacturers, brand is a way to reach users, and channels are the core of converting orders.

First of all, in terms of online sales, in addition to Xiaomi's channel support, Lumi's own brand Aqara has also been deployed on platforms such as Tmall and JD.com. You Yanjun introduced that in most online channels, Lumi's annual sales performance can reach the first level.

For example, during the 2018 Double 11 shopping festival, within 1 hour and 20 minutes, the online sales of all categories of Green Home smart home products exceeded RMB 100 million, and the number of smart products sold on that day reached 500,000.

"This may be the annual sales volume of many smart home companies, but at that time, Lumi Lianchuang completed it in one day," said You Yanjun.

The offline channels of Lumi Lianchuang are divided into two categories. The first is service providers and smart home experience centers , and the other is To B channels , mainly including real estate developers, home improvement manufacturers, operators, etc.

This is because although the broad user base of smart homes is on the C-end, cooperation with B-end real estate developers, home improvement manufacturers, operators, etc. is also a promotion model for manufacturers in the industry. Manufacturers such as Oreebo, Boradlink, Nanjing IoT and Yunqi are all promoting such cooperation, and Lumi Lianchuang is no exception.

Online and offline channels as well as brand capabilities play a complementary role in traffic generation and conversion.

There are roughly two ways for Lumi Lianchuang to convert orders .

In the first one, users become aware of the Aqara brand and pay a deposit for the whole-house smart system through online channels. Then the offline service will take over the order and be responsible for the specific implementation.

Second, users who are interested in achieving whole-house intelligence will search for Aqara on the Internet, and then find a nearby service provider to fulfill their needs.

The "2020 Smart Home Industry Research Report" shows that currently 80% of surveyed users have some understanding of smart homes, and 46% of consumers learned about smart homes through online channels.

In the conversion phase, 52% of consumers prefer to purchase after experiencing the home furnishing store. This also indirectly shows that the online and offline linkage of manufacturers is in line with the needs of today's consumers.

From a broader market perspective, when users accept whole-house intelligence, there is a 0-1 and 1-N transition. Online channels display a variety of single products to a large number of potential users, and users who accept single products first complete the 0-1 transition online or offline according to their needs.

When users feel the charm of a single product, they may continue to purchase multiple products and eventually develop a demand for whole-house intelligence. Offline channels can meet the overall implementation needs and help users complete the transition from 1 to N.

(2) Channel Management

As mentioned above, franchise is often a low-cost way for enterprises to expand the market, and many whole-house customization manufacturers also take this route. The smart home market is large and still in its emerging stage. The full direct sales model consumes financial resources first and second does not match the market characteristics very well.

However, the risk of the franchise system is that the company cannot fully penetrate the front line, and it is also impossible for each consumer to experience completely consistent services in person . Therefore, the management of franchisees by the company becomes a top priority.

From the perspective of Lumi, it has been selling products online for the first three years since it joined the Xiaomi ecosystem in 2014. However, users of smart homes need to experience it in person and also need one-stop services.

Therefore, since 2017, Lumi Lianchuang has begun to build the Aqara smart home service provider system and established a smart home 4S service system including Solution (solution display), Sales (product sales), Service (user service), and Survey (communication and feedback) to promote the one-stop implementation of smart homes.

To date, the company has established nearly 600 offline physical stores in more than 230 cities and regions across the country, serving 200,000 households.

Support for service providers should include all aspects and even become a systematic project. The first is products . For the service provider model, the products provided by manufacturers to service providers should be as standardized as possible, and the service threshold should be relatively universal. The second is to formulate strategies , first to help service providers improve service quality, and second to make them earn money.

In terms of products, Lumi Lianchuang said that its products are easy to use. For example, they support lightweight installation, do not require wiring or modification of original lines, greatly reduce construction period and cost, and are easy to use.

In terms of technology, it says that the power consumption of its own sensors is 1/3 of the industry's average, and a button battery can support a service life of 2-5 years; it can still be used normally even if the WIFI is disconnected, and has good stability.

The strategy consists of two parts. One is to help service providers carry out their work. For example, service providers will receive training from Lumi Lianchuang in many aspects, such as site selection, sales, installation, and maintenance. Lumi Lianchuang will also provide some tools to help service providers improve efficiency in configuration and maintenance.

Specifically, in terms of store location, Lumi United will assist franchisees in selecting locations and leverage the headquarters' strategic cooperation to obtain stores, which can help franchisees reduce rent by 20% or even 50%.

In terms of tools, Lumi Lianchuang said it will provide full-process service tools, including front-end design tools, configuration tools, and back-end remote troubleshooting tools. In actual operation, service providers can use remote troubleshooting tools to troubleshoot problems such as power outages in the community, network bandwidth, or router freezes without having to visit the site.

Of course, the service provider's need is to develop the market with Lumi Lianchuang and gain profits. Many offline channels are still in the business model of "earning the difference" , but Lumi Lianchuang said that it has been helping the channels move towards the "earning service fee" model.

The company believes that for service providers, product profits are only a part of the profits, and the greater source of profits is service fees. Taking smart door locks as an example, Lumi Lianchuang will transfer related orders from online to offline stores, allowing the stores to earn installation fees.

Its executives once said in an interview, "Passing the hardware gross profit of the product to users, earning service fees through offline channels, and cultivating users' payment habits for services are operational links that smart home companies need to pay attention to."

At the same time, an assessment system to ensure the level of service providers must also be introduced. On the Lumi Lianchuang official website, it can be seen that its joining process includes four stages: screening period, preparation period, assessment period, and formal period.

Especially during the assessment period, franchisees need to sign a three-month franchise contract with the company, participate in official training, assess performance, and investigate user satisfaction. In addition, Lumi Alliance also emphasized that it will assess service providers according to strict standards. On its official website, it can be seen that about 60 service providers have been terminated by Lumi Alliance for "not meeting the standards."

In summary, Lumi Lianchuang screens service providers in three dimensions , the first of which is the service concept. Since the whole house intelligence is relatively complex from engineering survey to design to debugging, it requires a strong service concept.

The second is strong team management capabilities, otherwise the service quality will be reduced. The third is focus.

Lumi Alliance service providers usually go through a 3 to 6 month probation period. If they are not focused enough, their learning period will be prolonged, and the break-even point will also be prolonged, which will bring pressure to the service provider. However, if they are focused, the better effect is that the service provider/franchisee may make a profit in the same month and recover the investment in 7 months.

(3) Challenges from the B-side

At present, the Lumi brand and channels have certain characteristics on the C-end, but on the B-end, manufacturers such as Oreebo may go further.

According to data provided by the latter, it has now become the exclusive strategic procurement supplier of home furnishings for many of the top 100 real estate groups, and has implemented 284 smart real estate projects in batches.

Earlier, Oreebo mainly adopted the 2B2C method in its customer acquisition channels, that is, reaching target customers through real estate companies, home decoration design companies and integrators to complete product implementation. This method also allowed it to progress faster on the B-side.

For real estate developers, fine decoration has been the focus of policy promotion in recent years. If the smart home control system can be involved in the pre-installation, it can cost less than before and create a cutting-edge sense of technology for the house.

In addition, B-end customers such as residential properties, long-term rental apartments, hotels, office parks, etc. are also interested in achieving security, energy conservation and environmental protection, and improving operational efficiency through smart homes.

For Lumi, B-side services are also important. Although the number is not large, it has already reached cooperation with some B-side customers.

In terms of strategy, Lumi completed a $100 million B2 round of financing in 2019, led by Far East Investment. At that time, both parties said that Lumi would also leverage the industrial resources of Far East Horizon Group, which is behind Far East Horizon, to actively deploy Aqara's whole-house smart solutions in nearly 100 hospitals and nursing homes and dozens of schools under Far East Horizon.

The experience in building products and some service provider systems may be the advantage of Lumi Lianchuang in serving the B-end at this time. The company believes that it has experienced the rigorous test of many C-end users from its earliest transformation to the current secondary layout, and has also created a number of popular products. It has a deep understanding of user usage scenarios and has made sufficient preparations in terms of product strength.

As for the engineering companies that serve the B-end, Lumi Lianchuang can also reuse its experience in building the C-end service provider system, training experience accumulation and some tool system foundation. The company believes that it is ready to reduce the dimension from the product and service port to the B-end.

In terms of market recognition, the company revealed that it received a smart community order for 6,000 residential units in Cambrian Town, Yunnan last month, "which some people in the industry called the 'largest order for smart communities' ".

This is an advantage that it has extended on the existing basis. However, it is undeniable that due to the difference in positioning, the company's brand and channels also need to "start from scratch" to some extent, which is also a challenge for it.

However, it is also worth mentioning that some industry insiders believe that although the B-end is also a path, due to the wide range of people and the preciousness of traffic, the general direction of smart home is still the C-end. They believe that the current popularity of the B-end is also due to changes in the real estate market, which has brought another path to the smart home industry at this time.

Overall, it is precisely because of the linkage between products, brands and channels that You Yanjun introduced that Lumi Lianchuang’s annual revenue has already exceeded 1 billion.

Long-term planning

1. Go overseas

As mentioned earlier, whole-home intelligence in 2021 is similar to customized home in 2017.

But then again, no matter where you go public, the core consideration is to tell a growth story or a profit story. The former makes everyone believe in the company's potential, and the latter proves its ability to make money.

At present, the smart home industry is still undecided. Whether it is product development, channel construction or brand promotion, it requires a lot of capital investment. In addition, from the consumer side, smart homes are far from entering thousands of households. At this point in time, the strategy of many companies is to try to set prices within a not-too-high range to expand the market.

Analyzed from these perspectives, the growth story is more suitable for smart home manufacturers - industry players are trying to expand C-end users, further expand the B-end market, and even expand overseas .

Regarding overseas markets, You Yanjun had previously discovered inadvertently that Lumi also has a group of "fans" overseas. In the early days, Lumi's products flowed overseas through purchasing agents and other means, and were recommended by bloggers on platforms such as Yotube.

Seeing the active signs of potential consumers, Lumi also decided to include overseas markets in its territory. When announcing the B2 round of financing, the company stated that North America and Europe will be the overseas markets that Lumi will focus on expanding in the next three years.

In these markets, Lumi will use the online e-commerce platform Amazon as the entry point. At the same time, it will launch a series of offline collaborations with Apple's global retail stores, large supermarkets, and large electronic product brand agents in various regions.

This is also the path that whole-house customization manufacturers have taken in the past. By reading the annual report of OPPEIN, it can be found that its product exports are mainly through two modes: foreign bulk business sales and foreign retail sales.

Overseas bulk sales refer to the company's independent participation in overseas retail, project negotiation, contract signing and performance; overseas retail sales refer to the company's sales of "OPPEIN" series of branded integrated home products through retail channels or by selecting overseas dealers. Regardless of the method, going overseas has become one of OPPEIN's options for further market expansion .

In addition, from a more macro perspective, each step of the research, production, and sales chain requires investment. As the industry chain matures, the cost of research and development will gradually decrease, and the cost of SKU expansion and sales will increase as the company expands and traffic becomes more expensive.

Under these premises, first movers are likely to be better at harvesting traffic and maintaining channels, which is also the advantage of Green Rice United Innovation.

2. From selling hardware to selling services

From the perspective of the whole-house smart model, the continuous expansion of product categories is also a powerful factor for manufacturers to tell a good growth story. At present, the positioning of whole-house smart manufacturers to provide basic equipment can theoretically extend more SKUs and make it easier to tap the potential of the overall smart home scene.

With the goal of providing a complete smart home experience, You Yanjun believes that there will be many more products that Lumi will be able to make in the future, such as elderly care, pets, and other scenarios that may bring inconvenience to people's living experience today.

As new products are continuously integrated, the linkage functions of basic equipment will be able to work together with the former to provide users with a more comprehensive smart home experience.

As mentioned earlier, Lumi believes that earning profits from services is a more imaginative business model for smart home manufacturers.

For example, its cooperation with LG in the Korean smart home market focuses on services - each user will pay a monthly service fee and sign a three-year contract. This charging method that creates a continuous connection with users is obviously more imaginative than a one-time transaction of simply selling hardware.

Of course, the premise for this model to work is that more and more users discover and confirm their need for services.

Today, some institutions around the world predict that the market size of smart homes will grow from US$78.3 billion in 2020 to US$135.3 billion in 2025. In China, the current market size of smart homes is growing at an annual rate of more than 20%, which also means an expansion of the potential consumer group.

If the concept of whole-house intelligence is further accepted with market education, perhaps the service-oriented business model will also be promoted. This is also one of the more revolutionary imaginations of smart home that breaks away from the traditional home field.

This article was written by Zhen Zi and Shi Yaqiong . It was first published on the official account 36氪Pro (ID: krkrpro). 36氪Pro is the official account of 36氪. Exclusive venture capital reports and interesting capital stories are all on 36氪Pro.