Over one million reservations, another big gamble by major mobile phone manufacturers after a year
Latest update time：2024-09-07
Reads：
"
There are over 40,000 in stock, a carnival for a few people.
"
Author | Ma Guangyu
Editor | Li Donghui
"It was particularly difficult to operate channels in the first half of this year. Now most big dealers are thinking about where to get financing and where to borrow money." Li Bing, a member of the dealer system of a certain mobile phone brand, sighed when talking about the status of dealers this year.
Since the beginning of this year, the brand has been sending out signals of "going all out" and has been placing special emphasis on profits, so that the provincial company has more orders to pick up goods than before. Li Bing had to pay a large amount of cash to pick up goods to ensure that there would be no problems with subsequent distribution. However, what he did not expect was that the "P series" was not well received, which caused Li Bing's inventory pressure to increase sharply. The "additional products" previously obtained through distribution were also lying in Li Bing's warehouse.
From Li Bing's perspective, "difficult business" is a three-dimensional problem. The feedback from the external market is only one of the factors. More pressure comes from within. Under the existing channel system, the top dealers still have room to survive at a loss, but for the dealers below the middle level, every time they follow up with the manufacturer's "potential hit" product, they have to bet most of their assets.
Li Bing is a veteran in the communications industry. He has been working with brands on channel business for more than a decade. He also participated in the brand's large-scale expansion of authorized stores and fortress stores last year. However, the pressure of reality forced Li Bing to reconsider the possibility of changing the agent brand.
(For more details, please add the author's WeChat: ByArsT)
01
Out of stock store
“Think about whether it is more advantageous for the channel to be half a step ahead of the product or for the product to be half a step ahead of the channel?”
Last year, when a certain brand’s 60 series was just released, the vice president of the brand left the following message during a visit to Guangzhou. Prior to this, the brand required dealers to expand stores across the country on a large scale, regardless of size, and planned to restore stores to pre-epidemic levels by the end of the year.
The "half-step faster" channel was the core premise for the 60 series to quickly occupy the market. It also gave a "boost" to dealers who had been losing money for years. Many dealers told Leifeng.com: "At that time, everyone was very confident. This wave alone has made back all our losses in the previous years."
What many dealers didn’t expect was that after just a few days of good times, they would have to face new challenges.
"Business has been difficult since March this year. On the one hand, there are some goods we want to sell, but they are difficult to get due to shortages. On the other hand, manufacturers are under great performance pressure this year, and they need to purchase some goods that are not so easy to sell, which leads to a large inventory," dealer Liu Lang told Leifeng.com.
According to the supply chain, in the first quarter of this year, the brand transferred the 60 series production capacity to the upcoming P series, resulting in a long-term shortage of the standard version of the 60 series in many stores. For this reason, the offline pickup requirements for 60 Pro and 60 Pro+ have become more stringent.
"When the stock was out of stock, you had to buy two TVs to buy a hot-selling version of the 60 series. Some large dealers were even asked to buy eight TVs. They were so scared that they dared not sell anything," Liu Lang told Leifeng.com.
"Out of stock" is a relative term for some dealers. For example, when facing more demanding distribution strategies, the top core dealers such as 368 and Golden Seed have sufficient funds to digest them, so they will naturally receive more resources; while the mid-level dealers want to quickly clear the distribution inventory, so they will choose to bundle and sell the hot-selling products, which will disrupt the price order. (For more details, please add the author's WeChat: ByArsT for communication)
This phenomenon is also reflected in certain regions. One very obvious difference is that the strong merchants' stores in first-tier cities basically have stock, and some stores will even recommend consumers to buy the higher-end "Ultimate Edition" package, the difference is that the earphone products will be thousands of yuan more. In some third- and fourth-tier cities or mid-tier merchants' stores, even when it is close to the end of the product cycle, it is difficult to see the 60 series in stock.
Under market pressure, adjustments to production capacity followed: additional orders were placed for the 60 series during the period of June and July, with priority given to the supply of the 60 Pro and 60 Pro+ versions to maintain market heat, and the Pura 70 stocking was adjusted to clear inventory offline.
However, the adjustment of production capacity may not necessarily solve the problem of product "shortage", at least not before the release of the new 70 series.
From Liu Lang's perspective, the brand is under great pressure in the integration business this year. The local chief executives have told dealers: Take more goods now, and you will get more when the hot-selling products are released next time. Many mid-level dealers thought that they could wait until the release of the P series to see the spring, but they ended up waiting for another turning point.
On the day when the P series mobile phones were released, many dealers told Leifeng.com that the customer flow has increased significantly, but the prices are too high compared to expectations, which has made consumers more cautious. It is obvious that the P series has not assumed the role of stabilizing the market. Instead, it has further exposed the brand's shortcomings of weak pressure-bearing ability in various price segments.
According to supply chain information, the brand set a sales target of 70 million units at the beginning of this year, which was subsequently adjusted to 50 million units. However, as of the end of July, sales were only 24 million units.
"Due to the new ban this year, low-end products cannot use Qualcomm chips, so there will be a relatively large impact, but from the perspective of brand potential, it will not be difficult to achieve shipments of more than 40 million units in the second half of the year." A supply chain person gave his own judgment to Leifeng.com.
On the other hand, if the production capacity of low-end products is limited, manufacturers will inevitably make certain compromises in pricing if they want to achieve annual shipment targets.
02
Belated price cut
In mid-July, the P series, which had just been released for three months, officially announced a price cut, with the Ultra version directly reduced by 1,000 yuan compared to the initial price, starting at 8,999 yuan. On August 15, the brand further reduced the price of the 60 series, with the maximum price reduction reaching 800 yuan.
For dealers, the price cut is a very sudden thing, which means that the original inventory will continue to be overstocked, and the flow rate of hot-selling products will be accelerated. However, the good news is that the P series has been matched to a correct price.
The price reduction policy of the P series has achieved certain results. Liu Lang told Leifeng.com: "The P series was a bit 'unworthy of its position' before, but this price reduction is still effective, and sales have increased slightly."
According to Wang Hai, an employee of a certain country representative, the reason why the brand is willing to cut prices is that it has achieved its sales target for the wearable business this year, and some cities have also cancelled the downgrade policy. In other words, dealers will not be punished even if they fail to complete their sales tasks.
Starting this year, the brand has slightly increased the sales target of its wearable business: "It can be seen from the internal assessment targets that the wearable business previously accounted for 6-7 points of the assessment, and now it has increased to 8-9 points," said Wang Hai.
The improvement of performance assessment of wearable business means that dealers need to take more goods when picking up goods and meet more targets set by brands. The cancellation of the downgrade system in some provinces and cities means that manufacturers no longer need to put pressure on dealers to allocate goods and force sales, and hot-selling mobile phone categories are no longer tied down by "allocation of goods".
However, with the extension of this policy, the actions taken by some city and prefecture officials are still somewhat distorted: "In early July this year, the brand suddenly lifted the control on Watch GT4. The market feedback for this product was very good, and it could obviously be produced for a while longer. However, the lifting of the control led to the mixing of goods and dumping of goods everywhere, and the price was directly hit the freezing point." Zhao Gang, a brand channel manager in a certain region, told Leifeng.com.
The decision-making errors made by the heads of cities and prefectures were due to the pressure brought by the "profit-oriented policy" within the brand, and on this basis, the actions of some provincial companies were also distorted.
In the eyes of dealer Liu Lang, some channel employees of the brand have been "changing orders every day": "In order to meet the performance pressure, the current operators often promise us that as long as we take this batch of goods, they will give us more resources the next time. As a result, when the next time the goods are distributed, this batch of resources is used for other purposes, and we can only lose money."
After the brand's return, although the flow rate of its mobile terminal business has increased, the sales of tablets and PC devices have not increased significantly, so the actual profit of dealers from selling products is not that high. On the other hand, the help provided by the brand to dealers is also extremely limited. The rapid expansion of the previous position has led to the exhaustion of high-quality store resources. At this stage, the only thing it can do is to help dealers do a good job of storefront and train more professional teams.
In the previous two years, dealers could still make up for the losses caused by store business through operator business. Now the subsidies provided by operators have been significantly reduced, which is undoubtedly adding insult to injury for some dealers.
Channel manager Zhao Gang also expressed helplessness about this matter: "As long as KPI exists, similar problems will inevitably arise. At present, many car dealers are making money, but if customers only do 1+8 business, they will most likely suffer losses."
In addition, in Zhao Gang's perception, due to the pressure of future development, too many unprofitable products were produced this year to test the market and pressure dealers to pick up the goods. This is also an important reason why merchants feel that this year is "difficult to do business."
"If there were one or two fewer IOT products such as PCs, tablets, and watches, manufacturers would not have to invest more energy in research and development, and dealers would not have to store so many goods in warehouses. Both brands and dealers would be able to have a more comfortable year," said Zhao Gang.
(For more details, please add the author’s WeChat: ByArsT for communication)
Wang Hai also confirmed this statement to Leifeng.com. According to internal research data, as of July, the loss ratio of dealers nationwide was close to 40%.
Fortunately, in the second half of this year, manufacturers have changed their channel strategy for expanding stores, requiring provincial managers to renovate existing positions and improve store standards. In addition, they have begun to select the best from the existing stores, upgrading the image of stores that are not profitable or make little money, and directly closing unqualified stores.
However, this belated policy is indeed a little late for the dealers who have already lost money and exited the market.
03
Who will pay for the "profit"?
"Before the return, everyone still had some hope, but now life is even more difficult than before the return." Li Bing described the current situation.
For dealers, building stores means investing a lot of money in low-velocity, slow-return projects. Taking the construction of stores in second-tier cities as an example, Liu Lang told Leifeng.com: "It takes about 5 million yuan to build a large store. If it is a lifestyle store of nearly 1,000 square meters, it will cost about 10 million yuan. Compared with the expenses of expanding stores at that time, the money for holding inventory is only a drop in the bucket."
In addition to the losses in dealer business, after-sales service is also a sector with serious losses. Wang Nan, who works in after-sales service, told Leifeng.com: "As early as the second half of 2022, after-sales business was already not doing well. Some time ago, I heard that a dealer lost more than 300,000 yuan in one province in one quarter."
In Wang Nan's impression, the investment in after-sales stores is much higher than that in lifestyle stores because it involves brand image, service, staffing and other aspects. For this reason, the brand is extremely strict with after-sales dealers, and they will be punished if they fail to meet the standards. Some professional managers even use punishments as local performance.
"The after-sales business volume has declined in the past two years, and it has become increasingly difficult for after-sales dealers to make money." Wang Nan told Leifeng.com, "This year, several large after-sales dealers have withdrawn, and there are some who want to withdraw but cannot. Last year, there were still people taking over the stores, but this year there is no one connected."
Two months ago, the brand introduced regulations in some provinces and cities to transfer the original after-sales business to Hes experience stores and require experience store customers to supplement after-sales staff. It can be seen that manufacturers have realized that the pressure on after-sales channels is too great, and finally chose to take over the pressure to more powerful Top merchants.
Extending from this point of view, operational problems are only part of the difficulties faced by dealers today. The root of the problem is that there is not enough money in their pockets.
During the massive store expansion campaign at the time, some dealers took out loans to build stores. Store investment itself makes money slowly, and coupled with the decline in product potential, they did not make money from sales. The pressure on these dealers suddenly increased. Under the manufacturer's strict dealer hierarchy system, if they wanted to get more resources and products next time, they had to take out loans to buy more goods this time to prepare for the next "turnaround."
Some time ago, there were reports that some dealers went bankrupt or even went to extremes due to poor management. The manufacturer concluded that it was caused by poor management of the dealers.
However, only Li Bing, who was in the middle of it, knew that he had no choice: "In the system, if you don't keep up, you won't get resources. The consequence of not getting resources is falling behind and being eliminated."
(For more details, please add the author’s WeChat: ByArsT for communication)
There are still many optimistic voices about the mobile phone market in the second half of the year, and some institutions have given good growth expectations: in the second quarter of 2024, global smartphone shipments have increased by 6.5% year-on-year, and the data provided by Counterpoint shows that this quarter is also the quarter with the highest growth rate in three years. It is estimated that the sales volume of the Chinese mobile phone market will continue to grow by 3% throughout the year, and the sales volume will reach between 270 million and 280 million.
According to data from research institutions, China's mobile phone market shipments exceeded 70 million units in the second quarter of 2024, among which vivo topped the list with a market share of 19%. OPPO, Honor, and Huawei followed closely behind with market shares of 16%, 15%, and 15%, respectively. Huawei's market share increased to 15% from 12% last year.
Image source: Counterpoint
In terms of sales, vivo has seen significant growth in the price range above 3,000 yuan thanks to the success of the X100 series, and is able to occupy 10%-20% of the market share. Honor and OPPO are extremely competitive in the price range of US$200-400. It is worth mentioning that although Xiaomi's market share ranking is not high this year, its shipments of high-end mobile phones above 3,000 yuan have reached 22.1%, and it has obviously entered the stage of "high-quality growth".
Although the market performance of various companies in the first half of the year has exceeded expectations, it also means that the competition among companies will be more brutal in the second half of the year. Among them, companies represented by Huawei have made preparations early. Public information shows that Huawei will release a new three-fold screen product at the press conference on September 10: Huawei Mate XT Extraordinary Master.
This product is also sold in advance. At 12:08 on September 7, Huawei Mate XT was officially available for pre-order. Huawei Terminal said that the number of people who made reservations exceeded 10,000 as soon as the reservation channel was opened. As of 5:00 p.m. that day, Huawei Mall showed that one million people had made reservations. Sellers on second-hand platforms have already posted purchase links, with prices ranging from 30,000 to 100,000 yuan.
Historically, Huawei's folding screen products have been able to maintain a high premium for a long time after their release, which means that dealers can make enough profit from the product. However, it is worth noting that the first batch of Huawei's three-folding screen mobile phones is only 40,000 units in stock.
Industry insiders predict that the starting price of Huawei Mate XT may be 23,000 yuan, the premium for the first batch of scarce supply could reach 30,000 yuan, and the premium can be maintained at 5,000 yuan in the later period.
"The higher the pre-order volume of Huawei's 70% discount, the more uncomfortable it will be for small merchants like us, because we can't get the goods at all and we dare not even think about it," a dealer told Leifeng.com on the day of Huawei Mate XT pre-sale.
"Huawei plans to operate the tri-fold product in a whitelist and short channel manner this time. It may not even be able to get the TOP 368. Take Guangzhou as an example. There are more than 1,000 Huawei stores, but no more than 10 can get the tri-fold. So this time dealers still have to rely on the Mate 70 series to make money," Zhao Gang told Leifeng.com. "According to internal estimates, the Mate 70 series can achieve about 70% of the Mate 60 series."
Of course, Huawei's performance this year is also impressive enough. According to Huawei's first-half performance, sales revenue reached 417.5 billion yuan, a year-on-year increase of 34.3%, and a net profit margin of 13.2%, about 55.11 billion yuan. If Huawei can continue to maintain its growth rate this year, it is very likely to achieve sales revenue of more than 800 billion yuan for the whole year and return to its peak period.
The "Global Wearable Device Market Quarterly Report" recently released by IDC shows that the global market shipments in the second quarter of 2024 were 43.74 million units, among which Huawei surpassed Apple, Samsung and other manufacturers to rank first with a market share of 20.3%; and in the Chinese market, Huawei also ranked first with a market share of 38.4%, far exceeding the second place Xiaomi's 18.8%.
Behind Huawei's growing profits, it is inseparable from the support of the entire terminal. If Huawei wants to achieve its annual goals in the second half of the year, it is obvious that it needs to increase its support for terminals.
Huawei's three-fold terminal is ready to go, Apple frequently cuts prices to regain the Chinese market, and domestic and foreign brands continue to clash. Who will win the high-end market in the end?
The author of this article has been paying attention to smart hardware and terminals for a long time. Industry insiders who are interested in terminal channels and industry dynamics are welcome to add the author's WeChat (ByArsT) for communication.
//
Recent Hot Articles
京公网安备 11010802033920号