Capital is no longer optimistic about the creative small home appliance market? This is a false proposition

The epidemic in 2020 has brought countless creative small home appliances into the consumer horizon. However, with the easing of the epidemic, especially the ebb of the "home economy", creative small home appliance stocks seem to have become "yesterday's yellow flowers". With the end of capital speculation, The share prices of creative small household appliance brands Xinbao, Xiaoxiong Electric, and Beiding have returned to their 2019 levels. So, has the enthusiasm for consumption in the creative small home appliance market really disappeared? What will the future of the creative small home appliance industry look like?

Divide into the "long tail" market

In fact, whether it is "creative small home appliances" or "net red small home appliances", these emerging small home appliance companies are focusing on a field that has long been ignored by the mainstream market - the long tail home appliance market. This market is characterized by a focus on selling a variety of categories, each of which may appear to be relatively unscaled at first glance, but collectively generate significant sales. The long-tail market often addresses the relatively small needs of consumers and has a relatively broad value choice. Although there are some hot-selling products, they do not have the attributes of rigid family needs.

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The above-mentioned characteristics have also caused the market volatility of related companies to increase. Taking Xinbao as an example, in the first three quarters of 2021, Xinbao’s domestic sales business achieved revenue of 2.168 billion yuan, a year-on-year increase of 0.98%. The company's own brand Dongling contributed 140 million yuan in revenue, a year-on-year decrease of 32%. In the first three quarters of 2021, the company achieved revenue of 2.365 billion yuan, a year-on-year decrease of 5.32%.

Although creative small home appliance companies have indicated that they will hedge against unfavorable factors by increasing new product development and price increases, but with the overall decline in terminal demand, the room for product price increases is relatively limited.

In fact, looking at the products of creative small home appliance companies, a big reason for their popularity is the price choice. The average price of products such as electric stew pots, yogurt machines, sandwich machines, and mini ovens that are popular on e-commerce platforms is mostly below 200 yuan. , take the route of small profits but quick turnover; although the price of the products of Xinbao's brand Mofei is slightly higher, most of them are more than 100 yuan, and there are even several products of about 1,000 yuan, but except for popular models such as multi-functional pots, the sales of other products are still To be improved.

In addition, from the perspective of volume, the advantages of traditional small household appliance brands such as Joyoung, Supor, Midea, etc. still exist in China, supporting the "basic market" of the current market of small kitchen appliances in China. In the first three quarters of 2021, Joyoung achieved a revenue of 7.032 billion yuan and a net profit of 663 million yuan attributable to the parent; Supor achieved a revenue of 5.231 billion yuan and a net profit of 375 million yuan attributable to the parent. In the field of small household appliances such as rice cookers, induction cookers, electric kettles, and wall breakers, "Meijiusu" has divided up more than 90% of the market share. The market concentration is high, and the barriers are still deep. At the same time, relying on their brand and resource advantages, these traditional small home appliance brands continue to follow behind the creative small home appliance companies to "scavenge" and continue to break into the hinterland of the long-tail home appliance market to compete with emerging brands. The means of creative small household appliance brands to attract young people, such as cute appearance, IP joint name, rejuvenation of color and appearance, etc., are being "copied and pasted" by traditional brands.

Marketing expenses and traffic conversion

As non-rigid small household appliances, creative small household appliances or Internet celebrity small household appliances are inseparable from the consumption of "planting grass" to broaden their awareness and form a certain "trend". In a sense, The rise of emerging channels such as social e-commerce and live streaming has provided "soil" for the rapid growth of creative small home appliances. However, with the fragmentation of traffic on various platforms and the increasing difficulty in obtaining traffic resources, platform costs have been rising, which undoubtedly increases the marketing costs of various brands. To maintain brand popularity and create popular models, companies need to continue to invest in marketing expenses, but it is unknown whether the traffic potential that this investment can bring and whether the traffic can be conve