Gome Combined With More Marriage: Faster Integration Of Household Appliances Online And Offline

In the evening of April 19th, China's home appliance chain retailer 00493.HK (GOME) and the new e-commerce platform (NASDAQ:PDD) formally reached a deep strategic cooperation.

According to the agreement, Gome will connect the retail infrastructure such as "home life" supply chain, large bulk logistics network, service solution and so on to provide more goods and services for it. In many ways, it will pour the big data, such as "big data", "billions of subsidies" and technology flow into Gome, and strengthen cooperation in letting profits, promotion and marketing.

Affected by this, Hong Kong shares opened up more than 30% in April 20th, and then slightly narrowed, closing at HK $0.85 / share, up 16.4%.

"The strategic cooperation between Gome and many spells, including cooperation at the capital level, is a strong complementarity between the two sides' strengths," he said. Wang Junzhou, the retail president of Gome, told the business reporter in twenty-first Century on April 20th, "this cooperation will further speed up the integration of online and offline and further promote the progress and iteration of the new consumption era, which is very meaningful for both sides."

He told reporters that, in recent years, especially in the epidemic period, Gome already has strong social operation capabilities, and combined with a lot of Internet technology and digitalization capabilities in social fission, there will be plenty of room for growth and imagination in the future.

"Especially in the post epidemic era, there has been a new trend in the appliance of home appliance retailing in China." Gome retail CFO Fang Wei told our reporter that "Gome and spelling will jointly promote the value upgrading of retail enterprises in the supply chain, logistics, services, technology and other dimensions, helping the retail industry form a positive circular mechanism from supply innovation to consumption upgrading, and then to create new consumption growth points, accelerate the release of new consumption potential, and promote the upgrading of consumption expansion."

New mode of home appliance retailing

The epidemic has changed people's way of life, and has changed the traditional mode of home appliance retailing. It promotes the consumption of household appliances to move online further, and accelerates the online home appliance market again. Under the change of the entire retail mode, there are some new changes in the demand for home appliance retailers.

"When most of the stores are closed, it will be better to see who is better at using Internet tools and to reach more users without contact." Wang Junzhou said, "the focus of the second competition lies in who can grasp the changes in consumer behavior, demand changes and habits change."

He said that during the past two years, Gome has always attached great importance to the kitchen business, which has achieved rapid growth during the epidemic. Small household appliances, including electric cookers, wall breaking machines, low sugar rice cookers, and so on, almost all achieved an increase of over 100% over the same period last year.

"During the epidemic period, it is obvious that re organization of product mix and inventory is unrealistic, and we must rely on past accumulation." Wang Junzhou said, "seize the market trend in a short time and get the favor of customers, which are good at Gome, and therefore can promote the high growth of kitchen electricity."

On the basis of the community, Gome was also involved in "live goods" during the epidemic. Compared with the live broadcast of red belt products, Gome retail is basically a live broadcast of local employees and brand executives, and the advantage of these people is that they are more professional in product characteristics and usage, and enhance conversion rate.

"At the beginning of this month, through the live broadcast in the social platform, only 3 hours of live broadcast sales will break 100 million yuan, and the ability to explore users' consumption depends on their professional and service capabilities." Wang Junzhou said, "if the live broadcast can not satisfy the needs of users, it can also be arranged to go to the store, and even to the home, the way to reach customers through multiple channels is the most important capability for future sales."

Therefore, in his view, today's shops have fundamentally changed in concept and in the past. "The shop is a fulcrum, a display scene." Wang Junzhou said, "its users are covered and connected by social interaction and community. At the same time, there is also a logistics pivot function to achieve the extremely fast arrival of goods."

In 2019, the retail sales of Gome achieved nearly 700 annual growth. The location of the store is no longer similar to that used to be in the commercial center layout, and it has become more densely populated in the densely populated community. It ensures that more users can be reached within 3-5 km.

"The core business circle of every city will have a super large shop -- the Gome Home life experience Museum, and the rest of the store is the small shop opened in the crowded community, forming the mode of aircraft carrier group." Wang Junzhou said, "in the future, we will adjust the storefront network in this way to form a grid layout."

"Cat Ning group" upgraded version?

It is not the first time that Gome tried to cooperate with Internet Co, after Gome had been involved in many spells, but later became a "store in Jingdong".

Taking Ali and Suning's cat Ning business as an example, according to the industry analysis, the total amount of suning.com's business accounts for a large proportion of the whole channel of the company. Driven by the scale of Tmall users, suning.com's online turnover has increased significantly.

The combination of Gome and spa is likely to be an upgraded version of the "cat Ning group". Gome or it will achieve an increase in turnover in the future. This time, the cooperation between the two sides is not only on the business level, but also on the capital level.

According to the announcement, Gome introduced strategic investments with a total of 200 million US dollars in convertible bonds. According to the agreement, the initial share conversion price is HK $1.215 per share, which is 66.44% and 68.75% higher than the average closing price of the Gome retail closing price in April 17, 2020 and the five consecutive trading days before April 16, 2020.

Assuming that the conversion rights are exercised more frequently, 1 billion 280 million new shares will be issued and issued, accounting for about 5.96% of the issued share capital of the US retail announcement day and about 5.62% of the issued share capital of the Gome retail distribution and issuance issue.

"We have been working together for more than a year, from platform to later supply chain customization, and then to the matching of services." Fang Wei told reporters, "negotiations have been completed in a few days."

According to the cooperation agreement, Gome retail products will be put together on a large scale; Gome's brand will be connected to more than 10 billion subsidy schemes; the two service platforms of its logistics company and Gome Housekeeper will become a combination of many logistics and home appliances service providers.

"A lot of billions of subsidies will be covered for the first time, and the next line will probably usher in the first time a unified price perception, which will lead to a rebound in the offline stores of Gome." Mo Daiqing, senior analyst at network research center of e-commerce, told reporters.

For many products, the efficiency of household appliances will greatly increase. For a long time, in a second tier city, a lot of express logistics speed is less than that of Jingdong. But after becoming a member of the Gome, the latter's own logistics system and service outlets are expected to realize the "half day" of a second tier city and further enlarge its own price advantage.

"This combination has also created the most perfect form of the retail industry." Mo Daiqing said.

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