Gome, Jingdong, Competition For More Home Appliances Retail Competition Opened In The Second Half

With the formal strategic cooperation between Gome and Jingdong, the competition pattern of China's home appliance retail industry has opened up a new page.

In May 28th, 00493.HK, China's home appliance chain retailer, announced its announcement to the Jingdong. NASDAQ:JD To achieve deep strategic cooperation. The announcement shows that Gome issued $100 million convertible bonds to the Jingdong, assuming that the conversion rights have been fully exercised, and Jingdong will hold about 2.80% of the issued share capital of Gome.

This is another big cooperation between Gome and us at the capital level after the end of April this year. At this point, a three member household appliance retail alliance, which includes Gome, Jingdong and a lot of products, is initially visible. It is likely that it will surpass Suning and Ali to become the largest appliance Alliance in China, whether from consumer groups, product categories, supply chain or service coverage.

"Through a lot of overall transactions with Jingdong, Gome has basically completed the initial introduction of strategic investors." Gome retail CFO Fang Wei told the twenty-first Century economic news reporter, "through these cooperation, the cooperation process has been formed from the flow end to the supply chain."

Full channel cooperation

Through Gome's announcement, it can be found that there are different focuses on cooperation with Jingdong and many other businesses.

Complementary supply chain is an important reason for Gome's strategic investment in Jingdong. According to the agreement, Gome will link the "family life" supply chain, large bulk logistics warehousing and distribution, service system, and more than 2600 stores nationwide to the "new retail infrastructure" to access the Jingdong platform.

At the same time, the two sides reached a joint procurement cooperation. Gome and Jingdong will become the largest home appliance purchasing alliance in China. In addition, the two sides will also carry out systematic cooperation in logistics and service level.

If the joint procurement cooperation can be reached, the future appliance brands and Gome and Jingdong may only need to sign a supply contract. Although the strategy of different home appliance brands is different, such a large supply contract will largely reduce the cost of purchasing between Jingdong and Gome.

"According to the estimates, Gome and Jingdong annual procurement volume of about 400 billion yuan, the size of the formation of bargaining power will be very strong." Zhuang Shuai, founder of Bailian consulting, told reporters that "the scale up will reduce the selling price, and this advantage will be more obvious after the combination."

Not only that, Jingdong's current official website, including 4-6 SKU, including non household electrical appliances, will also be introduced into Gome to accelerate the sales process of Gome itself. It is reported that the project will be completed in 6-7 this year.

Jingdong needs Gome's appeal and influence in the field of home appliances to supplement the SKU of high-end appliances. At the same time, with the help of Gome's platform, the sales mode of its home appliances will be transformed to platform, so as to realize "restarting light".

In many ways, Gome will introduce more retail and new infrastructure such as "home life" supply chain, large bulk logistics network, service solutions and so on to provide richer products and services. At the same time, the two sides will carry out comprehensive cooperation in joint scale purchase, customized products, joint marketing, home appliances to the countryside, and online and offline traffic alliance.

In fact, a lot of needs for Gome's powerful household appliance category supply chain and corresponding service capabilities can enable them to achieve rapid growth in sales of high priced household appliance categories in the short term through platform subsidies, and enhance the GMV and customer unit price of the platform.

It can be found that cooperation with Jingdong is more focused on the procurement and logistics of the back end, and the cooperation with many other businesses is more inclined to the customization of commodities and the cooperation of flow ends.

Gome retail President Wang Junzhou told the twenty-first Century business news reporter that after the cooperation reached, Gome realized the coverage from online to offline, from the first line market to the sinking market, and at the same time formed the ability to supply different commodities to different communities. "Our cooperation with Jingdong and many spells is to maintain the Gome system and compete for the future appliance retail in all channels. The advantages of competition. He said.

In addition, such a combination will provide room for future smart home appliances, including new marketing and service models.

"Larger scale and lower cost will bring space for R & D and promotion of smart home appliances." Zhuang Shuai believes that "smart appliances have long been trapped in expensive costs, with enough scale and efficiency to enable them to have enough opportunities to reduce costs. In addition, after a lot of joint efforts, it is possible to create new online and offline formats."

New pattern of home appliance retailing

Similarly, the "online giant + offline head enterprises", Gome and Jingdong to fight a lot of cooperation is bound to let the outside world with the previous Alibaba and Suning cooperation contrast. Careful observation shows that there are great differences between the two modes of cooperation. But from the results, the two camps have formed a competitive relationship in the future retail pattern of the household electrical appliance industry in China.

First of all, the cooperation between Alibaba and Suning is that Suning has obtained funds through Alibaba shares, and the latter has become the second largest shareholder of the former. Suning has realized its own pluralistic development, but also because of Tmall's strong platform capability, its online business has become dependent.

Gome has introduced Jingdong into the form of convertible bonds, and the number of shares in the latter two shares is not high. The established development direction and strategy have not changed.

Because Tmall is an open platform, branding can choose to open shop independently in Tmall, or choose to sell through Suning. Therefore, Suning and Tmall can not form joint procurement cooperation with Gome Jingdong.

From the result, the competition between the two camps in household appliances has their own advantages and disadvantages. On the strength side, through the cost advantages brought by joint procurement, the more perfect distribution logistics system brought by the joint logistics of Jingdong and the complementary advantages of Jingdong, Gome and spelt in their respective fields make the Gome Jingdong have competitive advantages in cost and service.

From the perspective of "cat Ning camp", various marketing methods and strong marketing innovation capabilities make it more outstanding in developing new brands and new products. Meanwhile, the huge user base has also made the camp advantageous on the user side.

It is worth mentioning that Jingdong and Gome have established such procurement alliances with other retailers, but no Procurement Alliance has ever had a huge impact on an industry like this.

Jingdong, with WAL-MART, Yonghui supermarket in the day hundred supermarket Category Purchasing Alliance, both sides have huge bargaining power and larger sales scale. After Gome and Yongle electric appliances confirmed the stock cooperation, Gome also formed a strong purchasing alliance, ushered in the high-speed development.

Unlike other commodity categories, the home appliance industry is similar to furniture home, and its core competitiveness is more reflected in services rather than goods themselves. This kind of service is not only reflected in the distribution and installation of household appliances, but also in subsequent repair, maintenance, old or new, and even software updates.

According to public information, in the 2016-2019 years, the number of stores in Gome was 1628, 1604, 2122 and 2602, which showed a continuous growth trend. "GOME stores will also show positive growth this year", Wang Junzhou told reporters in an interview. At present, GOME stores as a branch point, has developed over 170 thousand communities to achieve grid management of store marketing.

Such a community, integrating consulting, sales and services, has also become an important starting point for Gome's future development.

"The transformation of the retail industry begins with seeing who has better use of Internet tools and can reach more users without contact." Wang Junzhou said, "its users are covered and connected by social interaction and community. At the same time, logistics and home service are the fulcrum to achieve in-depth communication with users and enhance user stickiness."

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