After the refrigerator is “home”, how much growth can new appliances bring to Xiaomi?
Author | Ouyang Weikang, Cecilia Xu
Millet has grown bigger again.
On October 11th, Xiaomi officially released the Mijiafeng cold refrigerator series products, which complemented the last piece of the puzzle in the layout of the home appliance. Since then, Xiaomi Mall can be officially upgraded from “Millet Grocery Shop” to “Millet Appliance City”.
From the first home appliance product in 2013 – TV to the newly released refrigerator, Xiaomi has built a whole house appliance system with Mijia App as the core in 6 years. In this system, Xiaomi own brand The lineup of home appliances continues to expand, and it is no longer the millet that needs to be filled with a large number of eco-chain products.
In a way, Xiaomi has embarked on a road of its own brand “home appliance empire”, but after crossing the TV, air conditioner, washing machine, refrigerator and other household appliances category, the growth space reserved for Xiaomi how much?
Millet home appliance map
The pace of expansion is getting faster
Xiaomi has long been a new thing in making home appliances. Since 2013, it has been involved in TV to the refrigerator, and Xiaomi’s home appliance layout already contains 22 categories.
Data Source: Organized by public information (as of October 11, 2019)
Especially after 2019, Xiaomi’s expansion of home appliance maps is getting faster and faster. According to the statistics of Zhisheng Research Institute, as of October 2019, Xiaomi has newly entered 8 new categories of household appliances this year, creating a new high in the calendar year. The home appliance layout of Xiaomi is also becoming more complete. This is also the beginning of Xiaomi’s establishment of “Mobile +AIoT”. “Double-engine drive plus code AIOT specific embodiment.
Data Source: Xiaomi, Public Information, Zhisheng Research Institute (as of October 10, 2019)
“Testing water, expandingThree stages of Zhang and deep cultivation
As of now, Xiaomi has launched more than 130 SKUs (excluding accessories), but the number of products varies greatly among different categories. The problem of “more than perfect” still exists. If products are launched in each category, As the standard of quantity and revenue scale, Xiaomi’s layout in its own home appliances can be roughly divided into three stages: “testing water, expanding, and deep farming”.
Data Source: Xiaomi, Public Information, Zhisheng Research Institute (as of October 11, 2019)
In the water test stage, Xiaomi launched fewer products, including vacuum cleaners, range hoods, gas stoves, etc., which were newly introduced in 2019. During the expansion phase, Xiaomi has gained a certain market share and is launching more price range products. In the form of deepening, the number of products, price coverage and market share have achieved certain results. At present, only Xiaomi TV is at this stage, covering more than 50 products from 699 yuan to 8999 yuan.
At present, household appliances such as air conditioners and washing machines are advancing along the market path of Xiaomi TV. In the category of refrigerators, Xiaomi has launched four products covering 999 yuan to 2,999 yuan. The rhythm of the washing machine, the relatively high customer price of the refrigerator, and the high frequency of use of large kitchen appliances, the refrigerator is likely to enter the expansion phase next year.
We can see that in 2019, Xiaomi is involved in more home appliances. In fact, every time you start selling a new category, it means that you will get a new increment. In 2019, when the mobile phone business was blocked, home appliances were taking on more important growth responsibilities.
How much growth does home energy bring to Xiaomi?
So the question is coming, How much growth can the new home appliances bring to Xiaomi? Ignore small household appliances with low customer price and small number of products. Here we take TV, air conditioner, washing machine and refrigerator as “four big pieces” as an example to roughly estimate the growth of home electric energy for Xiaomi. space.
In terms of air conditioning, Xiaomi’s financial report disclosed that in the first half of this year, Xiaomi’s air conditioner shipments were 1 million units, and if it was 2,000 yuan (2099 yuan in Xiaomi Mall, the first air conditioner sales, Xiaomi Tmall shop sales) The top three air conditioner prices are2399 yuan, 2099 yuan, 1699 yuan, taking the average price of 2000 yuan), Air conditioning to Xiaomi IoT and consumer goods business (hereinafter referred to as “IoT business”) brings an increase of 2 billion yuan The Xiaoyu IoT business increased its growth rate by 11 percentage points in the first half of the year.
In the first half of the year, IoT business accounted for 28.2% of total revenue. The newly-involved air-conditioning business contributed 2 percentage points to the growth rate of Xiaomi’s total revenue in the first half of 2019.
Data Source: Company Financial Results and Estimates (as of June 30, 2019)
An air conditioner is still the case, so with the addition of a later-powered washing machine and a newly released refrigerator, what impact will the expansion of the millet appliance empire in the next year have on revenue?
Air conditioning, According to the monthly retail sales data of Ovi Cloud online, the revenue of Xiaomi Air Conditioning’s 2 billion yuan can account for about 5% (due to the inconsistent caliber and millet air-conditioning camp) The estimate is taken as an estimate only). Comparing the market share of Avi Cloud’s 2018 air-conditioner online retail sales, Xiaomi can rank fifth in the industry.
Considering the time when Xiaomi enters the air-conditioning market and the sales structure improvement brought by the high-priced products after opening the market with low-priced products, we expect that under the better development, Xiaomi air-conditioning business will be online at the end of 2020. 7% of retail sales, 5.5% in the neutral case, and a poorer development than the current 5% share fell to 4.5%.
Data Source: Orvieto Cloud (as of December 31, 2018)
Washing machine, According to Xiaomi’s official disclosure, Xiaomi’s washing machine sold more than 100,000 units in a single month in September. In the same period, the domestic online washing machine sales volume was 1,181,100 units (Aowei cloud home appliance compass data, Due to the difference in caliber, it is only used as an estimation reference), smallThe rice washing machine sales market share is 5.5%. Since the average price of the two is similar, it is assumed that the retail share is also 5.5%. In light of market competition and better development, it is expected that the mill washing machine business will account for 7% of the online retail sales in the next year, while the development is 6%, and the poor development is down from the current 5.5%. 4.5%.
Data Source: Orvieto Cloud (as of December 31, 2018)
Refrigerator, As Xiaomi has just released public data, it is expected to combine the market competition with the estimated share of Xiaomi air conditioner and washing machine. Under the better development situation, it is expected that the millet refrigerator business will be completed by 2020. It can account for 6% of online retail sales, 5% for developing neutral conditions, and 4% for poor development.
Data Source: Orvieto Cloud (as of December 31, 2018)
For Xiaomi’s IoT business (including overseas business) other than air conditioners, washing machines, and refrigerators, 30%, 25%, and 20% of revenues will be increased in the second half of 2019, the first half of 2020, and the second half of 2020. Expected. Under this premise, we can roughly estimate the revenue increments that these three major home appliances have released to Xiaomi (the calculations in this paper are based on the relevant market data and expected data of Aowei.com and give 2020 according to the growth of the past category market. The relevant online market retail sales must increase at a certain rate, due to the difference in caliber and expected accuracy, for reference only).
It is estimated that air conditioners, washing machines and refrigeratorsIn 2020, it will bring incremental space of 6.3 billion~9.3 billion yuan to Xiaomi IoT (only in the domestic market), and find a new growth carriage for IoT business after Xiaomi TV, But it is not easy to achieve this expectation, and the pulling effect will again be bottlenecked in the second half of 2020.
Data Source: Company earnings and estimates (as of October 11, 2019)
Data Source: Company earnings and estimates (as of October 11, 2019)
Comparing the growth rate of the two periods in the second half of 2019 and the first half of 2020, it can be found that the incremental release of air conditioners, washing machines and refrigerators has a significant effect on the revenue of Xiaomi IoT business. It can also reduce the growth rate of Xiaomi IoT revenue, But in the second half of 2020, due to the fact that air conditioners and washing machines have already contributed a certain amount of revenue in the second half of 2019, the effect on the scale of revenue is limited. In particular, we have given 20% of the basic growth rate of other IoT businesses.
This means that Xiaomi’s approach to boost revenue growth by adding a major home appliance business is likely to encounter a tipping point in the second half of 2020, when Xiaomi fails to find new revenue increments, or A breakthrough has been made on the basis of existing business, so the Xiaomi IoT business may fall into a “stall” dilemma similar to the current smart phone business.
However, compared with the current situation of the Red Sea competition in the smart phone market, as far as the home appliance business is concerned, there is still a lot of room left for Xiaomi to “flash”, which may be a major reason for Xiaomi to enter the home appliance market. Strong> Not only because of the promotion of the power and IoT’s strategic position within the group, but also the inevitable choice of Xiaomi in the process of diversifying revenue, diversifying growth risks and finding growth momentum.
Space and Challenges of Xiaomi Home Appliances
Incremental expansion bonus
In the previous article, we have suggested that Xiaomi is good at “cutting into the market with low prices, combining with Xiaomi’s own product advantages and quickly gaining market share.” The premise of this strategy is that Xiaomi has not entered before. In the new market, new products can be added in increments, but as Xiaomi’s home appliances enter a period of intensive expansion this year, there is not much room for incremental space left for Xiaomi.
In the 16 sub-categories of household appliances listed in the Orient Cloud Network’s 2018 Appliances Summary Report (electrical heat and heat are combined into a water heater), Xiaomi has only three categories of water heaters, freezers and dishwashers. Enter, the total market size is 82.2 billion yuan. After TV, air conditioners, washing machines, refrigerators and other four major electrical categories are complete, Xiaomi’s good days of easily harvesting revenue growth bonuses through the launch of new products are over.
Data source: Aowei Cloud Network; the standard red is Xiaomi’s not involved in the market, all based on whether to launch their own brand products (as of December 31, 2018)
But under the various categories that have already been introduced, as mentioned above, there are a large number of products in Xiaomi that only stay in the water test stage, including wireless hand-held vacuum cleaners, induction cookers, microwave ovens, cooking machines, range hoods, gas stoves, etc. Compared with the old-fashioned home appliance companies such as Midea, Gree, Haier and TCL, Xiaomi can also provide users with a full set of self-owned branded home appliances, and there is room for further expansion in each category.
If the product is tested successfully, Xiaomi has enough power to launch products with different prices and different positioning. By expanding product coverage, it can gain more market share and revenue, and create more products like TV, air conditioner and washing machine. line.
Online “counterattack” line
The online has always been the home of Xiaomi’s home appliances. Take Xiaomi’s most powerful TV as an example. Its domestic online and offline market share (by sales) is very different. In addition to TV, Xiaomi’s sweeping floor This is also the case with robots, purifiers, water purifiers, rice cookers, etc., and Xiaomi is almost completely confronted with other home appliance companies by e-commerce channels.
Data Source: Ovi Cloud Appliance Appliance Compass (as of September 30, 2019)
The huge difference between online and offline performance means that while Xiaomi enjoys the online incremental bonus, there is still a big cake under the line. Referring to the Xiaomi smart phone business after the “Waterloo” plus code channel construction initiatives, Xiaomi home appliances in the replication of mobile phone business experience did not solve this hidden danger, but on the other hand, Xiaomi also left the home appliance business It is enough space for potential growth. It is only under the “light asset” mode that Xiaomi is used to. It is still unknown whether Xiaomi is willing to invest heavily in promoting home appliances online.
Data Source: Ovi Cloud’s 2019 semi-annual report (as of June 30, 2019)
However, from the perspective of market structure, most home appliance categories have already experienced an online market share eroding down the line. From this point of view, even if the millet appliances do not lay down the offline channels on a large scale, concomitant with the market The overall close to the line, Xiaomi, who is familiar with the e-commerce game method, also has a high probability of enjoying the online and offline integration bonus of the home appliance channel.
Overseas search for increments
In the previous estimates, we are all based on the expected sales share of Xiaomi’s home appliances in the domestic market. In fact, from the development process of Xiaomi TV, we cut into the domestic line with the explosive mode. Upmarket, expansion categories to stabilize the domestic market, expansion to overseas markets has become the standard route for Xiaomi’s explosion of IoT products. Today, Xiaomi TV has occupied a place in the Indian market in addition to the domestic market, which is also the potential of other household appliances of Xiaomi. Growth space.
Data Source: Straight Flush (as of June 30, 2019)
Summary
Back to the question in the title of the article, how far is Xiaomi from the “home appliance empire”? In fact, it depends on whether Xiaomi needs to become the “home appliance empire”. At this stage, Xiaomi enters various household appliances category more in order to inject new growth momentum into the IoT business before the smartphone business is revived. The smartphone business is still The core of Xiaomi’s three main businesses.
In the home appliance business to enhance the smart home user experience, before Xiaomi launched its own branded home appliances, there are already some Xiaomi eco-chain companies such as Yunmi and Zhimi launching various third-party brands that can access the Mijia App. From this point of view, Xiaomi can provide users with a complete set of IoT Internet experience around Mijia App in the form of investment and cooperation without “personality”, which is more different from Xiaomi’s own branded home appliances. The reason is that the former cannot bring real money and profits to Xiaomi.
In the end, the increasingly rich line of home appliances is currently playing the role of the millet revenue growth engine. Before real determination to become the “home appliance empire”, Xiaomi needs to stand firm in each test category. And see the possibility of exploring new forms of real estate after the interconnection of home appliances, otherwise, only sell the “empire” of electrical appliances, Xiaomi does not do it.
Related reading:
Intellectual Analysis | Perspectives on the Xiaomi Ecology “Confederation”
(The cover image is taken by the author of this article)