With the re-election of Gree’s management, the mixed reforms have basically come to the fore. At this moment, Dong Mingzhu has chosen a large-scale promotion, and there is no longer any subjective containment.

Editor’s note: This article is from WeChat public account “Alpha Workshop” (ID: alpworks ), the author Yu Chenqi.

On the evening of November 9, Gree Electric (SZ: 000651) official microblog released “Announcement on “11.11” to make profits of 3 billion yuan to combat low-quality and shoddy products,” claiming to produce quality models and optimal The price is returned to consumers, the inverter air conditioner has a minimum of 1599 yuan, the fixed-frequency air conditioner has a minimum of 1399 yuan, and the total profit amount is as high as 3 billion yuan.

This move, many air-conditioning companies have followed suit, the promotion is rare.

However, due to the impact of large-scale promotional news, the market worried that the price war will have an impact on profits. On the same day, Gree Electric’s share price fell 4%, causing the home appliance sector to collapse.

In response, we visited some Gree air-conditioning channels and summarized them as follows:

Suddenly shot

Resellers believe that historically, compared with the average price of other domestic brands, Gree air-conditioning products have risen faster in the past few years, and the brand effect is obvious, which has a relatively large premium compared with peers.

But the effect of higher average price is the decline in online share:

Greg has been criticized for its low online share for many years: Although Gree’s total market share is close to 35%, it ranks third in terms of sales of several major e-commerce platforms, behind the US and Oaks. Objectively give all kinds of low-end brands a faster growth opportunity.

A more obvious example is Oaks, which has a large increase in market share due to e-commerce channels and minimum allocation. Gree has been based on the protection of offline prices and profits. For many years, there has been no price competition on the line.

The competition between Gree and the low-end brand was highlighted in the “Reporting Door” of Oaks at the beginning of the year. Dealers believe that this e-commerce price bleeding is a further action to clean up the low-end brands.

Resellers speculate that Gree has been retaining online investment for many years, in part to protect the benefits of offline channels and to be more conservative in terms of resources. At the same time, another reason is that with the management changes last year and the factors of mixed reform this year, large-scale investment in sensitive periods is less realistic.

The meaning of this double eleven is highlighted:

With the re-election of Gree’s management, the mixed reforms have basically come to the fore. At this moment, Dong Mingzhu has chosen a large-scale promotion, and there is no longer any subjective containment;

At the same time, objective conditions, compared with 2014, GreeAt present, the channel inventory turnover days are relatively good, about 4 months;

So, the inventory is not high, the price has space. For Gree, it is an inevitable choice to force the e-commerce channel and clear the competitors.

Second: Clearing Action

Since 2018, the winter of white electricity has been established. Except for Gree and the United States, sales of Haier, Oaks and other home appliances have started to grow negatively in the first half of the year.

In addition, next year, the country is expected to release new air-conditioning energy efficiency standards. The inventory of old products will take up funds, so this time Gree will promote the low-end products as soon as possible, and the product upgrades will be lightly loaded next year.

After the big promotion at the beginning of the US (SZ:000333), the statistics of Avi Cloud (AVC) show that after some efforts, by the end of June 2019, the market share of the US air-conditioning online channel has been rushed. To the first place, the online share is 29.5%.

After seeing the promotion effect, Gree’s eagerness can be understood.

In particular, China’s air-conditioning market has become more concentrated. Gree and Haier already account for nearly 70% of the market, but nearly 30% of the market is concentrated in Oaks and Xinfei and various small brands. These small brands still rely on low prices to compete and gain market share.

After the promotion of Gree’s 3 billion investment, Midea and Haier also followed suit, and many big names have reduced their prices to around 1,000 yuan. Under the fierce price competition, the blow to the tail enterprises is very significant:

After 7 hours of opening, the main promotion model of Jingdong is Gree, and the purchase volume of Gree explosion air conditioner is 237,000, the beauty of 190,000, the Oaks 17,000, and the dimensional reduction strike is very obvious.

Third: intended for e-commerce drainage

Some models from Gree to the lowest price, some are listed in May 2019, such as a big one fixed frequency wall hanging machine.

So, this time Gree promotion, in addition to clearing inventory, a layer of potential intention is: consumers who participate in the purchase after purchasing a 50% fixed-frequency one machine, the future will further purchase high power discount lower The product is thus drained for Gree’s e-commerce channel.

In addition, according to CITIC Securities, next year is the peak of real estate completion, and the estimated number of completions is about 8 million sets. According to the average of 2 air conditioners per household, the corresponding is just 16 million units. According to Gree’s current market share of 35%-40%, the corresponding potential market is about 6 million units, and there is a basic disk that is just needed.

Because this round of Eleven’s Gree discount is unprecedented, so as long as the information can be effectively delivered, it is expected that most of the consumers will be locked in advance.