Offline stores are closed and sales are sluggish: how the mobile phone industry turns crisis into opportunity

In the mobile phone market, where the trend of online and offline integration is becoming more and more obvious, a sudden epidemic has made offline channels collectively “misfired”. Those mobile phone brand stores that have penetrated into every corner of the country have to close their doors to thank customers during the Spring Festival sales season.

Previously, mainstream mobile phone manufacturers such as Apple, Samsung, Huawei, OPPO, vivo, Xiaomi and other stores have chosen to postpone their opening. On February 20, a reporter from Feixiang.com visited several stores in Beijing and found that although some stores have opened, due to the “foot-stop order” due to the epidemic, store operations are basically suspended.

The shutdown of the offline market has brought a lot of impact to mobile phone manufacturers. Data shows that Huawei, Honor, OPPO and vivo brands occupy 75% of the offline channel market share. Therefore, both mobile phone manufacturers and millions of mobile phone channel merchants will face a difficult start.

According to the latest report from Strategy Analytics, China’s smartphone shipments will drop by 30% in the first quarter due to the epidemic. Tianfeng Securities analyst Guo Ming also predicted that due to the impact of the epidemic, the domestic mobile phone market shipments during the 2020 Spring Festival will decline by about 50-60% year-on-year, which leads to the current channel level, there will be a high inventory of 50-60 million units ( Most of them are domestic brand mobile phones).

In the face of the sudden epidemic, mobile phone manufacturers have to choose to shelve the offline market and turn to the online market. The re-layout of online and offline channels is a test for any mobile phone brand.

1. Passenger flow plummeted and offline sales stagnated

In recent years, with the rise of new retail, mobile phone manufacturers have combined traditional mobile phone physical retail with online Internet marketing, and integrated resources to achieve omni-channel development, including mobile phone manufacturers’ own direct-operated stores, as well as many channel cooperative stores. . Under the epidemic, the more test is the cooperative stores of these channels.

On February 20, a reporter from Feixiang.com visited several stores in Beijing and found that some of the channel cooperation stores of Huawei, OPPO, vivo and other brands have already opened. No customer even came into the store for consultation. A mobile phone shopping guide told reporters that it has been 5 days since the store where he is located has resumed business, but a mobile phone has not been sold.

Dealers are not only troubled by store rents and personnel costs, but also feel the huge pressure from inventory. Li Rui, CEO of Nuowei Consulting, told the media, “Generally speaking, the inventory turnover cycle of mobile phone products is one month. This year, affected by the epidemic, it will take one and a half to three months, which will basically exceed the two-month turnover cycle. In this case, this inventory is definitely high, and it is more difficult to support the channel for more than three months.”

According to the reporter’s understanding, the most 4G inventory is still in the hands of dealers. On the one hand, the sales of 4G mobile phones have slowed down due to the saturation of the 4G mobile phone market. On the other hand, the demand for 5G mobile phones is not as expected, and the channel is also digesting the inventory of 4G mobile phones.

Mobile phone manufacturers and operators have issued corresponding support policies for the difficulties encountered by channel dealers.

Huawei has changed the evaluation criteria for specialty stores. Instead of bundling the number of pick-up and sales, the store can decide the number of pick-ups based on the sales situation, which relieves the pressure on the store to a certain extent. In addition, China Telecom and China Mobile have also introduced support measures for channel agents and terminal manufacturers, including setting up special channel policies and reducing or subsidizing rent.

2. Test supply chain and logistics capabilities online

Every February and March were the busiest times in the mobile phone industry, and a batch of flagship products would be listed at this time. However, affected by the epidemic, many new product launches have been moved online.

On February 13, Xiaomi’s latest flagship Mi 10 was released in a “pure online live broadcast”. In the first round of online sales since then, Xiaomi 10 sold more than 200 million in one minute on the first day, and Xiaomi 10 Pro broke 200 million in 55 seconds. It can be seen that the Xiaomi Mi 10 series still achieved good sales despite the inability to distribute goods offline.

Online release has limited impact on mobile phone manufacturers, and mobile phone manufacturers are most worried about the supply chain. Xiaomi executive Lu Weibing revealed on Weibo that the production of Xiaomi Mi 10 was indeed affected by the epidemic.

Under the influence of the epidemic, most mobile phone supply chain companies have postponed their resumption of work, which will directly affect the global mobile phone industry chain. According to information, China produces 70% of the world’s smartphones. If the epidemic lasts for too long, it will be difficult for the best-selling models and newly launched models to meet the production demand.

Although mobile phone manufacturers’ own production lines and foundries are “gradually” resuming work, judging from the development of the epidemic, it is not easy to restore full production capacity in a short period of time, which will directly affect mobile phone manufacturers in the first quarter of this year. overall performance. The impact from upstream component manufacturers on mobile phone manufacturers is even longer, and will even affect the launch of new products in autumn in the second half of the year.

In addition, logistics is also a difficulty in online sales. Under the epidemic, many express delivery companies are unable to deliver goods on time, and there is even no clear delivery time point. For third- and fourth-tier cities and villages and towns that rely heavily on offline channels, logistics capabilities will directly affect consumers’ final purchase. With the resumption of work by express delivery companies, it will help mobile phone manufacturers to open up online channels and allow more consumers to turn to online.

3. Is 2020 a “danger” or an “opportunity”?

It is certain that the mobile phone market will see a sharp decline in shipments in the first quarter.

According to IDC, the overall domestic market from January to February will face a sharp decline of about 40% year-on-year. Small manufacturers not only face declining sales, but also face problems such as insufficient supply. They cannot spend a lot of money in the supply chain to seize the supply of goods, and can only be eliminated. From a market point of view, sales after the epidemic will surely rebound. After the first quarter, the mobile phone market will usher in an outbreak of sales.

Lei Jun also made the same point at the Xiaomi Mi 10 conference. He believes that sales in the first quarter dropped sharply, but the next two quarters will usher in a “retaliatory” rebound.

OPPO CEO Chen Mingyong also said: It is undeniable that the epidemic will have a certain impact on the company, but this impact is only temporary. The development of the company will not change because of this, the fundamentals of the company have not changed, and the trend of the entire industry has not changed.

From the perspective of the overall market in 2020, the impact of the epidemic on the mobile phone market is only one aspect, and the core is still the lack of replacement demand.

The current mobile phone market is on the verge of switching between 4G and 5G, but for consumers, 5G has not yet demonstrated a distinctly differentiated experience compared to 4G, causing consumers to be more hesitant to switch phones.

How to give consumers a reason to switch phones depends on whether mobile phone manufacturers can touch user needs while iterating on technology. From this point of view, we are also looking forward to the new mobile phone products in 2020.