Vantage: developing self-built channels to reduce dependence on KA stores

Under the impact of e-commerce, the balance between traditional channels and manufacturers began to change slightly. In June, the senior management of KA stores began to move in and out of manufacturing companies frequently to achieve a win-win situation with the latter.

“Traditional channel providers have already reached the decision point, and if they do not lower their fees, they will be affected by e-commerce,” said Wang Cao, director of the sales center of Vantage Kitchen & TV Marketing.

He believes that the first quarter of the appliance industry, especially in the first-tier cities, the reasons for the apparent decline in the appliance industry, one is due to the impact of the real estate industry; the second is the impact of channel costs. Today, the profit margins consumed by traditional channels, such as stores, can reach up to 50% - only by resolving the channel issues can it be possible to drastically reduce the prices of products.



An industry source told reporters, “The high price of kitchen and bathroom products is highly related to the higher channel costs. Currently, the access costs for KA stores are as high as 30%-50%, which puts great pressure on manufacturing companies. ”

As a medium- and high-end market, Vantage, with medium- and high-level consumers as the main potential consumer groups, has eased the pressure on channel costs, especially the pressure on the sales channels of KA stores, and minimized the price of products to become a major focus of its scale.

During the May 1st, Vantage once adjusted its price structure and carried out large-scale price reduction promotions.

Reducing prices is the key to creating the market scale for kitchen and electric companies. There are many brands in the kitchen electricity industry, and there are many mixed forces. If leading companies can reduce costs and reduce prices, they will undoubtedly further promote industry concentration. Products such as air conditioners, color TVs, and microwave ovens can form a highly concentrated pattern today, and none of them will benefit from the leader’s dedication to reducing prices.

"To make the product a little better, and to lower the price even lower, it is Vantage's culture and values." In an interview with reporters, Wang Cao said, "The Vantage does not pursue huge profits, especially the pursuit of a single product. Maintain reasonable profit margins, increase product sales, and improve Vantage's manufacturing capabilities, and sell products to consumers at the right prices. The vast majority of great companies should be positioned so that there is no consumer goods industry that has the highest price. The brand can do it first."

However, in the face of strong traditional channels, the contradiction between reducing prices and high costs seems to be irreconcilable. In recent years, the rapidly evolving e-commerce platform has attracted the attention of Vantage with its lower distribution price compared to physical stores.

Wang Cao said that Vantage paid more attention to e-commerce platforms such as Taobao, JD, Kuba, and Tesco, as well as the e-commerce platform established by traditional channels. He believes that GOME Online Mall, Suning Tesco and other platforms are in the former. Under the pressure of competition, its model will surely become more reasonable.

However, it is still too early to devote too much channel share to e-commerce.

The superiority of the e-commerce channel comes from its wider coverage and lower marketing costs, but it is also based on this fact that only large companies can survive, and small and medium-sized companies and regional companies have difficulties in surviving. In the current stage, the pattern of China's e-commerce market is unknown, and farce at low prices and scraping the market has repeatedly been staged. Experts said that the e-commerce's nonstop price shopping has severely consumed the strength of domestic e-commerce, and on the other hand it has disrupted the normal price system of traditional channels.

Although the operation of the Vantage e-commerce channel has become more mature, it is obviously impossible to reduce the channel pressure and reduce the weight of the cost.

Influenced by the market environment, Vantage's performance had a significant year-on-year decline in the first quarter. Afterwards, Vantage Company launched a series of measures to regain sales. Among them, increasing the development of specialty stores and second-, third-, and fourth-tier sales outlets is an especially important point in the initiative.

It is understood that currently Vantage has 2,600 stores, 3,000 township outlets, and Wang Cao said, "In the next three years, Vantage will establish 10,000 effective township outlets, the number of own-brand stores will reach 4000-5000."

Wang Cao introduced that self-built outlets are the main channels of Vantage, and they have assumed more than 60% market share of Vantage. These outlets are mainly concentrated in the second- and third-tier markets such as prefecture-level cities and county seats. However, Wang Cao also stated that although the first-tier cities and suburban markets are not the sales focus of Vantage, they will not relax. This is consistent with Vantage's strategy of positioning high-end and high-end products at both ends. For these markets, we will adopt the principle of “striving but not Forced" principle.