The market cannibalization that has plagued all home appliance manufacturers since the beginning of this year has not eased, but rather intensified. It's not just the fierce and heated competition among peers in the home appliance industry, but also a new situation where manufacturers are cannibalizing their own partners and employees.
In recent years, market cannibalization in the home appliance market has left many companies and retailers feeling frustrated and helpless. Simply put, in the frontline market, all manufacturers are either "being cannibalized" or "cannibalizing" others.
As we enter 2024, the focus on cannibalization in the frontline market has brought two pieces of news to the home appliance industry: one is good news—there's a change in market cannibalization, and the other is bad news—companies are now cannibalizing their own people.
In the past, home appliance manufacturers teamed up to "cannibalize their peers." For example, JD.com would cannibalize Tmall and Suning, while Haier, Midea, and Gree would cannibalize Hisense, TCL, and Changhong, respectively. This was done to seize market share and commercial territory from competitors, addressing issues related to business growth and expansion through tactics like "big fish eating small fish" and "fast fish eating slow fish."
Now, the situation is completely different. Major home appliance manufacturers are directly cannibalizing their "partners." In other words, JD.com and Tmall are not only cannibalizing each other but also targeting their own franchise channels and distributors. Similarly, major home appliance companies are also targeting their authorized distributors and salespersons. Monthly assessments, payment tasks, and delivery targets are just the beginning—now, they're also evaluating the business practices of retailers and cracking down on irregularities like third-party purchases and unauthorized sales.
From the past strategy of manufacturers teaming up to cannibalize their peers to the current trend of manufacturers cannibalizing their own distribution channels and partners, it's clear that cannibalization in the market is a challenge and test that all manufacturers must face and overcome in the short term. In simple terms, in the coming days, home appliance manufacturers with strength and resources must continue to "cannibalize their peers" and "cannibalize their partners" to avoid being "cannibalized" themselves.
Of course, this is also an inevitable reshuffle as the industry matures, using market mechanisms to force weaker players out and enhance the competitiveness of the strong, ultimately raising the entry barriers and improving the operating order of the market. It's foreseeable that in the downstream terminal market, there will be various scenarios of cannibalization, including physical stores cannibalizing each other, online stores cannibalizing, and live-streaming e-commerce platforms cannibalizing, among others. This isn't bad news; it's just the darkness before dawn. This continuous process of cannibalization won't end quickly—it could last for about a year or even up to two years.
Furthermore, this is also a joint initiative by major home appliance manufacturers and the main consumer groups, driving capable and innovative manufacturers to accelerate their return to the origins of the industry. By understanding user needs and offering products, solutions, and capabilities, they can win the market and earn user trust through better service. Of course, any transformation is not achieved overnight but requires time, space, and the active demonstration and investment of major manufacturers.
Market cannibalization is not terrifying. In the eyes of the home appliance industry, the new round of adjustments in the home appliance market has entered the final "critical period." The core goal is no longer to pursue the continued crazy growth of market scale and consumer demand but to seek and establish new development models, business models, and competitive strategies. The aim is to find new driving systems and growth momentum between the industry, market, households, and users. Ultimately, the goal is not just to solve the survival and development of individual enterprises and businesses but to find a new path for the sustainable development of the entire home appliance industry in the Chinese market.
Currently, in the ongoing market competition of the second quarter, smart home appliance manufacturers are leveraging this round of market cannibalization to find more suitable business models, accelerating the transition from mass production of single products to high-end, branded, and structural adjustment. Meanwhile, a large number of manufacturers are choosing to wait and observe, enduring the current situation.
