Behind Dong Mingzhu'S Live Broadcast: Pain Of Channel Reform

On July 16, Chen Qiang, who has been a Gree air conditioner agent in Sichuan for more than ten years, is very anxious. Since August 1 is the opening day of Gree's new cold year, we still haven't received the opening notice until the middle of July this year.

"This year (cold year) is going to be over. How can I give an account to the merchants? After all, it was offline businesses who accompanied her (Dong Mingzhu), who sold more than 200 billion yuan a year. Finally, due to the rise of the Internet, they abandoned these people. In fact, it was a great loss to Gree. " In the past three months, Chen Qiang has been very disappointed, even angry.

Although Dong Mingzhu has repeatedly stressed in the live broadcasting room and other public occasions that the new retail transformation is not to abandon the original dealers, but to play a leading role in promoting them to transform as soon as possible to meet the needs of the new era, what Chen Qiang has really felt in recent months is confusion and helplessness.

Under Dong Mingzhu's live e-commerce mode, Chen Qiang's agent's middle level has been impacted most obviously. In addition to the lower price of air conditioner, the retailer will get a lower discount from the lower price.

Now, this kind of layer by layer distribution model is gradually broken. Because Gree gave a great discount to some products during the live broadcast, and the price was even lower than the agent's supply price, some businesses chose to pick up the goods directly in the live broadcast room.

"Now the price is low, the original inventory is very angry, only to reduce the price, about 1000 more, less hundreds." Chen Qiang said.

Break and stand

In March this year, Dong Mingzhu revealed for the first time in a public live broadcast of "walking into Gree to talk to Dong Mingzhu". Affected by the epidemic situation, closed air conditioners in residential areas could not be installed. Gree basically had zero sales in February, resulting in a loss of 20 billion yuan. According to Gree financial report, in the first quarter of this year, the company achieved revenue of 20.395 billion yuan, a year-on-year decrease of 49.70%; the net profit attributable to shareholders of listed companies was 1.558 billion yuan, a year-on-year decrease of 72.53%.

In order to break the dilemma, Dong Mingzhu launched the first live broadcast on the platform of shaking sound on the evening of April 24, and in the following two months, he successively carried out live broadcast with goods in Kuaishou, Jingdong, Taobao, Gome and Gree dongmingzhu store. Moreover, from the cooperation with the platform to the linkage of 30000 stores offline, from the initial turnover of 230000 to more than 10 billion, the cumulative sales volume of five live broadcast exceeded 17.8 billion yuan.

On July 10, Dong Mingzhu opened the sixth live broadcast of Gree Electric in Ganzhou, Jiangxi Province. As of 0:00 on July 11, Ganzhou live broadcast finally completed sales of 5.08 billion yuan. Although there was no breakthrough in 618 that night, it was a regional live sales for Ganzhou in Dong Mingzhu's words, with more than 5 billion goods per day, it was still the top in the industry.

According to the person in charge of Gree, taking Ganzhou as the first stop, Gree will start the nationwide live broadcast tour with an average frequency of once every two weeks, and the next station is initially selected to be held in Luoyang, Henan Province. Previously, Dong Mingzhu has made it clear that "live broadcasting will become the norm this year.".

In fact, the more new the online and offline retail service is, the more confident I am in using the traditional online and offline marketing services We are closer to consumers. " Faced with all kinds of doubts caused by the live broadcast, Dong Mingzhu responded in an interview with media including the 21st century economic report on the eve of Ganzhou live broadcast on July 10.

In fact, from the first live broadcast to now, the most concerned thing about Dong Mingzhu's live delivery is no longer whether the dealer has "swiped the order", but the impact on Gree's original distribution system after this live broadcast promotion has become normal.

Shen Wen, head of a gree exclusive store in Dazhu, Sichuan, told reporters that live broadcasting has a great impact on them, because the products in the live broadcasting room are mainly aimed at users, and the price is very low, attracting a large part of price sensitive consumers.

"Now Gree's dealers are under great pressure. Some of the dealers at the county level can complete (the target), but for the people in the countryside, it is almost impossible." Shen Wen told reporters that in the past few years, dealers could barely finish the work, even if they paid for the goods to be saved, they also had to finish to get the rebate. However, with the development of e-commerce in recent years, the profit margin of Gree dealers has not been as good as before.

"Gree (Headquarters) sometimes comes to an event in March or April, and 520 activities. For example, if you sell a product for 3000 yuan, then you are asked to sell 2500 or 3000 yuan, and you can't make any money at all. In the past two years, the weather is not good, and there are more online shopping. It is basically a loss. " As for the new retail mode that Gree has been pushing hard and letting consumers buy by scanning the code recently, Shen Wen said that he had tried, but later gave up. Like many dealers, they were afraid of affecting offline sales, so they were not willing to actively participate.

The reporter noted that in the two live broadcasts on June 1 and June 18, Dong Mingzhu specially asked young dealers in various regions to speak on the stage. The general content was about the views and confidence of hugging online, and she herself applied both soft and hard in the live broadcast. From the beginning, he said that "live broadcasting is the leading role, hoping to embrace new retail with 30000 stores". Later, Dong Mingzhu occasionally took a tough attitude and said something like "the times are forcing you to turn around and you will be eliminated.".

Pain transition

In the past, the huge sales network composed of "headquarters - branches - agents - retailers" successfully made Gree the No. 1 air conditioner. In the era of Gome and Suning, Gree even dared to challenge Gome with its distribution system. But time has changed. With the new generation gradually becoming the main purchasing force of home appliances and the growing popularity of online shopping habits, this practice of using high gross profit to support layer by layer dealers is obviously no longer suitable for the current competition.

One of the great landmarks is the rise of oaks. With the Internet direct selling mode, the market share of oaks online has exceeded gree in recent years. Since last year, Gree launched "Dong Mingzhu store", hoping to find a breakthrough in social media to promote the channel reform of Gree.

Under the epidemic situation this year, the prevalence of live broadcasting has objectively given Dong Mingzhu an opportunity to accelerate reform. To this end, Gree not only upgraded the "Dong Mingzhu store" to "Gree dongmingzhu store", but also normalized the live broadcast, forcing dealers to accelerate the transformation.

However, in the actual operation process, it encountered a lot of resistance.

"Now it is necessary to integrate online and offline, but how to lead these businesses to integrate online and offline, and how to achieve win-win situation, we need to come up with a specific detailed rules and draw up a direction." Chen Qiang said that Gree has not given the merchants a direction at present, which has caused great negative emotions among the merchants, and more and more people will be separated from Gree team.

The person in charge of Guangzhou Fengxue electric appliance told the reporter of the 21st century economic report that the price of live online broadcasting is often lower than the retail price, sometimes even lower than the purchase price, so the physical store is not easy to do. "And now the installation fee is gone. The installation is unified in their company. If we don't install it, there is no profit. Now, we don't have much in mind to do it. "

The sales staff of a Gome store in Guangzhou told reporters that after Dong Mingzhu's live broadcast, the stores are relatively cold and the daily passenger flow is about 20-30 people. In his opinion, live broadcast affects people who speculate in goods, and regular manufacturers will make profits. "For example, Gree's air conditioner costs 2000 yuan. It has a rebate for each unit, but the speculators don't have it. He has got 1600 prices from other channels, but if the price of Gree live is lower than 1600, they will lose."

Chen Qiang said that after the live broadcast, the problem of fleeing goods in his area became serious. "A lot of people began to sell goods by themselves. In the past, many inspectors in this area had gone. They mainly checked the prices and purchasing channels to standardize the market, but now no one is in charge of it. Chongqing side 16 people walked 12, no one to manage, the market chaos. People don't care about other prices. " He said.

In fact, a gree agent has reported to the media that a batch of air conditioners purchased at the previous 2200 yuan were sold for only 1999 yuan in the live broadcast, and finally the agent returned the goods directly. In addition, many businesses also reported that in order to reduce their sales pressure and "declare" their sovereignty and force off-line distributors to ship goods, some agents directly ship goods with online rating. As a result, the contradictions between manufacturers and dealers, agents and dealers become more acute.

According to a "2020 difference adjustment notice" issued by Hebei Gree company on June 25, this year, according to the market adjustment and change this year, the company decided to cash all the rebate in 2020 in the form of difference adjustment. The difference adjustment models cover engineering machines, sales machines and machines with price difference in this year, and the difference adjustment standards are: empty alley activities, 6.1 live broadcast For more than 6 live events, the lowest ticket prices are 18.

However, as far as the reporter has learned, the premise of making up the difference this time is to cancel various subsidies, including the annual subsidy rebate, the subsidy for exclusive stores, the subsidy for fixed frequency conversion ratio, the subsidy for the proportion of cabinet machines, and the general subsidy for completing the task, so the dealers in Hebei are not happy. However, Sichuan, Guangzhou and other places have not received similar compensation notice, and the policies are different in different regions.

Chen Qiang told reporters that in December last year, Gree adjusted the price once, but it did not adjust the price of live broadcast. It was only adjusted according to the purchase price minus the installation cost. "After that, why didn't you say that the price was adjusted temporarily?" He said.

Not only the dealers, but also the channel reform caused by the live broadcast also affects the branches. It is said that under the live e-commerce mode, many branches have difficulties in operation, including Luoyang and other companies. Even Xu Zizi, who has been working hard for decades in Hebei Geli, also reported that he resigned in June.

Xu Geli, the person responsible for the resignation, said he had not received a reply.

At the same time, as the general manager of Hebei Shengxin Electric Co., Ltd., the director of Hebei Xinxing Electric Appliance Co., Ltd., is also the general manager of Hebei Shengxin Electric Appliance Co., Ltd., which is also the sales representative of Hebei Shengxin Electric Co., Ltd. and Shengxing Gehai Electric Co., Ltd The company holds shares ranging from 4% to 95%.

Jinghai guarantee is jointly established by 10 regional distribution companies of Gree Electric appliances, which has been regarded as representing the interests of Gree distributors by the outside world, and is also Dong Mingzhu's "person acting in concert" in major decisions for many years.

According to the announcement issued by Gree Electric on July 10, the company received the "Notice of completion of share reduction" from Hebei Jinghai guarantee investment Co., Ltd., which holds more than 5% of the shares, on July 9. As of July 9, 2020, Jinghai guarantee has reduced 42881778 shares of the company through block trading, accounting for 0.71% of the total share capital of the company.

Liu buchen, a senior industry observer, believes that this is a thought-provoking news, especially in the context of Dong Mingzhu's push for new e-commerce.

"Dong Mingzhu vigorously promotes the reform of Gree's sales system. From relying on offline stores in the past to relying on e-commerce (live delivery with goods is a form of e-commerce), Gree's exclusive store system has been rapidly marginalized." In his opinion, this means that the relationship between Dong Mingzhu and the dealers has cracked, and the relationship between people acting in concert over the past years is gradually fading away. But at the same time, the reduction of Jinghai guarantee may not be a good thing for Gree, which can relieve Dong Mingzhu's pressure to promote the second reform of Gree's sales system.

Change is on the way

Next, how to get there?

So far, Dong Mingzhu has carried out seven live broadcasts with a total turnover of more than 22.8 billion yuan. In a recent live broadcast held in Ganzhou, we not only sold Gree's products, but also introduced and sold products with local characteristics. "Gree is trying to carry out collaborative live mode, and every live broadcast hopes to combine with the local industry." Dong Mingzhu said to the 21st century economic report.

According to the analysis, the ultimate goal of the new round of channel reform of Gree is to reduce the sales links and gradually shift from offline to online. In addition to linkage with several major e-commerce platforms, Gree dongmingzhu store is the key to connect Gree employees and dealers. As long as the problem of profit redistribution is solved, the sales scale is not necessarily smaller than that of the e-commerce platform.

It is worth noting that in the new mode of live broadcast, Gree air conditioning line has been on the rise and fall. From the 28th to the 28th week of 2020, the sales volume of Aoli reached 35% and 26% respectively, which exceeded the monitoring data of Aoli in China from February to June. However, the offline share has declined. In the 24th, 25th, 26th and 27th weeks of 2020 (from June 8th to July 5th), the retail shares of Gree offline air conditioners were 30.15%, 32.72%, 32.3% and 28.33% respectively, while those of Midea were 34.1%, 34.08%, 33.81% and 37.71% respectively in the same period.

Moreover, since the live broadcast, the sales volume and market share of Gree air conditioner have basically kept the same with the live broadcast nodes. Each live broadcast drives a wave of sales peak, but then immediately falls back until the next live broadcast.

When asked "what kind of effect does Gree hope to achieve in the new retail transformation this year", Dong Mingzhu said frankly that this is a reform, not to mention any goal, but the behavior and way are changing.

"It should be said that it is close to our times, because what will happen after the epidemic is unexpected." Dong Mingzhu further said, "the sudden outbreak of the epidemic has made us see many shortcomings. We hope that through our efforts, our service objects will not be unable to receive services because of changes in the external environment, and live broadcasting is more for the purpose of serving the market."

As for the functional changes of the sales branch in this reform, Dong Mingzhu said that the original positioning of the sales company is service-oriented, not profit-making sales company, but through the live broadcast mode and the combination of online and offline Internet, the unsmooth links in the middle are reduced.

She also revealed that before the live broadcast in Ganzhou, Gree held a meeting with the general manager of the national sales company and reached a very important understanding: "after these live broadcasts, we found that the perception speed of consumers has become faster. It took many days in the past, but now it has changed. But at the same time, we also found that it is because of this contradiction that we (dealers) bring too much goods during live broadcast, so the contradiction between wholesale and retail of online batch distributors is more prominent in this period of time. So we'll find the problem. "

Dong Mingzhu revealed that in the next live broadcast process, there is no online batch, each dealer has its own live broadcast platform, and each dealer can face their consumers and place an order in the nearby crowd to pay. "We will provide them with unified installation and distribution, which will bring more convenient changes to consumers. For the sales company, there is no big change. It is simple from the past Today, the functions of sales companies are also changing in terms of delivery, publicity and promotion. In the future, it may be more about training, making the training of tens of thousands of exclusive stores into normal work. "

On the evening of July 14, Gree Electric Appliances (000651. SZ) released the performance forecast for the first half of the year. The announcement showed that, affected by the epidemic situation and promotion, the company's revenue and net profit will decline significantly in the first half of the year. It is estimated that the total operating revenue is 69.5 billion yuan-72.5 billion yuan, down 26% - 29% year-on-year; the net profit attributable to shareholders of listed companies is 6.3-7.2 billion yuan, 48% - 54% lower than the same period last year; the basic earnings per share is expected to be 1.05 yuan / share - 1.2 yuan / share, down 47.6% - 54% compared with 2.29 yuan / share in the same period of last year.

In the first half of the year, the decrease in the market demand for new type of air conditioners was attributed to the decrease in the market demand for new type of air conditioners. But on the other hand, in 2020, "Gree dongmingzhu store" began to promote the new retail mode nationwide and continue to implement active promotion policies.

Under the adversity, the profits of listed companies have been compressed, and the intermediary channels are inevitably affected. This is what Chen Qiang and other dealers are most worried about.

"This year's business is not easy to do, so far the sales are not half of that of last year." The person in charge of the above-mentioned Blizzard electric appliances told reporters that at present, they are trying to slowly transform into other brands. Shen Wen told reporters that many dealers around Gree have the idea of withdrawing. "Users always think that you sell too much, but you don't make much money."

However, it is not easy to turn if you want to. "We can't get the rebate and installation fee after 4 months. Moreover, for example, when we mention the installation fee, we have to mention Gree products. When we pick up the products, we will deduct the installation fee from you. Gree's dealers will always see the goods, not the money. " Shen Wen felt helpless.

However, Chen Qiang has not been able to pick up the goods any more. He said that he would wait until the policy came out and then decide whether to take the goods or not. The most important problem is how to balance the interests of online and offline businesses.

"Dong Mingzhu has great ability, but it is not enough to rely on her alone. We also need to listen to everyone's opinions to achieve a good promotion effect, which not only guarantees Gree's quality and Gree's brand, but also ensures reasonable profits of manufacturers and dealers. This is a win-win and multi win way." He said.

Close up: live broadcast of Dong Mingzhu