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Why are e-commerce giants targeting the home market?

by:Hench Hardware     2021-08-25
With the development of the Internet of Things, smart homes have ushered in a concentrated outbreak, which has also driven consumption upgrades. One of the typical phenomena is the rise of the O2O service model of Internet home furnishings, and it shows the characteristics of internationalization and concentration of big brands. However, so far there has not been a 'super unicorn' in the home furnishing industry, which has given Chinese e-commerce giants a chase under the instinct of business instinct. Just as JD.com said, 'Become the No. 1 retail channel for home furnishings online and offline within five years.'


   Jingdong aims at scene marketing


   Obviously, Liu Qiangdong himself did not expect home furnishings to become the next trend in a few years, and Jingdong's home furnishing business could do so much. According to the reporter's understanding, JD Home Furnishing started its layout in 2011 and maintained a compound growth rate of more than 100% from 2013 to 2016, so that JD.com split the Apparel Home Furnishing Division two weeks ago and Home Furnishing became an independent business unit.


   In Liu Qiangdong’s view, JD’s apparel and home furnishing categories have grown to a stage where intensive cultivation is needed. JD’s strategy for this market choice is to make great strides. At the recent strategy conference, JD Home Furnishing has set itself a specific goal of enriching categories and brands: within three years, well-known brands and star products from all over the world can be found on JD.com. Up to now, JD Home Furnishing Cooperative Merchants have exceeded 25,000.


   In Zhou Xinyuan’s view, the war of home improvement e-commerce is not easier than clothing e-commerce. 'Apparel e-commerce is difficult to meet the individual needs and trends of consumers, but the cost of trial and error is low. The pain point is the high cost of user trial and error.'


   It is foreseeable from this adjustment of JD.com that the trend of online consumption in the home furnishing category in the future is already very obvious. However, China's Internet home furnishing market has no mature foreign models to refer to, and there are many things that have not been verified. How companies innovate and truly understand users still face many challenges.


  The status quo of the home furnishing industry brings unprecedented opportunities to the Internet industry


   Five years back, it is estimated that no one can think of the opportunity of the Internet home improvement market. In fact, unlike many people's impressions, the market capacity of the home furnishing industry is much larger than that of the catering industry and the travel service industry. Relevant data shows that the market size of the home furnishing industry in 2015 was about 4 trillion yuan, and in the two industries of catering and tourism, Ctrip Qunar, with a combined market value of more than 20 billion U.S. dollars, and a new valued at 17 billion U.S. dollars, have been born. Beautiful.


   But in the home furnishing industry, such a 'super unicorn' has not yet emerged. In the 4 trillion yuan home furnishing market, there are only 100 listed companies and a handful of them with a market value of over US$1 billion. From this perspective, the home improvement market is a big business. Sensitive control of the tuyere has become one of the reasons for e-commerce giants to enter the market.


   On the other hand, although the home improvement market is a trillion-scale market, the share of the Internet is still less than 10%. According to the 'Special Research Report on China Internet (Love, Net Worth, Information) Home Furnishing Market' released by Analysys at the end of 2016, the market size of the large home furnishing industry has reached 4 trillion in 2015 and has maintained steady growth. Statistics from the China E-commerce Research Center show that the online sales scale of the home furnishing industry was 70 billion yuan in 2013, and it will reach 200 billion yuan by 2015.


   There is no doubt that the battlefield of e-commerce in the second half will shift to the field of apparel and home furnishing. At present, China's home furnishing industry has the characteristics of extremely fragmented market, low efficiency, high energy consumption, backward Internet, and information asymmetry. For the Internet industry, the opportunity to 'make heroes in troubled times' has come again.
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