
CIFF Shanghai Expo 2024|The furniture business in cross-border e-commerce, should we focus on brand power or cost-effective?
The attention of furniture going overseas
is increasing.
According to Statista, the global furniture
market is expected to reach $770 billion by 2023, with a compound annual growth
rate of 5.31% between 2023 and 2027. This gives furniture enterprises going
overseas a broad space for development. A few days ago, cross-border e-commerce
furniture enterprises to European technology, Lege shares have disclosed the
2023 annual report to the online brand to go to sea, are to achieve double
growth in revenue, net profit, better than the performance of the same period
of cross-border e-commerce enterprises;
Known as the "South China City four
young" Aoji Technology has just submitted a listing application to the
main board of the Hong Kong Stock Exchange, is recovering from the impact of
Amazon's blocking wave, revenue and profitability has also improved. However,
despite the bright performance, the impact of Chinese furniture brands overseas
is still limited, and this is especially true for companies that only sell
through online channels.Wayfair Greater China Commercial General Manager
Stephen Lee told the 21st Century Business Herald that China has always been
the main exporter of furniture to the overseas market, but the core is the
price, not the brand.
Maintain the price advantage, enterprises
are faced with tighter cost control, and logistics is one of the difficult
problems that can not be bypassed - the ups and downs of shipping prices, the
cost of soaring overseas warehouse leasing, do large cross-border e-commerce
enterprises to bear a greater risk of the outside world.
For them, it is still a good business?
Brand start, online acceleration
In fact, furniture overseas is not a new
topic. Benefiting from the export policy dividend, perfect supply chain, low
labor costs and mature production processes, the furniture export industry has
grown rapidly since the reform and opening up. According to CSIL (Center for
Industrial Studies in Milan), the global furniture production will be about
$500 billion in 2022, of which China is the major furniture producer,
accounting for about 37% of the global furniture production. "The entire
Chinese furniture export has been benefiting from a relatively low cost
advantage as well as better quality." Li told reporters, "In fact,
most of the current European and American countries produce their own furniture
has become less and less, basically to Southeast Asia and China's exports of
furniture."
However, as with the early manufacturing
industry to go overseas, domestic home furnishing enterprises were initially
mainly through OEM (independent production) and ODM (independent design) and
other modes of OEM, which can be traced back as far as the last century. Under
this model, Chinese companies mainly take on the role of manufacturing, while
branding and design are the responsibility of overseas customers or companies.
With the improvement of technological capabilities and changes in the market,
Chinese enterprises gradually accumulated the ability of independent design and
production, and began the exploration of OBM (own brand), which can be regarded
as the prototype of branding overseas.
In the past two years, domestic head
furniture enterprises overseas layout is more frequent, for example, gold
kitchen cabinet and Gujia Home Furnishing and other companies have increased
their overseas operations, through the establishment of production bases in
Thailand and Mexico to enhance the competitiveness of the overseas market and
the ability to provide services, ZhiBang Home Furnishing, Sophia and other
enterprises to actively open stores overseas, to further enhance the impact of
the brand. And in the cross-border e-commerce new industry, there are also
enterprises through Amazon, independent station and other platforms directly
for the overseas market, for independent brand sales, such as to Europe and the
United States consumers gradually formed the home furnishing and service
capabilities of the European and American consumers.
In Europe and the United States consumers
gradually formed home, telecommuting habits of the background, coupled with
inflationary pressures, "affordable consumption" wave, more and more
consumers turned to the price transparency, product variety, cost-effective
online home consumption, for the company's market space to further expand the
opportunity to create.
From these enterprises can also be seen in
the tide of Chinese furniture brands to go overseas. 2023 results have been
released, the above three companies have achieved double growth in revenue and
profit, performance is bright. Zhi Ou Technology's annual report shows that in
2023, the company realized total revenue of 6.074 billion yuan, up 11.34%
year-on-year; net profit of 413 million yuan, up 65.08% year-on-year. Zhi Ou
Technology said, its SONGMICS, VASAGLE, Feandrea three major private product
brands deep plowing Europe and the United States online market, 2024 will be
clear group main brand SONGMICS HOME as the direction of brand normalization.
In 2023, the company realized operating income of RMB 3.902 billion, up 21.61%
year-on-year, and net profit of RMB 634 million, a year-on-year surge of
189.72%.
The company has launched a variety of
ergonomic products under the brand "Loctek" at home and
"FlexiSpot" abroad. During the reporting period, the company's own
brand product sales revenue accounted for more than 70% of the proportion of
the main business income (excluding overseas warehouse business income).
Aoji Technology, which is still in the
process of impacting the IPO of Hong Kong stocks, realized operating revenue of
8.683 billion yuan in 2023, up 22.30% year-on-year; net profit was 520 million
yuan, up 133.18% year-on-year. The company has a number of furniture and home
furnishing brands such as ALLEWIE, IRONCK, LIKIMIO, etc. In 2023, the company
has 11 brands with GMV of more than 100 million yuan.
And the online market penetration will
continue to expand. According to Frost & Sullivan, the GMV of the U.S.
furniture and home furnishing B2C e-commerce market is expected to increase
from $74.8 billion in 2023 to $132.3 billion in 2028, with a CAGR of 12.1%,
while the GMV of the European furniture and home furnishing B2C e-commerce
market will increase from $85.9 billion in 2023 to $144.4 billion in 2028, with
a CAGR of 10.9%.
For more industry information, welcome to CIFF Shanghai Expo 2024!
Source: Furniture Industry
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