2023-06-23 05:58:49
Written by | Zhang Yu
Editor | Yang Bocheng
Topic picture | IC Photo
The hot war in the electric toothbrush industry is still going on.
According to the briefing on the oral care industry from January to April 2023 released by the China Association of Oral Cleaning and Care Products Industry, the market share of electric toothbrushes exceeds 11%, a year-on-year increase of 18.5%, making it the fastest growing sub-category in the oral care industry.
According to the brand ranking, the top five are UsMed, Philips, Oral-B, Mijia and Feike, whose online retail sales accounted for 24.7%, 21%, 9%, 4.8% and 4.6% respectively. Among them, Flytech’s online retail sales from January to April increased by 125.2% year-on-year, while foreign brands Philips and Oral-B both showed a downward trend, and their market share was seized by domestic brands.
The other side of the hot war is that the electric toothbrush industry is ushering in huge development opportunities. According to Taobao data, since 2017, the online sales growth rate of electric toothbrushes has basically remained at more than 69%. From 2015 to 2020, the average annual compound growth rate of the electric toothbrush market is as high as 40.1%.
At the same time, a group of powerful electric toothbrush manufacturers are also trying to open the door to the capital market. For example, in January 2021, the parent company of the electric toothbrush brand Usmile, Xingjiyuedong, signed a listing guidance agreement with China International Finance Corporation, and listed in the Guangdong Securities Regulatory Commission. In November 2021, Soocas Technology, a Xiaomi ecological chain enterprise, submitted a prospectus to the Shenzhen Stock Exchange, planning to be listed on the GEM; in February 2022, Vimezi, the parent company of oral care brand Shuke, officially Submit a prospectus to the Hong Kong Stock Exchange and plan to list on the main board of the Hong Kong Stock Exchange.
Behind the fact that electric toothbrush manufacturers are involved in the “thousand-brush war” and are scrambling for the “first share of electric toothbrush”, how much growth space does the electric toothbrush market still have? How much IPO can the electric toothbrush track support?
01.
Growing wildly, marketing is king
In recent years, the electric toothbrush industry has grown rapidly.
According to data from the China Business Industry Research Institute, from 2017 to 2021, China’s electric toothbrush has shown a rapid growth trend, increasing from 4.3 billion yuan to 12.5 billion yuan. In 2022, the scale of China’s electric toothbrush market will further increase to 18.5 billion yuan. It is worth mentioning that 2018 and 2019 are the highlights of the electric toothbrush industry, and its compound annual growth rate is as high as 75.1%. According to Alibaba data, in 2018 and 2019, the growth rate of electric toothbrushes on the Taoxi platform The speed is divided into 105% and 175%.
Not only that, but the electric toothbrush industry is also facing a situation of low penetration. According to data from Nielsen Consulting and Zhiyan Consulting, the penetration rate of electric toothbrushes in China was only regarding 3% in 2015, while the current market penetration rate is regarding 10%, which is a huge gap compared with the penetration rates of regarding 42% and 40% in the United States and Japan. With the upgrading of consumption and the strengthening of the concept of oral hygiene, the demand will be gradually released and upgraded, and the future development space of the industry is very broad.
Despite the optimistic outlook for the electric toothbrush industry, manufacturers are still sparing no effort to invest large sums of money in marketing.
Taking Soocas Technology as an example, according to the prospectus, the marketing expenses and proportion of Soocas Technology have been increasing year by year. From 2019 to 2021, its marketing expenses will be 135 million yuan, 261 million yuan and 440 million yuan respectively, accounting for 20% of the total revenue. The proportions are 13.17%, 19.04% and 23.52% respectively.
Specifically, Soocas Technology is looking for multi-dimensional strategies such as cooperation with head anchors, celebrity endorsements, and sponsorship of popular variety shows. For example, Soocas Technology has cooperated with Li Jiaqi and Luo Yonghao; Xiu served as the “Soocas Hairdressing Ambassador”; in September, the new youth representative Yoko Rame was invited to endorse his first massage-capable retro hair dryer; in May 2022, Soocas Technology also officially announced its electric toothbrush spokesperson as Tan Jianci and so on.
In addition, according to the use of raised funds of 775 million yuan announced by Soocas Technology, it is still trying to use the raised funds of 146 million yuan for brand promotion and marketing upgrade construction projects.
In fact, it is not just Soocas Technology. The phenomenon of “marketing is king” is very common in the electric toothbrush industry. For example, according to the prospectus of Weimei Capital, most of the money it earns is used for marketing: 2019, 2020 and 2021 From January to September, the sales and distribution expenses of Vimeizi were 734 million yuan, 631 million yuan and 508 million yuan respectively, accounting for 44.2%, 39.1% and 41.3% of the total revenue. Even much higher than Soocas Technology.
Usmile’s investment in marketing is also not stingy. Usmile, who is well versed in the true meaning of traffic, on the one hand attracts traffic through platforms such as WeChat official account, Weibo, and Xiaohongshu; The cooperation of many top anchors and the implantation of TV dramas are enough to show that it has invested a lot in marketing expenses.
Obviously, the electric toothbrush industry has not yet entered a benign and orderly development stage. Behind the continuous improvement of the market share and brand influence of electric toothbrush manufacturers, huge marketing expenses are still needed as support.
02.
The OEM model is prevalent and the homogeneity is serious
The savagely growing electric toothbrush industry has hidden many disadvantages. For example, the OEM model prevails in the industry, which leads to serious product homogeneity.
Taking Soocas Technology as an example, it mainly adopts an asset-light business model that focuses on product R&D, design and sales, and OEM production. The prospectus shows that the current development stage of Soocas Technology is mainly focused on product research and development, design innovation and sales. The product production adopts the OEM production model and has no self-built production factory.
In short, Soocas Technology is only responsible for product development, design and sales during the entire process from product development to market entry, while the production process is completely handed over to the foundry. In the electric toothbrush industry, there are not a few manufacturers that adopt the OEM model. For example, Usmile, Oaklin, Lanxi, Xiaoxiong, Xinbao, and Dental Nurses all have OEM factories. In addition, as the world’s largest manufacturer of electric toothbrushes, Saijia Electric has manufactured more than 50 electric toothbrush brands.
Although the foundry model allows electric toothbrush manufacturers to travel lightly, it also has a disadvantage that cannot be ignored: manufacturers cannot fully guarantee product quality. Excessive reliance on the foundry makes manufacturer B subject to the production process, manufacturing costs and management level of the foundry. Once the production process of the foundry is out of control, the brand image will be affected.
Soocas Technology also stated frankly in the prospectus: “If the future production capacity of OEMs cannot meet the company’s order scale requirements in a timely manner, cannot adapt to the company’s product update and alternative development, the cost of OEM production fluctuates sharply, or there are problems with the quality of OEM products, It may have an adverse impact on the production and operation of the company.”
However, it should be pointed out that although Soocas Technology is responsible for product development, design and sales, its investment in research and development is hard to describe. According to the prospectus, from 2019 to 2021, the research and development expenses of Soocas Technology will be 50.038 million yuan, 45.9308 million yuan and 66.5134 million yuan respectively, accounting for 4.88%, 3.35% and 3.55% of the total revenue respectively. Lower than most data of comparable manufacturers in the same industry.
In fact, Soocas Technology is not the only one that underestimates research and development. According to the prospectus of Weimei Capital, in 2019, 2020 and January-September 2021, its research and development expenses are 25.404 million yuan, 27.403 million yuan and 11.883 million yuan, respectively. The proportions of total revenue were 1.53%, 1.7% and 0.97%, respectively.
Electric toothbrush manufacturers despise research and development and are keen on the OEM model, resulting in serious product homogeneity.
Southwest Securities pointed out in the research report that electric toothbrushes are mainly composed of batteries, motors, casings and brush heads. They have a simple structure and low technical threshold, which attracts various brands to participate in the competition. It is precisely because of the lack of technical barriers that the homogenization of electric toothbrushes is serious.
As the core component motor of an electric toothbrush, at this stage only head manufacturers such as Philips and Oral-B can achieve self-supply. The motors of most other manufacturers rely on imports or are in the research and development stage. A question worth pondering is that in the absence of In the case of core technology, how long can electric toothbrush manufacturers run wild just relying on marketing?
03.
Lack of unified standards, quality problems are worrying
The electric toothbrush market has promising prospects, but the development process is particularly bumpy.
A person in the electric toothbrush industry told DoNews (ID: ilovedonews) that the product quality of many electric toothbrush brands is worrying, but in the marketing and publicity, they exaggerate the efficacy and false publicity under the banner of protecting oral health, which leads to consumers’ experience in using the toothbrush. Not good, even considering electric toothbrushes as “IQ tax” products.
“Because of dental health issues, electric toothbrush manufacturers also need to ensure product quality. Because once the quality of electric toothbrushes is not up to standard, it is easy to cause consumers to have problems such as bleeding teeth, swollen gums, and tooth loss.” The industry source said.
Some media have exposed the product quality of electric toothbrushes: the production and supply of hundreds of electric toothbrush brands in China are mainly concentrated in the hands of more than 20 foundries, most of which are just changing brands, but the product quality is actually similar.
Up to now, on the consumer complaint platform Black Cat Complaints, searched with “electric toothbrush” as the keyword, the number of complaints is as high as 3902, most of which are complaints regarding product quality and following-sales service, involving electric toothbrush manufacturers Including Soocas Technology, Feike, Philips, etc.
In September 2019, in order to promote the healthy development of the electric toothbrush industry, approved by the China Household Electrical Appliances Association, the China Household Electrical Appliances Association standard T/CHEAA 0009-2019 “Electric Toothbrush” was officially released and implemented, which not only standardized related terms, classifications, Performance requirements, inspection rules, etc., also specify the safety requirements for electric toothbrushes, and specify the noise range of electric toothbrushes.
However, due to lax supervision and profit-driven, some electric toothbrush manufacturers will still cut corners and violate a series of regulations in the manufacturing process of their products.
At present, the electric toothbrush industry is in a stage of full competition. Not only are there a large number of brands, but also the entry threshold is not high. It cannot be ignored that electric toothbrush manufacturers still need to have a spirit of self-discipline, and work hard on product differentiation and product quality control , Otherwise, even if more financial and material resources are spent on marketing, it will be difficult to impress consumers, and eventually lead to the gradual decline of the industry’s reputation.
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