Hello.
It is impossible not to love the competition in the Russian electronics market, this is not just a roller coaster, but something unimaginable, we will never get bored. It seems that price wars are impossible during a crisis, they contradict logic, but everything is exactly the opposite. The worse the conditions, the more strategies to increase sales. Last year was marked by the life and death struggle of Chinese companies, the rise of their sales. The main source of concern was Tecno, which has dramatically increased its presence both on store shelves and in the media space. The same realme and Xiaomi were forced to respond and reduce the prices of their products, the price war unfolded to its fullest.
Marketplaces stood apart in this war, for them electronics is a tasty, but not the main product. As a result, they wanted to increase their sales, but could not do this, because often they sold goods not even at the purchase price, but at a discount from it. For the buyer, this is an ideal option, but for all market players – just a blow below the belt. There is no logic in it, except for the capture of market share by a specific player. Moreover, all other players in the eyes of buyers become greedy, trying to cash in on them. What is infinitely far from reality, in reality, these are just discounts below the purchase from one of the players. Big, noticeable, but far from the main one. We talked about the reasons why Wildberries do this in a separate article.
The problem for Wildberries was the supply of goods, as suppliers limited them to reduce the impact of low prices on the entire market. Until 2022, this function was performed by representative offices of manufacturers, in 2022 – by distributors who were not interested in such a development of events. After all, it turned out that Wildberries often sold goods at a wholesale price or even lower. A paradoxical situation, and no one was interested in it, except for the site, which was increasing its turnover. As a result, the shortage of goods at Wildberries turned out to be significant. What did this online platform do?
The company changed its strategy, decided not to give up discounts, but to improve its economy. You can do this in a simple way – to supply goods directly for your channel, that is, use parallel imports and bring as much as you need. No restrictions on the part of distributors, no price controls on the part of manufacturers. At the end of 2022, Wildberries switched to direct deliveries of electronics across the entire range of products, and a large campaign to promote them will begin in early March.
By removing intermediaries from the chain, Wildberries achieved a slightly better economy, saved at least 5-7% of the cost of goods for themselves, and even more in some positions. Which in theory makes it possible to reduce prices even more, the loss from such operations will not exceed last year’s. Or leave prices at last year’s level (conditionally, retail of other companies minus a certain percentage), which will reduce losses and improve the sales economy.
In any case, this step gives Wildberries additional room to maneuver, and direct competitors will be forced to look for how to respond to these steps. Here it must be said that the Wildberries attack is primarily directed against Ozone, other online markets are not perceived as equal. We can say that Aliexpress has given up its positions and is gradually fading, in the field of electronics Yandex.Market does not feel very good for most positions, Sbermegamarket does not yet pose a serious threat and magnitude. In a word, all these actions are directed against Ozon, and the latter has prepared for them. In fact, we will see a price war between the two sites, where each will respond to the actions of the other, and these butts will be clearly visible to buyers. In the spring, it is these two channels that should be evaluated in terms of sales, and if you are looking for something from electronics, you should pay attention to them, the prices there will be at least interesting.
For the entire electronics market, this unplanned price war will come as an unpleasant surprise, but there are exceptions. For example, it will become difficult to sell products such as smartphones from Samsung or Apple, Dyson appliances, Xiaomi devices. But the same Chinese brands Tecno, realme and a number of others will not be affected, they will be able to make their own sales, increase their presence in the market. That will automatically push these brands to growth.
In the TV segment, STM will show excellent growth, sales of Sberbank, Yandex (both of their brands), and other companies will grow. This segment is not subject to the price war, as it is already in full swing and does not plan to stop. But for the rest of the market, the actions of Wildberries will be tangible.
For the marketplace, its own purchase of electronics presents a number of new problems, in particular, it is not clear what to do with marriage. When goods arrive at the warehouse, a certain number of devices will not turn on (whether there will be an initial health check is a separate question – most likely, it will simply be removed to reduce costs). Then the return of the broken goods, since Wildberries is responsible for it. On the issue of after-sales service, many companies have broken their teeth, it is hard and difficult, especially in the current market situation. I am almost one hundred percent sure that, when deciding on their own supplies, no one calculated in detail the losses from the service and how much they will grow for Wildberries. And this is the saddest part of the story, plus or minus the marketplace can digest everything else, including losses from such operations. You can also say that the temptation to shift their own problems onto buyers will be great, which will ultimately kill the perception of the site as an electronics seller, it will be avoided. But it certainly won’t happen instantly.
This is not the first price war in the Russian electronics market, there were hundreds of them, and many similar events are ahead of us. The main thing here is the understanding that the market situation in 2023 is devoid of predetermination and the stake should be placed not so much on the cost, it is not so important, but on the quality of service. Wildberries will not be able to compete with the gray market, where prices will still be lower and more attractive. Keeping prices like in the gray market for a long time means working in a deep minus, which the company will definitely not be able to do, even despite all the resources and clothing sales that generate the main profit. This is a deliberately unprofitable process in which there is no long-term strategy. Give discounts to what? That is, what is the goal of Wildberries, in addition to increasing their own turnover at the cost of giving out unprecedented discounts? The answer is no, since nothing will come of it. It is a good old business tradition to sell a dollar for 99 cents, there will be no end to those who want to buy dollars like that, but in the end you will pay for this holiday of life. It’s a pity, but I really don’t see the point in such a price war. Those goods and brands that Wildberries will bring and sell will suffer, but the effect will not last forever, then the market will recover.
For you, our readers who do not work in the electronics market, a simple piece of advice. Wait for March, keep an eye on Wildberries and their direct competitors, most likely you will receive very interesting price offers. But then how lucky – will you have time to buy or not, will you run into problems and further down the list. And don’t say later that you weren’t warned about the pitfalls that accompany free cheese in a mousetrap.