Polarized serious custom furniture caught in a low profit trap

For example, the same wild horse, the past ten years is the "golden age" of the customary furniture business barbaric growth: up to 60% annual growth rate, the traditional furniture companies with weak growth are far behind; After seizing the commercial MALL, community and airport, and high-speed rail gold advertising space in the first and second-tier cities, the outlets were paved to the third- and fourth-tier cities; the new C2B business model was used to subvert the industry ecology and become the focus of the industry exhibition.

In just over a decade, “customized furniture” has become the standard for a new generation of consumers’ fashionable life, and the traditional furniture that has accumulated over 30 years of hard work is far behind.

However, the time has passed, the current custom furniture market is no longer the blue ocean before, a series of "pretty" transcripts behind, the "net profit" data is so dazzling!

Good-looking gross profit margin

“The average gross profit margin of the custom furniture industry is between 30% and 50%, but the average net profit margin is only about 3%-7%.” The net profit margins of customized furniture giants such as Sophia, Haolaike, and Europa have only exceeded 10%. This data is almost the highest level that can be achieved in the current custom furniture industry. In contrast, other industries, such as the ceramics industry, have a net interest rate of 15%-20%. There is no harm without comparison. The low interest rate of custom furniture can be seen.

“Many business owners who make custom furniture have worked hard year after year and finally found out that they didn’t actually earn much.”

It seems that the fast-growing custom furniture has also encountered the same problems as traditional furniture.

An industry insider pointed out that the furniture industry is both a profiteering industry and a low-profit industry. It is said that it is profiteering. From the factory to the final consumer, it is about to increase the price by 4-6 times. It is said to be a small profit. In recent years, due to multiple factors of internal and external troubles, the net profit margin of furniture factories and dealers has been greatly reduced.

From the perspective of production cost, furniture is not expensive, but the various costs such as rent, sales, and management are high, which makes the price deviate from the value.

This phenomenon is a pain point in the furniture industry, traditional furniture is being experienced, and custom furniture is not spared today.

Where did the money go?

“What furniture does the consumer need, and what furniture the manufacturer produces.” Customized furniture has subverted the traditional furniture business model and gained more consumers, but at the same time it faces various costs:

The cost of communication in the early stage is high. The sales process of custom furniture is generally online booking, the designer goes to the customer's home door scale and design plan, the customer goes to the offline store to see the plan and sign the contract, and finally the product distribution and installation and after-sales. The whole process ranges from half a month to one month. The cost of communication in the early stage is very high. The store designer sometimes measures the scale every day. The customer who orders the last order may also have one. The total amount is not high, and the designer is usually exhausted.

Promotions, advertising, and storefront fees are high. Custom furniture is now popular in commercial MALL, shop rents are high, and are popular, please celebrity endorsements, attracting customers through store promotions, one-year rent, advertising endorsement costs, event promotion costs are a big expense.

Production costs are high. On the one hand, raw materials rose, some raw materials rose by as much as 10%, and on the other hand, labor costs, smart equipment maintenance costs, and so on.

Internal management costs are high. With the entry of the 90s into the workplace and the return of the older generation of industrial workers, the cultivation of newcomers has brought higher management costs, and the cultivation of the designer community has brought great cost pressure to management.

The dilemma between direct stores and franchisees. "Direct store" is more conducive to the formation of quality, service and word of mouth, but the management costs are high; although the "franchise store" can alleviate the management costs, but the management level is uneven, affecting the brand reputation.

With the continuous improvement of customer demand, customized furniture will face more funds, research and development, and technical investment in the upgrading of intelligent manufacturing.

Trend: Stronger stronger polarization

In the past few months of 2017, Shangpin's home delivery and European-style listings have been listed one after another. In addition, Sophia and Hao Laike, which have already been listed, and the status of custom-made furniture “Four Swordsmen” are temporarily stable.

As capital enters large-scale custom furniture enterprises, the threshold for custom furniture intelligent manufacturing is getting higher and higher, the industry development is polarized, the strong is stronger, and enterprises with insufficient capital and technology will have difficulty entering this segmentation market.

The data shows that although the custom furniture is developing rapidly, its proportion in the total sales of the Chinese furniture market is still only 15%-20%. With the liberalization of the second child policy, the demand for small size, secondary decoration, etc., custom furniture There is still a lot of room for growth in the market, which is an opportunity for custom furniture.

The competition in the custom furniture industry is also becoming more and more fierce: even the “four swordsmen” who are now in the forefront of the rivers and lakes have their own advantages. After using the power of capital, they will strive to grab a bigger market share; the traditional furniture enterprises The fixed products category can not be underestimated, although it is post-knowledge, but it is also catching up; there are also “spoilers” from real estate, Internet and other industries to share the furniture market; more “smart home” these new furniture The category is watching...

Custom furniture companies are slowing down from the pursuit of speed to the pursuit of net profit as the center, the future competition must be to see the level of continuous profitability of custom furniture companies.