No offline business: Can Internet TV escape being a niche?

After experiencing a wave of Internet development, offline stores, which were once considered "behind the times", are once again becoming the target of TV manufacturers.

According to data from third-party market research organization Aowei Cloud Network, online TV sales in the first half of 2015 were 5.28 million units, up 77% year-on-year, accounting for 24% of all channels; but at the same time, compared with the sales of 4.89 million in the second half of last year, the month-on-month increase was only less than 8%. Even taking into account the difference in shopping seasons in the first and second half of the year, this month-on-month growth figure seems too "ugly."

An industry analyst told NetEase Technology that when the television industry develops to a certain extent through online channels, it will inevitably encounter some bottlenecks. "Although the acceptance of online shopping for black electronics is increasing, issues such as logistics, distribution, and experience are gradually becoming consumers' biggest concerns. Re-arranging offline channels may help alleviate some of the concerns."

This is no longer a secret in the industry. According to NetEase Technology, even online brands such as LeTV, Xiaomi, and PPTV have or are considering returning to offline sales. The offline war among TV manufacturers seems to be on the verge of breaking out again. However, the gameplay this time may be different from the previous shopping malls and stores.

The Dilemma of Online Bonuses

In fact, compared with the overall downward trend in the television industry, online channels that maintain growth still have relatively obvious dividends.

For this reason, both traditional and Internet brands have high hopes for online sales. For example, Coocaa, an Internet brand that was officially spun off from Skyworth in the first half of the year, has sold more than 500,000 TVs so far this year; and LeTV TV reportedly sold 1.8 million units last year, with an internal target of 3 million this year.

Although sales of 3 million units are not considered a lot in the traditional TV industry, for traditional manufacturers with decades of history, an Internet brand that has only grown for a few years is too strong.

But the growth is not all good news. Coocaa CEO Lin Jin told NetEase Technology that "demand in the TV industry is declining, and online channels are growing against the trend, but the growth rate may be slower than expected." This also explains why the online growth rate is slowing down, but still has a good share in all channels.

As for the reasons for the slowdown in growth, many TV manufacturers told NetEase Technology that the first- and second-tier markets covered by e-commerce channels are becoming increasingly saturated, while the third- and fourth-tier markets and rural markets have not yet been fully developed; at the same time, whether in the first- and second-tier or the third- and fourth-tier cities, people over 30 years old, who are considered to be the main consumers, have limited awareness of the Internet.

In addition, the relatively cumbersome pre-sales experience, logistics distribution, and after-sales maintenance have become obstacles to expanding new users after the first batch of online channels have adopted them.

E-commerce companies have also made many efforts to address these weaknesses. Aowei data shows that as of the first half of this year, JD.com has 600 service stores nationwide, covering more than 100,000 administrative villages; Cainiao Network has 20,000 outlets nationwide, etc. These offline outlets will more or less ease the distribution and logistics problems of large home appliances.

But this is not enough. Chang Jiang, general manager of PPTV TV Division, said that TVs that have developed online will definitely have to go offline again after a certain stage of development. "The user experience model brought by physical stores is what home appliances such as TVs need." In terms of distribution logistics and after-sales maintenance, offline stores have inherent advantages over e-commerce.

Zhang Zhiwei, vice president of LeEco Holdings, even believes that as the trend of slowing online growth intensifies, the proportion of online channels will be difficult to exceed 30% in the end. "If a TV brand does not have offline stores, it will definitely not become a mainstream brand."

Breakthrough Experience Store

However, the "offline stores" coveted by Internet TV manufacturers are not doing as well as expected.

As the industry shrinks and online sales grow, physical channels have declined accordingly, especially large chains, which fell 10% year-on-year in the first half of this year. Chang Jiang told NetEase Technology that since online channels have flatter information and greater price advantages, traditional stores have lost many potential users.

But this situation is also changing. After LeTV and other Internet TV manufacturers entered the market, traditional manufacturers and distributors have been trying to go online, which has also prompted some stores to put up slogans such as "same price online and offline" or even "cheaper than online". "Offline channels are also becoming flatter now," Chang Jiang believes, and this trend may become more obvious in the future.

However, manufacturers do not seem to have enough patience to wait for traditional stores to recover.

In Zhang Zhiwei's view, the biggest link that physical stores can complement is "experience". In traditional offline channels, although the experience link has always existed, the core of the channel has never been on the experience. The crowded layout and continuous promotion make the meaning of sales far more important than other links. "Lepar experience store wants to change the traditional store display sales model to experience display sales," he emphasized.

This type of experience store does not just add an "experience" concept. In terms of effect, on the one hand, the experience store carries the functions of traditional offline channel sales and improves the shopping experience of offline purchasers; on the other hand, by weakening the "offline sales" link, users' purchases will no longer be limited to stores, and they will feed back to online channels.

Chang Jiang asserted that with the increase in the number of experience stores, the boundaries between online and offline will gradually blur, and eventually there may no longer be a term like "Internet TV". "In the future, there may only be a distinction between smart and non-smart. Industry competition will return to experience, and the concept of the Internet will become quiet."

This user experience not only includes products, but also includes product experience, delivery logistics, and after-sales service.

Lin Jin further confirmed this view. He said without hesitation that online and offline will eventually merge with each other, "a single channel will not last long, and this is the same for both online and offline manufacturers."

Radical and conservative

It is worth mentioning that compared with manufacturers who already have more traditional offline channels, the Internet camp represented by LeTV is particularly radical towards experience stores.

According to LeEco, there are 1,800 Lepar experience stores that have been built and signed nationwide, while this number was less than 500 in March this year. According to NetEase Technology, as an important strategy of LeEco TV this year, LeEco has conducted "roadshows" for Lepar across the country, and the prices LeEco offers to dealers are also very surprising. For example, it does not sell bare phones offline, and the price of offline two-year membership phones is the same as that of online three-year membership phones.

LeTV's one-year full-screen membership fee is 490 yuan, which means that Lepar dealers can earn at least 490 yuan for every LeTV TV sold, which is almost an impossible number in previous offline channels.

PPTV TV, backed by Suning, is taking a relatively different route. According to Chang Jiang, the PPTV-55P TV released on the 29th of this month will be sold at Suning.com and Suning stores at the same time, and the stores will also try to open TV experience areas in the future. "PPTV TV is expected to sell 1 million units this year, of which offline sales will account for a certain proportion."

However, in practice, the expansion of experience stores is not entirely smooth sailing. Some industry insiders believe that although the gameplay of Internet TV manufacturers is relatively new, the process from sales stores to experience stores still needs to be explored.

Zhang Zhiwei said that the experience store will have relatively strict standards for the "experience", "LeTV has no exclusive requirements for offline stores, but all signed stores must provide LeTV with relatively independent space." This alone will exclude many less "formal" stores.

In addition, it will be a challenge for Internet manufacturers who are relatively unfamiliar with offline channels to maintain a high retention rate after store expansion. Lin Jin said that offline store owners are not very loyal. "What they care most about is whether they can make money after signing the agreement. Once there are some product or marketing problems on the enterprise side, the store's response may be much faster than expected."

Most importantly, the increased costs brought by offline experience stores still make manufacturers worried. Previously, Wang Chuan, head of Xiaomi TV, said that due to the high offline costs, Xiaomi TV is still mainly sold through online channels, but it is not opposed to some lower-cost offline channels.

This does not seem to be a big problem for the traditional camp that already has a large amount of offline channel resources.

Lin Jin said that based on the current situation, Coocaa will still insist on being online only, but it is already developing some offline partners to showcase its products. "It makes no sense to copy another Skyworth, so we are also exploring some new ways of playing. In addition, Skyworth has about 5,000 offline channel stores. We feel that if we compete again offline, Skyworth will not be at a disadvantage."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.