For home furnishing companies and dealers, rising raw material prices have always been a problem. Because the rise in raw material prices will inevitably lead to an increase in product prices, this is not an easy acceptance for consumers. Regarding the rise in raw material prices, industry insiders said that this effect is difficult to directly transmit to the terminal, and the e-commerce channel may have a greater impact.
The home industry is affected by the rise in raw material prices, and the impact of micro-e-commerce channels will be more obvious (Source Network)
It is difficult to directly transfer raw material prices to the terminal
For the impact of rising raw material prices on terminal prices, dealers' views are basically the same, that is, "the fluctuation of raw material prices is difficult to directly transmit to the terminal." The viewpoint of a solid wood home dealer is very representative. In his view, with the competition in the market over the years, the home market has become more and more perfect, and the concentration of home brands is also increasing. This means that the increase in production costs, including raw materials, cannot be immediately transmitted to the terminal price, especially for those companies of scale. The reason for this is mainly due to the following three reasons:
First, whether it is a solid wood home business or a soft-home business, raw materials are stored, and the cycle is 20 days, 30 days or even longer, so even if the price of raw materials rises, there will be a buffer cycle.
Second, most companies have a general price increase clause when signing an agency contract with a distributor. Under normal circumstances, the company's annual product ex-factory price can be increased by about 10%. The price increase is mostly used to buffer the increase in production costs including raw materials.
Third, even if the sudden fluctuations in raw material prices force companies to temporarily raise the ex-factory price, most companies will wait and see their competitors.
Then, will the increase in production costs such as raw materials cause an impact on the end market? The answer is yes, but not as powerful as imagined. In the dealer's view, as long as the industry collectively raises prices, the market's sensitivity to price will fall." However, for the rise in raw material prices, the response of similar markets is also very important. If it is a collective price increase, it is better to solve, If only individual manufacturers raise the price, then the dealer pressure will be big. "Consumers can't compare the current product price with the product price five years ago, but they will definitely compare the current product price with the price of several similar products. . â€
Dealers are more worried about the impact of e-commerce channels
Compared with traditional channels, dealers are more worried about the impact of e-commerce channels because of rising raw material prices. The consumer boom of the double eleven detonation has become the “carnival†of the entire consumer market, and from the recent years, the home industry has also begun to participate deeply. Household enterprises with a sales volume of over 100 million a day appear frequently, and there are more traditional home brands that combine online and offline activities to create a common marketing.
Looking back at the home brands in the Internet field in the early years, most of them are composed of “miscellaneous armyâ€. In the eyes of many home dealers, it is not enough to fear. After all, brand differentiation can eliminate the impact of price disparity. However, as more and more traditional home brands “touch the netâ€, the price system problem caused by the change in raw material costs began to emerge. Earlier, many traditional home brands were strictly suppressed against the e-commerce channel, but with the continuous expansion of the online market, the company's management and control has been significantly relaxed. Even so, as long as the price volatility caused by the increase in raw material prices is maintained at a reasonable level, the competitiveness under the line still exists.
However, if the price of raw materials rises above a certain limit, although the price will be raised online and offline, the price gap between the two will definitely increase. When the gap widens to a certain extent, the consumer’s willingness to consume online will increase. This means that because of the rise in raw material prices, dealers, although not defeated by competitors in traditional channels, will still lose to e-commerce channels.
Therefore, in general, for the home furnishing industry, the impact of rising raw material prices has been somewhat delayed, and the impact of the e-commerce channel has not been as great as the impact of e-commerce channels.
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