LED joint procurement or disruption distribution pattern

“Traditional lighting has been sedimenting for many years, with a stable pattern and thin profits. The emergence of LED can bring new profit points, and it can be said to drive the restructuring of the distribution brand.” According to Liu Nan, head of the lighting company in Nanchang, Jiangxi, he introduced the reporter.

“We originally made lanterns such as crystal lamps and were more familiar with the engineering field. For example, the main lights of hotels and villas were purchased. General lighting and other auxiliary lightings are easy to follow.” Liu is currently extending the product line portfolio. Hopefully, Professional LED brand companies have long-term cooperation. “We also have a lot of LED products that go through the market, but they are all more expensive than price, quality is uneven, and after-sales is troublesome. But we are not familiar with the LED brand.”

As in the case of engineering distributors, the cooperation of manufacturers and brands in distribution channels is constantly changing due to the penetration of LEDs. "The disadvantage of the distribution channel is that it is impossible to control the dealer's profitability and loyalty. If there is no attractive investment policy, or if it does not achieve sustainable profitability in the short term after joining, it will be common for dealers to withdraw or to fight back." Guo Huaguo, general manager of China National Lighting Group, said that the rigid cost of LED has been declining. With the gradual acceptance of second-tier and third-tier cities, high cost-effectiveness and sustained profit protection have become the primary indicators for dealers to select brands.

“So, the joint procurement of LED is higher than the traditional lighting and lantern ratio. In the 2012 Guzhen Light Fair, we received several batches of joint procurement businesses in different regions in four days.” Deputy General Manager of Senpai Optoelectronics Marketing Lu Yi said to reporters, "This type of business is on the second and third lines, not the strongest in the region, but it is eager to use LED new light source products to achieve breakthroughs in scale and brand."

The emergence of LEDs has brought about changes in agency loyalty and patterns, and traditional lighting and lighting dealers have begun to re-choose. According to the reporter's survey of Changzhou, Linyi, Chongqing and other lighting industry exhibition and distribution center shows: provincial and municipal logistics companies with certain distribution channels have also begun to jointly purchase LED accessories from the production base and ship it back to the local OEM. This will further promote the joint efforts of merchants from different regions around the world to purchase finished lamps and lanterns to reduce costs and increase the price competitiveness of single products.

As the volume of finished products goes up, the bargaining power of companies to raw material suppliers naturally increases, and one of the largest items in production costs is the cost of material procurement. According to incomplete statistics, the cost of purchasing raw materials is reduced by 3%, equivalent to an increase of 8%-10% in sales.

Temporary Mission Joint Purchasing is not unfamiliar to most dealers, but in their consciousness, it seems that they are still more on the consumer level, and the joint procurement that occurs between merchants and manufacturers is rare. Wherever the goods are purchased and what goods have been traded as trade secrets by the merchants, the emergence of joint procurement means breaking the original procurement model, and many people hold a skeptical attitude. “How could it be?” Many traditional lighting merchants with large distribution channels shook their heads at joint procurement.

Especially when the product of its own brand only appears in the store as an accessory of the merchant, the merchant takes the mentality of trying to sell it, and the company does not have the continuity of cooperation as long as it serves the long-term cooperative customers. It is easy to discount.

At present, joint procurement is not mature in the lighting industry, including cases of joint procurement by merchants in several cities including Jinan, Jilin, Dalian, and Taiyuan. Even if there are, it will be a companion in twos and threes, reaching industrial bases such as Zhongshan, Foshan and Huizhou. Or purchase separately.

As Linyi, one of the most important lighting distribution centers in the country, a number of businesses also agreed that at present, there is no thought of moving closer to joint procurement of LED products. The main reason is that this new procurement model has not yet matured, and the effect remains to be verified. Some merchants bluntly said: "Joint buying is tantamount to making your own cards naked and unacceptable."

Businessmen's concerns are not without reason. On the one hand, they are concerned about the homogeneity of the products they purchase and cause vicious competition. On the other hand, the brands they represent are not the same, and joint procurement operations are very difficult. According to the actual situation, joint procurement is more suitable for distributors of the same brand.

“The reason is very simple. The distributors of the same brand belong to a certain brand, and the factors such as product type, business experience, and place of supply are highly similar, and they have no direct conflict of interest and are easier to operate.” Chairman of Shandong Tianma Lighting Co., Ltd. Liu Tongguang said, however, the joint procurement of the same brand of business is more likely to be seen as a manufacturer's order.

“Like Philips, Osram, NVC, Ops and other traditional lighting giants, their original channels are lush, LED penetration is basically a change of product and price system, although the pace is slow, but in general its channel influence is basically stable. "We are engaged in exporting for many years, and Zhou Jiaxiang, chairman of Leia Lighting, which is currently fully exploring the domestic LED market, said. He believes that at present, in the transition period between LED and traditional lighting, the joint procurement of businesses is only a temporary temporary, rather than symbiotic and prosperous in the long-term marketing system.

Marantz Lighting's general manager, Yuan Guanfeng, described deeper concerns: Generally, large-scale chain stores will be more rational in purchasing, and they will have more control over the market. However, if they are temporary organizations, “small and medium customer group purchases” are very emotional. It is often the case that we haven't understood clearly where the combination of products, companies, and markets needs to follow suit. If there are joint and unsellable conditions, the brand's crackdown on the region cannot be ignored.

Difficulties in Operation Although joint procurement has many benefits for merchants, it is extremely difficult to actually operate.

The first is who will organize joint procurement activities. “The dealers in the lighting industry are all independent and self-employed, and everyone has their own ideas. People who do not have a certain influence cannot simply organize everyone into a procurement group,” said Liu Liu, head of lighting at Fors Lighting.

Second, the procurement time is difficult to determine. Because the sales situation of the local distributors is very different, their procurement plans are not the same, it is easy to unify a purchase time.

“Since local consumption habits and consumption levels are not the same, dealers’ purchase needs are very different, and it is difficult to form scale procurement.” Wu Zhongbao, general manager of Changzhou Tongfa Lighting, also told reporters, “Finally, it is difficult to find cooperation. factory."

For example, in Zhongshan, Foshan, Huizhou and other old industrial bases that are at the peak of LED transformation, there are LED companies with certain strength. They have their own sales outlets throughout the country, and they are not willing to give them to other businesses outside the distribution system. Goods, otherwise it will affect the interests of existing fixed cooperative dealers.

It is understood that in the fiery construction of the channel in 2012, many LED companies have intentionally or unintentionally set up "barriers" that restrict the joint procurement of merchants from all over the country. For example, many large LED brand companies have first-level distribution agencies in different parts of the country. In different regions, products are treated differently depending on the cultivation market, mature market and competitive market. When businesses cross-regional joint procurement, the contradiction between the procurement alliance and the LED marketing system is exposed. In the face of this contradiction, the originally very fragile purchasing coalition is easily disintegrated.

“Of course, this is something that some scale lighting companies are unwilling to see. Because they are simply not willing to have businesses to unite with them or their competitors to 'talk about the conditions'.” An industry analyst so analysis.

In addition, the general LED brand enterprises are returned to the agents according to the total amount of the final purchase, and how the companies involved in the joint procurement are divided, "This is not a simple matter of who sells much and takes the bulk, which involves To all aspects of interest." The industry added.

General Guo Guangguo, general manager of Minguang Lighting, said frankly: “If there are distributors to our company to purchase products, we will certainly welcome it, but one thing is that our company is more interested in reaching long-term relationships with the members of the purchasing group. Rather than buying and selling."

According to the survey, like Minguang Lighting, many LED companies do not feel that they are taking joint purchases with the purpose of driving down the purchase price. Many LED business executives said that although the rigid cost of LED is constantly declining, but the logistics transportation, employee wages, plant and store rental, etc. are also rising, coupled with homogenized price competition, the profit margin is already already Very small, and then lower prices, it does not make much effort. In response, Wu Zhengyi, general manager of Guangdong Boao Division’s corporate planning agency, once proposed a new management concept: the LED industry’s procurement alliance not only buys the needed products and services, but also establishes a comprehensive industrial supply chain. Systematic supply management.

The key factor determining the efficiency of LED companies in the future is that buyers and sellers complete the transformation from simple purchasers to supply management roles. The core competition of the brand is in essence the competition of the supply chain, not the establishment of a "purchasing alliance" can solve it.