Under the tide of the times, the lighting industry is gradually entering a period of deep adjustment, and the LED lighting market is becoming more mature. However, market competition is still everywhere, and even has a growing trend. As we are already halfway through this year, many dealers have admitted that the LED lighting market did not perform as well as expected in the first half of the year. Due to various factors, they have all lamented the difficult times ahead.

In China, distributors are a very special group with unique and irreplaceable commercial value in the short term. In the era when the lighting industry was still dominated by channels, the days of distributors used to be very prosperous; In today's Internet era, dealers are often faced with the difficult choice of staying or leaving. Such a huge change has caused dealers to lose their position in a fog, with some having to withdraw from the competitive stage of the industry in embarrassment, while others are struggling to survive even if they stay. Only a small number of people have grasped the pulse of the times and found new ways out.

Dealers are facing difficulties and challenges

Distributors used to be an indispensable bridge between manufacturers and retail terminals, especially in the face of China's vast and diverse market, which not only has multiple market levels, but also significant differences between different regions and urban and rural areas. Manufacturers have formed a unique interdependent and non completely aligned competitive relationship. But the current predicament faced by dealers can be said to be an inevitable result of economic and technological development:

The first is the impact of the economic downturn. With the Chinese economy entering a new normal, various industries are showing signs of weak growth. The demand growth in the LED lighting market is slowing down, gross profit margins are declining, and sales are declining. The era of simultaneous sales and profits has come to an end.

Second, in the "Internet plus" era, the information revolution is rapidly spreading from the C end to the B end, and the traditional channel channels are being reconstructed. The arrival of B2B e-commerce is a thorough revolution in the traditional channels of the lighting industry, adhering to the concept of "de intermediation" and posing an unprecedented impact on traditional distributors. At the beginning of the year, Alibaba held the "Global B2B Ecological Summit" in Yunqi Town, Hangzhou, and launched the "Hundred Cities, Ten Thousand Stores" plan and the 1688 service provider project in a high-profile manner, repositioning the B2B market; Following that, JD Group also held its annual meeting and announced that JD will launch the "New Channel Business Unit" in 2016, laying out three major websites to focus on developing fresh food and international businesses. Represented by Alibaba and JD.com, B2B e-commerce can be devastating for traditional distributors. Their model is characterized by bypassing all intermediate links from manufacturers to terminals, directly controlling terminals, and replacing distributors.

The third is the increase in operating costs. In recent years, domestic prices have gradually risen, not only have rent increased year by year, but labor costs have also become higher. Management costs have also gradually increased with the expansion of enterprise scale. In addition, facing a decline in sales, manufacturers have also begun to increase pressure and demand more stringent requirements from distributors.

As a result, dealers caught between manufacturers and terminals are facing increasingly difficult times due to various reasons.

Distributors realize the trend of transformation

With the rapid development of "Internet plus" and the gradual transparency of information, all business elements will be reconstructed, including channels that will also be transformed by the Internet, and the transformation of dealers is urgent. Through Internet transformation, dealers can still find their own irreplaceable value even in the "Internet plus" era

With the help of the Internet platform, realize the terminal

Under the traditional channel structure of the lighting industry, high gross profit, high cost, and high energy consumption are typical characteristics of the traditional channel model. Dealers have to start by themselves, cut down unnecessary distribution and management links, and use the Internet platform to directly control the terminal or self built terminal to achieve online and offline connectivity, that is, online orders, offline orders distributed nearby. The essence is to optimize the commercial efficiency between manufacturers and retail terminals through e-commerce, achieving "de intermediation" between manufacturers and retail terminals. Achieving zero distance with manufacturers and consumers ensures both quality and low prices, while also meeting the convenience needs of consumers for immediate consumption.

Leveraging the advantages of localization to transform into a service provider

The essence of marketing is to establish a long-term trading relationship with customers. In the context of "Internet plus", an important function of dealers is the maintenance and management of terminals. Its service functions for customer maintenance, financial services, logistics and distribution can not be replaced by anyone at least in the short term, which is still an important function of dealers. For the LED lighting industry, besides the product itself being a service, lighting products are not fast-moving consumer goods, and after-sales service will be a huge market. With severe homogenization competition in the industry, low profits, and increased costs, dealers have a localization advantage and can gradually transform into third-party service providers while maintaining their existing wholesale and retail business. Through intelligent information systems, offline after-sales outlets can be integrated to provide users with fast and timely services.

This type of output third-party service can be divided into different fields such as logistics and distribution services, financial credit services, information services, and operation management services. According to the service target, it can be further divided into: B-end services, which provide services for terminal merchants; C-end service refers to providing services to end consumers.

Transform to platformization based on one's own strength

There are two main directions for the transformation of dealer platformization: first, powerful dealers can transform into independent logistics e-commerce platforms; Secondly, dealers who do not have the ability to build platforms can choose to cooperate with third-party e-commerce platforms.

Among them, distributors with certain strength earn management fees by building logistics e-commerce platforms, which is the longest and most stable business model. In the future, whoever can integrate traffic the best will be the winner. But building a logistics e-commerce platform requires a large amount of capital investment in the early stage, and a certain level of strength is also needed for later management and operation. Distributors can fully utilize their warehousing, logistics, and financial credit service functions on independent e-commerce platforms.

For most dealers, it is more appropriate to enter a third-party platform and use the third-party platform to realize the Internet transformation of operation and organization management. The original market area of distributors will not change, but with the help of the platform, resource sharing can be achieved among distributors, as well as sharing the traffic brought by the platform, enjoying the information and financial services provided by the platform, achieving complementary advantages, resource sharing, rapidly improving efficiency, and reducing costs.

At present, there is still room for improvement in the circulation efficiency of the entire lighting industry. With the penetration of "Internet plus" into various industries, e-commerce development has become an irreversible trend, but its essence is to improve efficiency and reduce costs. Its purpose is to optimize the original channels, not to completely eliminate the traditional channels. As long as dealers actively change to meet the general trend of e-commerce development, they will still play an irreplaceable role.