7 products are hot-selling on Amazon, and the small appliance giant is rushing for IPO!

Small home appliance companies flock to raise funds and go public

According to information disclosed by the Shenzhen Stock Exchange, Guangdong Deerma Technology Co., Ltd. (hereinafter referred to as "Deerma") recently submitted its response to the second round of review inquiries for the GEM IPO. Deerma first submitted its prospectus in June 2021.

Founded in 2011, Deerma positions itself as "an innovative home appliance brand company integrating independent research and development, original design, self-owned production and self-operated sales", and focuses on the "multi-brand, multi-category, globalization" development strategy. Its brands include "Deerma", "Philips" (trademark authorization), "Weixin", etc.

In addition, home appliance company Guangdong Shunde Douhe Electronic Technology Co., Ltd. (hereinafter referred to as "Douhe Technology") also has plans to go public. Douhe Technology's official website disclosed that 2021-2023 is the company's listing guidance period. At present, Douhe Technology has completed nearly 100 million yuan in Series A financing.

Similar to Delma's business model, Douhe Technology, founded in 2014, is mainly engaged in the research and development, production and sales of environmental and kitchen small appliances. In addition to its own brands, Douhe Technology also operates internationally renowned brands such as Whirlpool. At the same time, Douhe Technology is also a contract manufacturer for many world brands.

In addition to the domestic market, Deerma and Douhe Technology also have overseas markets. This is also in line with the current development trend of Chinese small home appliance brands. Based on supply chain advantages and channel innovation, brands such as JS Global Life and Stone Technology are gradually moving overseas.

Deerma's direct-sale store on Amazon sells a few products, a total of 7, including humidifiers, dehumidifiers, water mops, vacuum cleaners and handheld irons. Among them, water mops and dehumidifiers are more popular, both of which have received more than a thousand reviews. For the water mop, buyers gave it five-star reviews for the following reasons: lightweight, 360-degree rotation and atomized water spray. The dehumidifier is favored by buyers because it can be recycled compared to disposable dehumidifiers.

As for Douhe Technology, it mainly relies on Amazon, Rakuten, Walmart, independent websites, offline channels, etc. However, unlike Deerma, Douhe Technology's current operating income mainly comes from overseas. It is reported that Douhe Technology's overseas revenue accounts for two-thirds.

At present, Douhe Technology has launched electric heaters, quilt warmers, dehumidifiers, air-conditioning fans, air purifiers, humidifiers and other products, all of which are popular small household appliances that meet the needs of the European and American markets.

With the support of the coordinated development of the entire industry chain and multiple brands, Douhe Technology's performance has improved significantly. In the past three years, it has grown at an average rate of over 100% per year.

Judging from the data in recent years, Deerma's overseas revenue has been on the rise. From 2018 to 2020, Deerma's overseas sales of its own/authorized brands were RMB 224.7 million, RMB 640.1 million and RMB 232 million, respectively, with a compound annual growth rate of 221.64%.

Not only that, the share of overseas revenue is also increasing. From 2018 to 2020 and the first half of 2021, Deerma's overseas revenue accounted for 10.16%, 5.69%, 11.44% and 15.12% of its main revenue respectively.

At present, Deerma’s overseas markets have covered countries and regions such as Brazil, South Korea, Russia, Ukraine, Indonesia, Japan, and Thailand.

Look to China for global small home appliances, and look to Guangdong for China's small home appliances

According to Sullivan's forecast, the global small appliance market will reach US$144.6 billion by 2023. The global supply chain of small appliances is mainly in China.

Since the 1990s, China has had a huge production capacity for home appliances. At present, as the world's manufacturing factory, China has formed advanced small home appliance manufacturing capabilities, a complete small home appliance industry chain cluster and an efficient small home appliance industry supply chain.

From the perspective of regional distribution, small household appliance industry chain enterprises are mainly distributed in Guangdong Province and the eastern coastal areas, including Fujian, Zhejiang, Anhui, Shanghai, Jiangsu and Shandong.

At present, there are 52 industrial parks related to the small household appliance industry in China , mainly distributed in Guangdong, Zhejiang, Jiangsu, Anhui and Shandong provinces, of which there are 17 in Guangdong Province (such as Luoxi Home Appliance Industrial Park, Shenzhen Home Appliance Base Caobuxiawei Industrial Zone, Zhongshan Tianlang Electrical Appliance Industrial Park, etc.).

An industry blogger once said that if sellers want to be "small and beautiful", they need to visit factories more often and look for high-quality products. But if they want to become bigger and stronger, this is far from enough. If sellers want to be favored by capital, they may need to meet the following conditions.

As one of the investors of Deerma and Douhe Technology, Hongzhang Capital said: "We have been looking for companies that have both R&D advantages, supply chain accumulation, and cross-border e-commerce capabilities." And these two companies have all these conditions.

R& D capability is the guarantee of a company's long-term success. The most representative example is Anker Innovations, a "net celebrity" in the cross-border circle . It is understood that Anker Innovations takes an average of 6 months to develop each category, and will continue to polish, update and iterate its products after they are launched.

Moreover, R&D is more reflected in functional innovation. Take Douhe Technology as an example. If the company's R&D capabilities are divided into 1.0 and 2.0 stages, then Douhe Technology's R&D 1.0 stage is more reflected in appearance design, while the 2.0 stage focuses on technology.

As for the steak maker newly developed by Douhe Technology, the new version adds a hot air convection duct. This can significantly improve the air frying effect, reduce noise and enhance heat dissipation. In addition, the new steak maker can also make the steak maker more intelligent through automatic and precise temperature control.

Secondly, companies supported by the supply chain can ensure their own product and efficiency advantages. Both Deerma and Douhe Technology have their own production bases. Douhe's factory in Changsha adopts mixed-flow production to meet the needs of personalized and small-batch production.

However, owning a production base means higher operating costs and the risk of seasonal sales. When there are promotional events such as Black Friday and Cyber ​​Monday, productivity is tight. In this case, Delma will choose to find other factories to do the production and share the production pressure.

However, there are peak seasons and off-seasons. For example, some humidification products have a large market demand in the dry winter, while the demand shrinks rapidly at other times. If the company fails to reasonably anticipate and plan its business activities and respond to demand fluctuations in a timely manner, its performance may be negatively affected by sales seasonality risks.

When it comes to cross-border e-commerce, since experiencing the Amazon account ban wave last year, multi-platform layout has now become a consensus among many sellers.

Companies like Deerma and Douhe Technology have a stronger ability to resist risks. First of all, these two companies not only produce and sell their own brands, but also OEM for well-known brands. If one end fails, at least there is business support on the other end. In addition, their sales models are multi-platform and multi-channel, so even if one platform fails, it will not severely affect their overseas business.

Small appliances

Financing and listing