In 2015, the Chinese e-commerce market for home building materials is expected to reach 205 billion yuan, with online shopping growing by an impressive 249% and reaching 17.5% of the total market. Industry experts believe that home e-commerce is set to become the next big opportunity after fashion and 3C electronics. This rapid growth is largely driven by the rise of the O2O (online-to-offline) model, which has gained significant traction in recent years.
The traditional home furnishing industry, which includes home improvement, building materials, and furniture, has been undergoing a transformation. The concept of O2O has been around for nearly two years, but it was only recently that it started gaining real momentum. At a forum titled “2015 Home Improvement O2O Future Development Road†held in December 2014, industry insiders shared their experiences, noting that just two years ago, the term "O2O" was often misunderstood or dismissed, but now, not discussing it would make one seem out of touch.
The home improvement and building materials sectors are closely tied to the real estate industry. Between 2012 and 2014, the sales area of commercial housing nationwide saw a sharp increase, reaching a peak in 2013 with a rise of over 45%. However, despite this growth, the home improvement industry still faces challenges, including market chaos and difficulties in updating traditional distribution channels. Traditional hypermarkets have proven inefficient, prompting a need for modernization.
In 2012, the annual sales of large-scale building materials and home furnishing stores reached 1.25 trillion yuan, but this dropped by 2.46% year-on-year. In 2013, sales remained flat. With the increasing popularity of online platforms, the O2O model has become a necessary evolution for the traditional home industry. As Tang Ren, chief expert at the China Home Improvement E-Commerce Research Institute, explained: “O2O is about using the internet to transform traditional distribution channels, achieving integration between online and offline operations and improving overall efficiency.â€
According to data from the Speedway Research Institute, Japan currently leads in home online shopping, with 20.5% of its market being digital, while China is still in the early stages, with only 3.4% of its home market going online. This gap highlights the potential for growth, especially in the home O2O sector.
In 2013, the online sales volume of the home furnishings industry was 70 billion yuan, making up 3.9% of the offline market. By 2015, it is projected to reach 205 billion yuan—three times the size of 2013. Analyst Zhang Wei from Guotai Junan believes that the online sales of the home industry will continue to grow rapidly in the coming years.
Many leading home companies in Guangdong have begun exploring the O2O model since 2014. For example, Yihua Wood signed a strategic partnership with Melody Co., Ltd. to create a new O2O platform. The company currently has only 13 directly operated stores, but they recognize the need for more locations and better coverage. Partnering with Melody allows them to tap into the platform’s customer traffic and enhance their offline experience offerings.
Similarly, Seagull Sanitary Ware introduced Qijia.com as a strategic investor in November 2014 to support its O2O operations. According to its 2013 annual report, the company's overseas revenue accounted for 84% of total sales. With the recovery of the U.S. and EU markets, Seagull aims to expand further and use the O2O platform to provide e-commerce services to international customers, strengthening relationships and improving global outreach.
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