- Ecovacs’ performance depends on both Deebot and Tineco rather than one product line.
- Financial reports reveal whether category expansion is creating scale or adding pressure.
- The company’s challenge is sustaining innovation while defending profitability.
A few days ago, while I was hospitalized with chickenpox, Ecovacs released its mid-year annual report. I have briefly excerpted some key points for your reference.
Firstly, the overall performance declined by 3.8% compared to the same period last year. Among them, the ODM for service robots decreased by 84.47%, while the OEM/ODM for cleaning small appliances dropped by 13.87%. This signals a significant shift towards proprietary brands for Ecovacs. From a product perspective, robot vacuum ODM revenue has almost fallen to only RMB 38.65 million, with no noticeable impact from completely abandoning it. For cleaning small appliances, there is still an amount close to 600 million RMB (accounting for 24.7% of total performance) in OEM/ODM orders. If these were all abandoned, it might have a certain short-term impact on the listed company.
Especially at this juncture of the Sino-US trade war, how to make choices may be a question that Ecovacs CEO Mr. Qian needs to consider.
Ecovacs has developed the Tineco brand for intelligent small household appliances focused on cleaning. During this period, advertisements for the Tineco smart vacuum cleaner can be seen in many places. It is evident that Ecovacs places high hopes on the Tineco brand.
However, the pricing of Tineco's vacuum cleaners is particularly puzzling, as they are priced similarly to Dyson models. There is a well-known industry rule that those priced close to Dyson will perish. A search for "Tineco vacuum cleaner" on Taobao reveals two-digit sales figures on the homepage, which validates the reasonableness of this pricing strategy.
In the vacuum cleaner industry, both listed companies Kingclean's Mojie and Ecovacs' Tineco have demonstrated through actual sales that pricing close to Dyson is a dead end.
From my perspective, positioning Tineco or Mojie as the top domestic brand might be the most practical approach. Setting the sales price around 1,999 yuan would likely achieve certain sales volumes while still maintaining reasonable profit margins.
This table is quite interesting and lists Ecovacs' subsidiaries' sales and net profits. Those who pay attention can glean a lot of information from it.
According to a report from China Home Appliances Research Institute (CHARI) in 2019, which can be found online, let's take a look at the changes in data for major brands both online and offline.
