Enterprise development locks the problem of low profit in the furniture rental market

Starting from the furniture factory

Weiyou Home was established in 1999. Since the founder has a background in industrial design, its initial positioning is different from ordinary furniture factories and home improvement companies. It uses its own design advantages to provide home furnishing for Shanghai's middle and high-end consumers. Tailored service.

“When most of the home improvement companies were still providing hard-wired services to customers, we have already begun to provide customers with the overall design of 'hard-packed + soft-packed'.” Wang Wei, executive director of Weiyou.com, said A model has allowed the company to accumulate a large amount of home improvement design experience and higher operating profit from the beginning. When the company's business developed to a certain stage, Weiyou Home found another huge demand.

“At the time, our company’s business scope was mainly in the Gubei District where the wealthy in Shanghai gathered. It is also a relatively dense area where the executives of multinational corporations settled and lived.” Wang Wei said that the company’s research and return visits showed that transnational The company's senior executives are employed in China for a period of three years, and most of them are renting. These executives hope that the style of the furniture has more choices, the cost of using the furniture is lower, and that the home improvement company can do a good job of maintaining the furniture. This demand has also spawned the current model of Weiyou.com, which provides furniture rental services.

This actually involves the topic of environmental protection. The furniture manufacturing industry is an industry that consumes a lot of resources. In many countries, such as Japan, due to lack of natural resources, it attaches great importance to the recycling of resources. It is very important for the recycling of furniture, and has already incorporated household rental into daily life. In countries such as the United Kingdom and the United States, the furniture rental market has matured.

“Our current roadmap for raw materials in the household industry is starting from China, after China has been cut to Southeast Asia, after Southeast Asia to South America, there is no wood in South America and then fell to Africa. The annual consumption of wood in China is ten. The area of ​​Hong Kong. So the consumption of wood and the pollution generated when making furniture is a great damage to the natural environment.” Wang Wei expressed concern about the current impact of the furniture industry on the environment, and at the same time The business situation is also seen in the context of the status quo.

“In the United States, home leasing has a market size of US$44 billion, while China’s home furnishing market is about 740 billion yuan, but the leasing market is almost zero.” Wang Wei said that he believes that with domestic consumers in environmental protection, home aesthetics With the improvement of consciousness, the furniture leasing model will inevitably usher in a period of rapid development. In the current environment, the main customers they serve are still multinational companies.

How to accurately find this part of the population is the next problem faced by Weiyou.com. After several years of exploration, Weiyou.com has established stable cooperation with many foreign executives' service agencies and real estate agents all over the streets, and promoted the business through B2B.

From public to civilian

However, China's home leasing industry currently only stays in the two areas of office furniture and exhibition furniture, while mid-to-high-end furniture leasing and supporting home leasing have not yet entered the enterprise. The concept of domestic leasing has not yet been fully accepted. This market gap, the first selected customer group is the hotel club industry.

“The furniture industry is expensive, the furniture of star-rated hotels is generally depreciated for 5-7 years, and budget hotels are generally not available for 3 years.” Wang Wei said, “For hotels, one-time purchase of furniture is large. And it is more troublesome to deal with these depreciated furniture in a few years. They should have a demand for leasing.” Among the existing customer groups, Weiyou Home has signed a long-term furniture rental contract with Marriott, and reached a furniture rental for the model house with Wanda Group. At the same time, it is also involved in public rental housing projects, not only providing furniture rental, but also renting small appliances. There are also some furniture rental cooperation in theatrical performances.

At present, the preferred home is to design and customize in accordance with the requirements of the hotel when the initial demand is reached. After 45 days of production, the sales process will be completed, and after-sales service will be started to provide maintenance and maintenance for the home leasing party. The new service guarantees that the partner does not have to consider the loss and depreciation of the furniture during the use process and the contract period. This is also the biggest innovation point of Wangyou in Wang Hao.

After the expiration, the partner can choose to continue to rent, purchase or return the furniture to the preferred home. “The possibility that these furniture can be reused after recycling is very high.” Wang Wei explained to the reporter, “Home rental and car rental are not the same. Generally better solid wood materials can be made new through the maintenance of technicians. This also makes our depreciation period longer."

At the same time, in the setting of business model, Weiyou Home also refers to the practice of foreign counterparts. "There are four listed companies that rent furniture in the United States. We went to New York to see Buffett's Cuit company. In their setup, these furniture will be sold cheaply after 20 years, so in our current model, these are After the furniture has a reasonable return on profits, we will still sell the furniture in our online store or to the second and third-tier markets."

Wang Wei revealed that the next step is to target the personal consumer market and sign a 10-15 year home rental contract. During this period, consumers can change furniture at will. After the contract expires, they can return and even own the furniture. .

Great investment pressure

When asked about the asset pressure brought by such a business model, Wang Wei said that in fact, everyone likes light assets, so the pressure on operators and investors is the least, but in our model, although the assets are under great pressure, We bring great value to our customers, and the most important thing is that we have made our own contribution to environmental protection and resource reuse. In addition, from a business perspective, we only need to reasonably plan the return on assets. It will make assets become stress, but create value for us, so such heavy assets are worthwhile. At the same time, we still need the support of investors and capital, which is also the purpose of our "innovation China".

However, there is no small challenge behind this seemingly idealized model. At present, only the home furnishing design, production, transportation and equipment industry chain, in addition to the fixed upstream suppliers with many years of cooperation, there are 2 self-built factories and 4 OEMs in the manufacturing process, followed by 4 A logistics team and a 3,000 square meter exhibition hall and physical furniture display. In Wang Wei’s view, covering the industrial chain can maximize the control of the factory cost of the product, and then convert the price of the lease according to different needs and lease cycles.

On the other hand, logistics is also a big problem. Wang Wei said that because the current logistics is concentrated in Shanghai, the logistics cost is extremely high in the radiation of the country, but can only give up the cooperation of some projects.

According to him, the team has invested tens of millions of yuan in the early stage of the project. At present, the cost is usually recovered in one and a half to two years at the time of a lease, but it is still in the early stage of cost recovery.

In addition, the degree of market acceptance is not a small one. Wang Hao said that the Americans agree that the concept of leasing is actually using funds to exchange after-sales service, but this idea does not work in China, and Chinese people like to settle accounts. They will add up the rent and the one-time purchase which price is lower. He said in private that it is now only possible to pass the accounting, so that the total price of the lease is lower than the cost of one-time purchase, but the pressure on the company is not small.

"At present, the biggest crux is how to use financial leverage and tools to revitalize assets. If the application is not good, this heavy asset will be a burden." Wang Wei said.

Some investors said that the home rental in the North American market is very large, so the direction of the preferred home is right, and the lease should be the future. But the problem is that there are still many problems to be solved in order to pay for rents in China. In terms of funding, there are many banks and PEs overseas who are willing to do such things, but it may take a little longer to form in China.

In addition, from the current situation, the profit of the home rental industry is not high, so the ability to execute is very important. If the efficiency is low, it will easily become a matter of spending money.

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