In the last decade, appliance and white good manufacturers have been under tremendous pressure to figure out sustainable ways to manage their depleting profit margins. According to a report by McKinsey, average profit margins have come down to a low single digit for most of the appliance categories.
In general, appliance and white good manufacturers have always relied on adding more features to their products in order to stay ahead of the competition. This approach seems to be fruitless now. Why?
- White Labelled commoditized products from China
With China becoming the manufacturing hub of the world and being accessible to all, each technology innovation that companies bring out after a great deal of effort on R&D, becomes available in days time in the form of white labelled commodity product in China. This actually makes all the effort in coming up with new features through your in-house team futile.
2. Distribution has already been disrupted
One point where appliance manufacturers found solace was their distribution channel. Indeed, no company can build a strong, reliable distribution channel in a matter of days, it takes years of hard work to build a sound distribution channel. Unfortunately, we live in a time where Amazons and Flipkarts of the world have almost levelled the playing field with the massive distribution they have to offer.
This further intensifies to the struggle of dealing with lower margins, not only your competition has access to the same product, it also has access to a good distribution channel.
So, what’s the way forward ?
It’s a time when appliance and white good manufacturers should adopt IoT in their product lines. A right IoT strategy can help them:
- Build revenue opportunities from after sales services much more effectively and efficiently. Further, it also hedges the risk of only relying on one time profit margins from sale of product.
2. Unearth a plethora of upselling/cross-selling opportunities because with IoT your products push back a lot of device information which can be used to provide better service quality to your consumers, along-side helping you derive meaningful upselling and cross-selling opportunities.
3. Better warranty management because you no longer need to rely on what the user of product said, your product also shares a story with your business.
About the Author – Shivam has been an award-winning entrepreneur working in the global IoT space for almost a decade. He is the Co-Founder of US-based IoTfy, Inc, a frontrunner in “Enabling IoT in Enterprises” and has been credited with creating high ROI, sharp and meaningful IoT use-cases for his customers. Shivam has also been a recipient of government grants for innovation and is a jury member for MSME and DST grants.