The Sweeping Robot Industry's Cold Winter: Dual Pressure from Technological Bottlenecks and Market Competition Behind Plunging Profits

Tech 2024-12-06 22:15:13 Source: Network

The Sweeping Robot Industry's Cold Winter: Dual Pressure from Technological Bottlenecks and Market Competition Behind Plunging ProfitsRecently, sweeping robot giants such as Roborock and Ecovacs have repeatedly topped the trending searches, with their significantly decreased net profits in Q3 sending shockwaves through the industry. Roborock CEO Chang Jing's "desert off-roading" video further fueled the fire, sparking public doubts about his "dilettantism" and concerns about the company's strategic transformation prospects

Recently, sweeping robot giants such as Roborock and Ecovacs have repeatedly topped the trending searches, with their significantly decreased net profits in Q3 sending shockwaves through the industry. Roborock CEO Chang Jing's "desert off-roading" video further fueled the fire, sparking public doubts about his "dilettantism" and concerns about the company's strategic transformation prospects. The sudden drop in profits for these once-high-flying "sweeping robot leaders" has prompted widespread discussion among industry insiders and consumers about the future development trends of the sweeping robot industry. This article will delve into the current state of the sweeping robot industry, analyze the underlying causes of its declining profits, and look ahead to its future direction.

I. The Dilemma of "Sweeping Robot Leaders": Plunging Profits and Shrinking Market Value

Roborock's Q3 net profit decreased by 43% year-on-year, reaching only 350 million yuan; Ecovacs, once the industry leader, fared even worse, with Q3 net profit reaching only 6.04 million yuan, a 69% year-on-year decrease. The market values of the two companies have fallen to 40.2 billion yuan and 29 billion yuan respectively, representing a 60% and 80% drop from their peak market values of over 100 billion yuan in 2021. This data seemingly offers strong evidence supporting the claim that the sweeping robot market is saturated. However, the reality is far more complex.

II. Sales Not Down, but Growth Slowed

Despite the significant drop in net profit, the Q3 revenue data for both Ecovacs and Roborock shows less dramatic fluctuations. Ecovacs' revenue was 3.25 billion yuan, a slight 4.06% year-on-year decrease; Roborock's revenue was 2.59 billion yuan, an 11.9% year-on-year increase. This indicates that the sweeping robot market has not completely shrunk, and sales remain considerable, though the growth rate has significantly slowed.

Third-party reports corroborate this view. A report by the China Business Industry Research Institute shows that 2019-2020 was a period of rapid development for sweeping robots, with retail sales exceeding 6 million units. Sales subsequently declined but rebounded last year, reaching 4.58 million units, a 4% year-on-year increase. The institute predicts that the retail sales of sweeping robots in China will continue to rise to 5.25 million units in 2024. Data from AVC shows that sales volume in July, August, and September increased year-on-year, and the average purchase price also increased for three consecutive months, reaching 4762 yuan in September.

The Sweeping Robot Industry

III. User Needs Still Exist, but Pain Points Remain

Through user interviews, we found that sweeping robots remain attractive to families seeking time-saving convenience, single individuals, and pet owners. Their advantage lies in fulfilling basic cleaning needs, saving time and effort. However, users commonly report that the biggest problems are insufficient intelligence, inability to accurately identify obstacles, inability to remove stubborn stains, and the need for manual water tank replacement.

A millennial mother, Qingqing, said that while the sweeping robot couldn't fully meet her cleaning needs, it could clean up most crumbs, hair, and food scraps, which was a great help. Xiao Meng, a single working professional, believes that sweeping robots are very suitable for small apartments, capable of cleaning hard-to-reach corners under beds. VV, a cat owner, said that although her new sweeping robot had some issues, it still cleaned up most of the cat hair and litter, reducing her cleaning burden.

IV. Sales and Prices Rising, Yet Profits Falling?

With sales and unit prices both increasing, why have the profits of sweeping robot companies fallen sharply? Ecovacs' explanation primarily includes three aspects: increased marketing expenses; the majority of new product sales delivered in Q4; and accelerated clearance of slow-moving overseas products, resulting in reduced gross profit margin. Roborock attributes the decline to further strengthening of domestic and overseas market expansion and the launch of multiple new products, leading to increased sales and R&D expenses.

The fundamental reason lies in the competitive landscape and company development strategies within the sweeping robot industry. While the home appliance industry generally follows the "Pareto principle," the sweeping robot industry exhibits a more fragmented competitive landscape. Several leading companies, including Ecovacs, Roborock, Dreame, Yunji, and Xiaomi, hold comparable market shares, leading to fierce competition. To compete for market share, companies have increased R&D investment and launched new products, resulting in significant increases in R&D and sales expenses.

The Sweeping Robot Industry

V. Fierce Market Competition: The Price of "Involution"

2024 has been dubbed the year of "involution" for sweeping robots. Ecovacs, Roborock, Dreame, Yunji, and Xiaomi have all released multiple new products this year, with prices remaining high. Roborock launched eight new products in the first three quarters, double the number of the previous year. Data from AVC shows that the number of new product releases from leading companies in the first half of this year far exceeded that of the same period last year, with the 3500-4000 yuan price range becoming the core segment, and high-end products around 5000 yuan also fully deployed. Companies are attempting to increase gross profit margins by launching higher-priced products.

However, the direct consequence of frequent new product launches is increased R&D and sales expenses. The R&D expenses of both Ecovacs and Roborock have increased significantly in the first three quarters, and R&D investment has continued to rise in recent years. Sales expenses have also increased accordingly. Roborock's sales expenses in the first three quarters increased by 46% year-on-year, reaching 1.6 billion yuan, accounting for 22% of operating revenue.

VI. Inventory Buildup: A Trade-off Between New Products and Profits

Frequent new product launches have also led to inventory buildup. Both Ecovacs and Roborock saw significant increases in inventory in the first three quarters, with inventory turnover days also increasing. With consumers generally believing that "it's better to buy the newest sweeping robot," companies dare not stop launching new products, leading to greater investment and continuously diluted profits.

VII. Technological Bottlenecks: Improvement Needed in Intelligence

The Sweeping Robot Industry

Although companies are increasing R&D investment, there is no significant differentiation in core technologies such as path planning algorithms, visual algorithms, and chip algorithms. Companies primarily focus on incremental innovation in functionality, but these innovations do not fully address user pain points. For example, sweeping robots equipped with bionic mechanical foot obstacle-crossing technology, while technically innovative, are prone to damage, and their convenience remains to be seen.

VIII. AI Intelligence: The Gap Between Hype and Practical Application

AI intelligence is a key marketing point for sweeping robot manufacturers this year. While AI technology can improve the intelligence of sweeping robots, there are still many shortcomings in practical applications. Some users have reported that even sweeping robots claiming to have AI capabilities cannot accurately identify obstacles such as carpets and pet toys.

IX. Diversification: Seeking a Second Growth Curve

In addition to enhancing the competitiveness of their core business, sweeping robot companies are actively seeking a second growth curve. Roborock has chosen washing machines, while Ecovacs and Dreame have opted for lawn mowers, and all are expanding into overseas markets.

X. Overseas Markets: Opportunities and Challenges Coexist

The Sweeping Robot Industry

The overseas market is an important future growth point for sweeping robot companies. Chinese sweeping robots have already secured a position in the overseas market, but the complexity of overseas markets far exceeds that of the domestic market, facing numerous challenges including policies, transportation costs, exchange rates, and product localization. Expanding into overseas markets requires significant investment of funds and effort, and also faces challenges in expanding sales channels.

XI. Q4 Outlook: Can the Peak Season Reverse the Trend?

Q4 is the peak sales season for sweeping robots, with the Double 11 shopping festival and national home appliance subsidy policies expected to stimulate sales growth. Industry insiders predict a significant increase in sweeping robot sales in Q4. However, this does not mean that sweeping robot companies can rest easy. Addressing market competition, resolving technological bottlenecks, and improving product intelligence remain significant challenges for all companies.

XII. Conclusion: The Choice Between Technological Breakthroughs and Market Strategies

The sweeping robot industry is at a crucial turning point. Technological bottlenecks, market competition, and cost control are all affecting industry development. The future sustainable and healthy development of the sweeping robot industry will depend on whether companies can make breakthroughs in technological innovation, product innovation, and market strategies, and find a path to development that suits them.

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