“China Light” COO Meng Shunqing has recently caused frenzy of comments on his weibo about “LED channel innovation and revolution”. Netizens and experts carried out a heated discussion on “the competition between LED e-commerce and traditional channel”.

E-commerce, as the new lighting channel, is of strategic importance at present:

Pros:

E-commerce as the mainstream forefront 1: expansive consumer base, fast growth and wide options

Nowadays, post-80s and -90s, who are quick to accept new ideas and newly sprouted things, are major consumer group and generally consider online shopping as the first choice. What’s more, high quality LED lights that are unavailable on normal circulation channel in the market, which is partly due to that LED lighting market has not been fully-established, are almost able to be found online. According to Meng Shunqing, by July 2012, the number of Chinese internet users has reached 538 million and e-commerce trade has achieved 330 million yuan. It is projected that this year Taobao will deliver sales volume of up to 1,000 billion yuan, equivalent to the total GDP of Shaanxi Province, around 3 billion yuan of which will be contributed by lighting fixtures. An online shop named H!WIN on Taobao records as high as 100 million yuan in sales volume, tripled within one year even without including other platforms such as 360buy. What is surprising is that the number of online shops that deal business per month do not exceed three digits, “a new world to be developed”.

E-commerce as the mainstream forefront 2: low cost, wide coverage

Compared with traditional channels such as engineering and agency which require high investment, online sales including B2B and B2C show apparent advantage of low cost and wide coverage. E-commerce has widespread audience, free of regional restriction, while reducing intermediate circulation link.

E-commerce as the mainstream forefront 3: on turning point

@Lilanguang: Network marketing has come vigorously in devouring a great part of traditional channel share in terms of consumer electronics, household appliance, clothing and small ware. E-commerce, on one hand, provides low price and convenience to consumers, and on another hand, help dealers reduce marketing cost and expand sales range. LED lighting just stands on turning point between online approach and traditional behavior. 

 Cons:

Keep traditional channel as main choice 1 : user experience

@Dazhaoming Chenxiaogang: solid shop enables consumers to see the real subject and check its material, color and workmanship. What’s more, the key points lie in delivery and after-sales service. Online sales requires waiting period during which products need be transported from production site, while sold shop enables same-city delivery where payment and shipment happen at the same time. Another thing is that many solid shops provide installation service.

@ Nanshi Rushi: Unlike clothing or daily necessities, lighting is a technology. After purchasing lights online, how will you install? At what height? How much area? How much illuminance required?. What does Ma Yun know about all these? 

 Keep traditional channel as main choice 2:  Replacement, brand building

@Wu Zhengzhe: In the stage of LED replacement, clients are mainly business users and public facility users who will not choose c2c, b2c or b2b to run projects. Traditional channel will keep playing the main channel role. Family purchase will rise, but will not prevail. Making e-commerce as main channel for differentiation is a reasonable option, but focusing on it will take you away from the main forefront.

@Dazhaoming Guoyilun: Those enterprises with certain base and ambition are unlikely, in building brand, to choose online sales that only sell products rather than brand over traditional channel.

  Keep traditional channel as main choice 3: accommodate retail, non-mainstream consumers dominate end users

Although network platform has become a popular shopping method now, it mainly accommodates retail which accounts for less than 35% in Chinese market. Therefore, e-commerce is not considered to be an optimized channel currently. In addition, engineering and decoration companies dominate LED lighting end users, with a small part of general consumers. The dominant group goes for producers directly, so what really matters are engineering and distribution channel.
 
@Laoshi Fangzhang
In the competition between LED e-commerce and traditional channel, I tend to support the latter. The latter is challenged, and the former also faces potential risk, so the best way is combination –O2O. In the future, e-commerce can serve as the window to strengthen trade and promotion of traditional channel, while traditional channel can become logistic and experience center for e-commerce. With advantage complementary, LED enterprises should focus on integration of multi channels. (O2O means Online To Offline, which refers to the combination of offline business opportunity and internet, with the latter as the frontline to offline transaction. In this way, internet attracts clients for offline service, offers screening choice for consumers and enables settlement. This mode has the most important characteristics that promotion result and every deal can be traced).