After lagging behind in the domestic business, Ecovacs' overseas revenue exceeds 6.5 billion yuan | Hardcore Analysis

Author | Ye Danxuan

Editor | Yuan Silai

The leading brand of stalled floor-cleaning robots is now seeking a future in the overseas market.

The performance growth of the established floor-cleaning robot company Ecovacs has been slow in recent years. The interim performance report of Ecovacs in 2024 shows that the company achieved an operating income of 6.98 billion yuan in the first half of the year, a year-on-year decline of 2.35%. It is worth noting that the revenue growth rate of Ecovacs has been declining for three consecutive years, continuously dropping from 123.11% in the first half of 2021 to 4.72%.

The involution in the intelligent cleaning appliance track is still accelerating. Price, performance, new product cycle, technological innovation points, and business layout will all become influencing factors for a brand to lead or fall behind. Many industry insiders told Yingke that this is because Ecovacs has "taken some detours" in both products and strategies.

The floor-cleaning robot has already become an extremely crowded track. According to Zhongyikang data, in 2023, the global floor-cleaning robot market size was 6.6 billion US dollars, with a year-on-year growth of 0.8%. Among them, the domestic floor-cleaning machine market had a retail volume of 4.12 million units, with a year-on-year growth of 0.5%.

Behind the huge market size, the leading brands have been highly concentrated. In the floor-cleaning robot category, the combined market share of the top four brands in the domestic online market reached 84.4%, and the fault-tolerant space for competition among giants is shrinking rapidly.

When the domestic market is almost at a standstill, Ecovacs has anchored its turnaround in the overseas market. In the first half of 2024, Ecovacs' overseas revenue was 1.3 billion yuan, with a year-on-year growth of 11%; the overseas revenue of Tineco, the high-end intelligent living appliance brand under the group, increased by 32%.

Although going overseas has become an industry consensus, and the competition in the overseas market is also becoming increasingly fierce, for Ecovacs, this is the only opportunity that it can still strive for.

Giant's Dilemma, Ecovacs Falls Behind

Among the mainstream brands of domestic floor-cleaning robots, Ecovacs is the earliest player to enter the intelligent cleaning track. In 2006, Ecovacs originated from TEK Electrical Appliances, which mainly engaged in the ODM/OEM of traditional vacuum cleaners. In 2008, China's first floor-cleaning robot, the Deebot 7 Series, was successfully developed and launched.

It is precisely because of this first-mover advantage that Ecovacs also landed on the Shanghai Stock Exchange in 2018, becoming the "first share of floor-cleaning robots". At that time, Roborock had just started to launch its own brand products, and Dreame was established for only one year.

The blank in the domestic intelligent cleaning industry has left room for large-scale innovation and iteration of products. The siphon effect of giants on technology and talents in R & D has enabled Ecovacs to firmly occupy the first position in the market share with its products and brands. In 2021, Ecovacs launched the X1 series with an "All-in-One Base Station". This concept directly led the floor-cleaning robot products from the "automatic vacuum cleaner" era to the integrated era of "sweeping and mopping with self-cleaning", and Ecovacs also became the biggest beneficiary of this round of change.

Since then, Ecovacs has been going further and further on the road of attempting technological change, and has repeatedly revealed that the product R & D direction has a differential advantage from the industry's general direction and competing products. However, the X2 series square floor-cleaning robot launched in 2023, which is committed to solving the corner cleaning problem by subverting the appearance of the traditional circular floor-cleaning robot, has encountered a sales setback.

The X2S series square floor-cleaning robot launched by Ecovacs

In fact, the era of the domestic floor-cleaning robot bonus explosion is gradually fading, and at the same time, it has also entered a technological plateau, and the industry growth rate has slowed down since 2021. According to Aowei Cloud data, in 2022, the domestic sales volume of floor-cleaning robots was 4.41 million units, a year-on-year decline of 24%, with a consecutive two-year sales decline. In the first half of 2023, both the sales volume and sales amount of floor-cleaning robots faced a year-on-year decline.

An industry insider told Yingke that the All-in-One Base Station can be understood as the last major change in the current floor-cleaning robot industry, and since then, the technological iteration of the industry has remained on the optimization of detailed problems. "For example, for the corner cleaning problem, the mainstream innovation direction is to add parts to the traditional robot for optimization, rather than making changes to the entire machine structure."

Ecovacs' heavy investment in the R & D of square floor-cleaning robots is also understood by the industry as "attempting to replicate the revolution of the All-in-One Base Station". However, it is not easy to subvert the industry again in a short period of time, only a few years after the emergence of the All-in-One Base Station.

In the two years that Ecovacs focused on square floor-cleaning robots, the industry pattern has also changed in the fierce catch-up. In 2021, Roborock launched the mop lifting technology, and in 2023, Dreame launched the bionic mechanical arm. Compared with the overall machine change, these detailed optimizations of additional functions have won a valuable time window for mid-range brands.

In the involuted intelligent cleaning track, the new product cycle is also a major focus of competition. Yingke sorted out the new products of the mainstream floor-cleaning robot brands and found that after Ecovacs released the X1 TURBO series in September 2021, the speed of following up new technologies was mediocre, maintaining a rhythm of one new product per year. However, Roborock and Dreame have been competing with each other in the rhythm of following up new product technologies. Since 2023, Dreame has launched the first mechanical arm functional product, and at the same time followed up with the hot water mopping function, and has updated a total of 4 products.

The "small steps and fast runs" strategy is becoming the norm in the technological competition of floor-cleaning robots. Ecovacs' falling behind seems to be an inevitability.

Ecovacs' Overseas Opportunity

A consensus is that the overseas market is a new opportunity.

Ecovacs' performance in overseas business is also relatively optimistic. In 2023, Ecovacs' overseas revenue was 6.522 billion yuan, with a year-on-year growth of 25.76%, and the gross profit margin was 51.81%, with a year-on-year increase of 7.16%.

According to the latest disclosed interim report data of 2024, in the first half of the year, Ecovacs brand's overseas business revenue increased by 11.3% year-on-year, and the proportion of the overall revenue of the Ecovacs brand increased to 39.3%. The overseas business revenue of Tineco, the high-end brand under the group, increased by 31.7% year-on-year, accounting for 39.8% of the overall revenue of the Tineco brand.

At the same time, Ecovacs stated in the interim report that in the first half of 2024, Ecovacs' sales revenue in the European market increased significantly by 42% year-on-year. And the first wireless window-cleaning product W2 OMNI launched for the consumption habits of the overseas market and the iterated new lawn mower robot also performed well. Only in the lawn mower category, Ecovacs' overseas revenue and sales volume achieved year-on-year growth of 185.9% and 252.1% respectively.

The difference in consumer mentality of base station products at home and abroad is also considered an opportunity for Ecovacs to break through overseas.

According to the research report of Hexiehuiyi, among the current floor-cleaning robots in the European market, the share of the single-machine type exceeds 60%, the share of the self-dust-collecting type is about 20%, and the share of both the single-machine and self-dust-collecting types in the North American market is around 40%. Compared with the current situation in the domestic market where the share of the All-in-One Base Station type exceeds 80%, there is a quite significant difference.

Industry insiders revealed to Yingke that during the brand's on-site research process, it was found that European consumers have almost no awareness of base station products, and Ecovacs has the opportunity to achieve a breakthrough in the establishment of the consumer mentality of the All-in-One Base Station products.

In fact, compared with other brands, Ecovacs' attempt to enter the European market is relatively early. "But they did not do a good job in the local dealer channels and did not seize the first-mover advantage (in Europe)."

At present, the growth rate of floor-cleaning robots in the North American and European markets is still optimistic. "The growth rate of floor-cleaning robots in the North American market on the Amazon platform exceeds 20%, and the growth rates of both Ecovacs and Roborock (on Amazon in North America) are around 50%." The industry insider revealed.

The low performance in the North American market at the 2023 performance meeting is being rewritten, which may be related to the change that the overseas business has been given a higher priority internally. In the middle of 2023, Ecovacs announced the establishment of an overseas headquarters in Singapore, and the business was completely switched from the Hong Kong company to the Singapore company. In October 2023, Ecovacs' overseas headquarters officially started operation.

In the domestic market, Ecovacs once fell behind due to the absence of a mid-range price band product layout. While overseas, Ecovacs' product prices just fill the price gap between high-end priced products such as iRobot and Dyson and affordable products such as Eufy.

The war in the overseas market is still continuing, and Ecovacs' "giant" reputation is reset to zero overseas. A new starting line may mean a new opportunity.