How far can the LED display market go?

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A few days ago, a familiar "speculator" friend came to the company to drink tea and talked about the LED display market in the past year. The most talked about was that the market was not easy to do, the team was distracted, orders were always snatched away by industry leaders, and the pot was not started for half a year... To be honest, even the worst team should have a turnover of 3 to 5 million in a year. It’s really not right to end up like this after not cooking for half a year.

The buddy over there was still complaining that he was "taking jujube pills" if he continued like this. He also compared and ridiculed the growth cases of some trading companies or manufacturers. The negative energy was overwhelming. I immediately realized that if he continued to complain like this, he would sooner or later leave the organization and run away alone. In order not to give this young team a knowing blow, I quickly changed the topic:

"Actually, speculation now is not as good as speculation in the past. The fundamental reason is that the value of speculation is diluting. I am not targeting a particular team. I mean that all teams still doing speculation are facing this situation."

He looked confused, "Huh? Why?"

Even if he fired the map cannon, he had to clear the ground with tears in his eyes, right? Let me explain why the value of speculation is diluting now.

First of all, what is entrepreneurial speculation (hereinafter referred to as speculation)?

There are many definitions. In short, it is to do business in an organized way with dreams. Find a group of like-minded poker friends, pick a few capable ones to form a group, pick a few tables with no corners from the second-hand market, hang up an open factory without a license plate, set up the coffee table, and we're open for business! ! In order to realize the dream of becoming the XX leader in the industry, the core work focus every day is: drinking tea, chatting, and sending WeChat messages. (Editor's heart: Brother, this is too direct~~~)

When you go out, turn left to brag with suppliers, turn right when you go out and chat with customers, share your case on WeChat, push it three times a day, and keep fit. As long as you talk, you can start a conversation. We have 100,000 modules in stock, we sold 1,000 square meters today, the NBA is about to place an order, the product has entered a national-level building... all kinds of things, high-end! There is no price advantage in speculating, we have to compare with quality. The most annoying thing about speculating is when manufacturers advertise low prices, because this means that everyone may not be able to afford the price.

Then, some people must say, isn’t this a trading company?

Of course, there is a difference. The simple definition of a trading company is that it invests in everything except production. It has all the necessary facilities such as site, personnel, market, qualifications, services, etc., and relies on the investment team, investment platform, and management business team to make a living; while "speculation" means that it does not take wages or support people, and most of the time it relies on itself to make a living.

Speculation is an individual behavior relative to collective behavior, a niche interest relative to collective interests, and a small project relative to large projects. Since it is so niche, where is the market for it?

Of course there is a market, a small-amount project market, a low-end project demand market, a small-scale enterprise demand market, and a private demand market. However, the total volume of these markets will not exceed the turnover of listed companies in a quarter. This determines that the speculative market is in a relatively marginal position in the mainstream market of the display industry.

Some people will definitely refute: So and so made hundreds of thousands by speculating on a single project, and now the BMW X6 is starting to drive, and it’s awesome. The person who said this must not have an in-depth understanding of the person and his story. How many companies are eyeing a multi-million dollar project, and everyone is trying their best to compete with each other, but they are conquered by the personal charm of a speculator. Do you think this can be simple? However, a large number of passionate young people follow blindly, and their fate can only be described in one word: bumpy.

Simply put, it’s not easy to mix.

Regarding the origin of speculation, let’s do some popular science. In the early days, order speculation was a way for salesmen in large companies to make extra money. They took out some orders that the company could not handle and the salesmen made them themselves. At that time, LED displays were still a "partial industry", unlike now where they are everywhere. There are few manufacturers and high prices. What should I do if I can't buy the goods if I have money? Privately, I entrusted the salesperson to help me make some trouble. Therefore, when the supply exceeds the demand and there is no way to find a way out, there is a golden occasion for salesmen to make a fortune by speculating. In the past, for a manufacturer, one speculator was worth as much as one sales department for a small company. For customers, the speculators could provide customers with knowing products that they could not find and wanted, and the value of speculators above and below was fully reflected.

Generally speaking, the LED display screen back then had the feel of my country’s reform and opening up. It was easy to sell and made a lot of money, and it was also very passionate. It attracted a large number of manic and passionate young people who yearned for capitalism. However, the current order speculation is completely different from the previous order speculation. Manufacturers are everywhere on the street. The advantages of order speculation have been offset by the transparency of information. According to the previous model, it is difficult to provide large value to upstream and downstream. Even the market personnel of small and medium-sized manufacturers and trading companies are in a difficult situation.

The success of speculators in the past was basically due to catching up with good times and good thinking of speculators. In 2010, the LED display trend was in full swing. Most speculators decisively transformed and started their own businesses. With the resources accumulated in large companies, they quickly established their own manufacturers or trading positions in the LED display industry.

But now the situation is different. LED display screen is no longer a price-closed industry. Whether it is a high-end product or a low-end product, there is a tacit understanding. The price of the same series of products is about 500 yuan/square. Everyone tries not to discriminate against each other and compete fairly. Why are only some speculators still successful?

1. Stand at the forefront and make trend products

First of all, it must be clear that speculation is not the same as manufacturer business. In principle, speculating is reselling the manufacturer's products - adding a certain amount to the price given by the manufacturer and reselling them to Party A. Therefore, the idea of "price wars between speculators and manufacturers" is extremely absurd. In essence, they are robbing the manufacturers' salesmen of their jobs. Nowadays, the biggest problems encountered by speculators and even the entire industry market are: homogeneous products and high customer overlap. Comparing quality and price with manufacturers, speculators basically have little hope. Comparing with trading companies and comparing services, they basically have no strength. If you want to get projects, you have to use public relations to provide better services. Prices cannot be quoted high, and costs are high. This is the "embarrassment" of product homogeneity!

But then again, if the buyer of a project does not do market research and product analysis, and just trusts the sales staff to place the order, then the purchase is not far away from packing up and leaving. If the order speculators are complacent and think that their personal charm can influence Party A, that is also stupid and lawless. In short, if the business is done without warning, I think both parties are stupid.

The market is ever-changing, and in China, a land of magical realism, the service industry is the rich mine, but LED displays are different. There are good years and bad years for entrepreneurship. If you do well, you will follow the trend, but if you do well, you may not have new products or the products will not be sold. The same goes for LED displays. If you bet on the trend correctly, you will follow the trend. If you bet on the wrong trend, you will be a fool.

2014 was a watershed. In the eyes of speculators at the time, direct insertion and surface posting were like the current VR, and they were both future trends. Some people choose to develop the subsidy system, and some people choose to go deep into direct investment. As a result, those who bet on the subsidy have changed their houses several times, and those who bet on the direct subsidy have not yet collected the down payment.

So we have to ask "What did the speculator do right?" rather than "What did the display do right?" Speculation is a very small business. Don't expect to be able to speculate on a Leyard. Once the trend is over, you won't be able to fly even if you use all your strength.

In 2016, a new trend has come again. Under the halo of energy saving, ZIP has come back to life with great momentum, and the market performance far exceeds expectations! However, the price advantage of surface-mounted products and the mass production of small spacing still allow it to occupy half of the market!

All in all, the core rule of speculating: make trending products and ride the wave!

2. Choose good manufacturers and cooperate in depth

Some people say that it’s just about doing business and just quote the price directly. People who say this are basically the "simple" hard-working type. First of all, order speculation is a very heavy task and the output is not very cost-effective: you have worked hard to develop the business plan, and the purpose is to promote the product you are speculating on. However, the customer uses your plan to find other manufacturers to compare and lower the price. In the process, you have to beware of a series of things such as manufacturers cutting wages, avoiding peers to grab orders at low prices, etc. In the end, you find that your greatest value is actually to promote the product for the manufacturer, nothing more.

Pessimistically speaking, in addition to betting on the right products and being "supported" by big manufacturers, the value that speculators can provide is extremely limited. The greatest value of speculators is output, and they continue to expand output. For profit, speculators even sign guaranteed sales and pay for affiliation fees in order to get greater support from manufacturers. However, this road has been moldy by speculative units. If you use it now, it is just copying and imitating, and people no longer play this way.

A platform with excellent quality and good reputation is what all speculators want to cooperate with. Therefore, if speculators want to succeed, they must find a suitable platform, and it is best to establish long-term and in-depth cooperation. A single two projects will not create much value for the speculators themselves, nor can they provide much value to the manufacturers. In this way, resources such as products, technology, services, etc. can be effectively guaranteed, and "rear stability" can you "enter the battlefield" with peace of mind. As for how to achieve in-depth cooperation, it requires the courage and wisdom of the participants. (Author of the article: Yuanxing COO)

The arrival of the big data era will inevitably intensify information transparency. It is not difficult to foresee that the original path of speculation will become narrower and narrower in the future, leaving little time for speculators to "reform"...