E-commerce for Large Appliances

Part
01
of four
Part
01

Key Online Large Appliance Sellers

We have researched and provided key players in the online large appliance market. The players identified include Samsung electronics. Whirlpool Corporation, LG Electronics, Lowe's, Best Buy, Amazon Inc.com, and Walmart.
To identify the key players in the Online appliance market, we searched through industry report, new articles, third-party websites and other relevant sources for the players in this sphere. Our research provided us with industry reports on the global retail appliance market for 2018. We were also able to identify a list of top online retails by revenue for the appliance market. The list identified collaborated with some players noted on the global report. To fulfill the criteria for our research, we grouped the key players based on the three segments (brands directly selling their products, third-party sellers, and other sellers, not specific to appliances). We included companies with higher revenues and those that are involved with online sales.

BRANDS DIRECTLY SELLING THEIR PRODUCTS

SAMSUNG

Overview: Samsung offers a unique discount to customers who purchased at least four large appliances at a time. The products purchased will be delivered free, and the customer pays a 10% discount for the products purchased.

WHIRLPOOL CORPORATION

Overview: Whirlpool Corporation's proposition lies in the quality of its products and the best cost which they offer to their consumers.

LG ELECTRONICS

Overview: LG is a has arrays of large appliances. It is known for its unique low-cost appliances and fast delivery.

THIRD-PARTY SELLERS

LOWE'S

Overview: Lowe's offers free delivery for any appliances purchased. They also offer 10% when the customer uses LLC. These offers are specifically for major appliances.

BEST BY

Overview: Best buy offers a 35% discount on major appliances. Also, they offer free delivery for major appliance purchases $399 and up, a $69.99 value, with a 24-month payment plan.

OTHER SELLERS, NOT SPECIFIC TO APPLIANCES

AMAZON

Overview: Amazon according to IBISWorld report is a leading retailer for appliances. It is a trusted store for major appliance manufacturers and buyers across the globe.

WALMART

Overview: Walmart is distinguished by fast shipment. It is also positioned for the low price they offer for appliances.

Part
02
of four
Part
02

Online Large Appliance Market Size

We estimated that the size of large appliance ecommerce market in the US and Canada is $5.26 billion (collectively).

METHODOLOGY

In order to find the required information, we started by searching government databases like the US Census, Department of Commerce, and Statistics Canada. While we were able to find data for the ecommerce category as a whole, there was nothing specific to large appliances. Following this, we searched industry portals like Twice and Association of Home Appliance Manufacturers (AHAM). None of the publicly available information in these sources was of direct relevance to our research (like home appliance sales of top retailers in the US) and seemingly useful information was behind paywalls. Next, we searched the research reports from agencies like NPD, Grand View Research, eMarketer, and Ibis. This strategy was fairly successful as we were able to find relevant data for the US; however, nothing specific to Canada was available. Given these limitations, we triangulated an estimate for the market size of online sales of large appliances in the US and Canada.

FINDINGS

According to the NPD’s receipt mining service, Checkout Tracking, consumers in the US spent $4 billion buying major home appliances online in 2016. This represents a 38% increase compared to the previous year. Refrigerators had a 30% share of this market. Sales figures by category of product:
Among the above product types, refrigerators, clothes dryers, air conditioners, dishwashers, ranges, freezers, and ovens are large appliances and they cumulatively amount to $3.65 billion (1,200M+700M+500M+350M+350M+350M+100M+100M) in sales. Microwave ovens, range hoods, cooktops, and sink disposers are small appliances. Therefore, the online sale of large appliances in the US was $3.65 billion in 2016.
As the online sale of major appliances grew by 38% in 2016, and since large appliances have a major chunk ($3.65B out of $4B) of the major appliances sales, we can assume that the growth rate was the same for online sales of large appliances too. If the growth rate was the same (38%) through 2017 and 2018, the current market size would be significantly higher. However, we cannot say if this category grew by 38% in 2017 and 2018, or by lesser or more.
Overall, e-commerce sales in the US grew by 15.6% in 2017 and 15% in 2018. Assuming that the major appliances category grew at the same rate, the market size for online sales of large appliances in the US will be $4.85 billion (3.65B*1.15*1.156). This estimate is likely to be a more accurate estimate than the 2016 market size ($3.65 billion).
As the US and Canada are both developed economies and the cost of living is more or less the same in both countries, we can assume that the online sale of home appliance products in the two countries will be in the same proportion as their GDPs. The GDP of the US is 19,390,604 million and that of Canada is 1,653,043 million. Therefore, the value of online sales of large appliances in Canada is $413 million (4.85B*1,653,043M /19,390,604M).
The market size of online sales of large appliances in the US and Canada is $5.26 billion ($4,850M + $413M).

ADDITIONAL INFO

  • According to Grand View Research, the US household appliances market is valued at $43.34 billion.
  • Samsung’s share of the US home appliance market was 19.5% in 2017. LG had a market share of 15.7% and Whirlpool had 15.4%.
  • The top 50 white-goods retailers do $28.7 million in home appliance sales (online and offline).
  • According to the NPD group, US consumers spent $56 billion on “everything from small home appliances and non-electric housewares products to home textiles and online purchases of major home appliances in 2016”.
  • The market share of retail e-commerce players:
• Amazon: 49.1%
• eBay: 6.6%
• Apple: 3.9%
• Walmart: 3.7%
• The Home Depot: 1.5%
• Best Buy: 1.3%
Quarte Retail Group: 1.2%
• Macy’s: 1.2%
• Costco: 1.2%
Wayfair: 1.1%
  • Amazon, Staples, Costco, and Best Buy are among the top online retailers in Canada.

Part
03
of four
Part
03

Online Large Appliance Sales: Customer Journey

Customers prefer purchasing appliances and products online due to the convenience and ease offered by online shopping. When purchasing large appliances customers prefer conducting product research online, however, most of them buy the actual appliance in-store. Studies have shown that 85% of online shoppers turn to Google to research on products before purchase. 72% of these customers conduct their product research on Amazon and a third of the respondents surveyed turn to eBay for product information. Customers who shop online site late deliveries, damaged goods and lack of interaction with the product as some pain points of purchasing products online.

ONLINE VS IN-STORE PURCHASE (CUSTOMERS' DECISIONS)

A Deloitte Survey found that although the majority of customers prefer having an in-store experience when purchasing home appliances. However, a large number of these customers often conduct pre-purchase research on the appliances they want to purchase online. The survey determined that $0.56 of every dollar spent in store in 2016 was influenced by the digital space and this was up from $0.14 in 2013. A Google Consumers Survey found that 87% of respondents stated that they researched home appliances online before making purchases in-store.

A similar study conducted by Forbes noted that consumers making "big purchases" like large appliances conduct Internet Research prior to making in-store purchases. 46% of retailers were in agreement with this fact, more than a third of the retailers noted that their customers conducted research online and purchased these products online. 18% of these retailers stating that their customers did both their research and purchasing in-store. Toni White, CMO of Synchrony Financial noted that large purchases are a commitment and therefore customers prefer to have a personal sales associate guide them through the purchase.

Customers visiting online sites to make their purchase decisions are often motivated by a few factors such as reviews from previous customers and the pricing of the appliance. Research conducted by J.D. Power established that 69% of online appliance shoppers found that the most important content were the reviews, 64% of these shoppers stated that pricing was the most important content in these online sites.

When accessing these online sites, customers noted that they enjoyed their viewing experience when they used their desktops or laptops as compared to using their mobile phones. Despite this, there was an increase in the use of mobile phones to access online sites, however, this was used mainly to compare prices between stores and find the locations of stores easily. 72% of respondents of the J.D. Power research stated that they use their mobile sites to determine price information, 70% to determine a store's location and 66% of respondents to read reviews on a particular appliance. Majority of these respondents also noted that they were more likely to access this information from mobile-enhanced websites than apps.

3500 customers from around the world, including the U.S., were surveyed to determine which mediums they preferred when conducting product discovery and research. 85% of the respondents noted that they used Google to gain their product information. 72% relied on Amazon, eBay was the third most popular online site followed by retailers' sites. 36% of US shoppers used Facebook to gain this information, they were the largest users of Facebook among those interviewed. 24% of those interviewed used Pinterest and 18% used Instagram as a source of information.

Of the 72% of respondents using Amazon to research on products, 56% returned to the site to make a purchase. 51% of this group state that they verify information from other sites on Amazon and to compare prices. 22% of them also state that they would not look anywhere else once they find what suits them on Amazon.

PAIN POINTS WHEN MAKING ONLINE PURCHASES

Consumers who make their purchases online noted that one of the biggest disadvantages of making these purchases was the amount of research required before making the purchase. Customers have to search through several websites, they also have to determine which sites offer discounts and coupons and how to access these benefits. They also have to make searches on shipping and shipping costs of the product or if their product comes with free shipping.

Customers have also complained about the handling of their products. Among the biggest complaints online shoppers have according to a survey are; late deliveries (19% of customers), damaged and faulty goods (13% of customers), and deliveries not arriving at all (11% of customers surveyed).

Lack of interaction with the product prior to purchase is a major pain point for consumers. Customers are not able to physically touch, feel and see the product and they often have to resort to "showroom". This is where they browse the product of their choice on the website and test out these products online. However, this is not always effective as some things have to be viewed in person to assess their quality.

Issues with ease of use of these websites have also been noted. Customers state that many of these websites have poor filtering options and this can be tiresome for the shopper as they have to go through very many options before accessing their preferred choice. It has been noted that only 16% of e-commerce sites offer decent filtering options for their customers. 42 percent of top e-commerce websites do not have category-specific filtering options for their major products.

CONCLUSION

In conclusion, customers still prefer making large home appliance purchases in-store. However, they base their purchasing decisions on the online research they have conducted on the appliances they wish to purchase. These decisions are largely based off of reviews and price comparisons.


















Part
04
of four
Part
04

Appliance Manufacturers Selling Online

Key large appliance manufacturers such as Miele and Bosch sell their products online through online retailers and direct selling through their online shops. Miele uses online channels to adapt to the challenges from the online market, to cut costs, to increase supply chain velocity, and to fulfill customer demand; meanwhile, Bosch considers online channels as an opportunity to reach more customers, increase brand presence, and provide a better purchase option to customers.

RESEARCH STRATEGY

We began by identifying a list of key large appliance manufacturers worldwide, and we validated each company that we found by going through their websites. Then, we searched for other reports to support our findings; we hoped to find online sales channels for large appliances (direct selling or online retailers), company statements, and the reason behind the selection of every channel.
We found some company statements for large appliance manufacturers such as Whirlpool, Bosch, Samsung, Miele, Vorwerk, and so on. Most of the statements were regarding the products available. There were also some quotes from the corporations about their partnerships. However, we were unable to find the reasons why large appliance manufacturers chose to sell online.

Finally, we took time to research the specific companies mentioned above more comprehensively. We were able to gather some information about the online channel distribution of Miele, Bosch, Vorwerk, and Whirlpool, which we checked against the required criteria, before including them in the key findings. However, only Miele and Bosch successfully fulfilled all the requirements for the request. The information that we found for Vorwerk was quite vague, and that for Whirpool only contained general information. For Vorwerk, we discovered that the company did not provide any option to order online except for its official distributors. Some sites that we searched include Retail Detail, Bosch ConnectedWorld Blog, Vorwerk, Alizila.com, etc.

CASE STUDIES OF APPLIANCE MANUFACTURERS SELLING ONLINE

Two key large appliance manufacturers who sell their products online are Miele and Bosch. Both cases are outlined below:

MIELE

Miele is a worldwide appliance manufacturer with products such as ovens and steam cookers, refrigerators, dishwashers, washing machines, and vacuum cleaners. The company generates sales through multiple channels ranging from online retailers like Amazon, Miele's dealer network, specialty network stores, to direct sales through Miele's e-commerce sites.

HOW THEY SELL ONLINE
To provide the best customer experience through an online sales channel, Miele carefully selected its online retailers with the criteria of a high-quality website, up-to-date contents (prepared daily by Miele), and an online consulting assistant feature. Miele employs a selective distribution strategy in an attempt to navigate towards a multichannel sales environment.

Miele also considers online retailers such as Amazon as an option to cut costs and increase the velocity of its supply chain. The rapid cycle of online retailers and stringent expectations of the online retailers' customers encouraged Miele to refine their supply chain and logistics operations by partnering with strategic logistic providers.

WHY THEY SELL ONLINE
From an internal customer study, Miele found that its customers also expect to have an option to order items directly through the company's website. The company provides its online shop to fulfill the demand to sell products directly to the customer.

BOSCH HOME APPLIANCES

Bosch Home Appliances is a leading home appliance manufacturer with a prominent reputation for its product quality, simplicity, and functionality.

HOW THEY SELL ONLINE
In the 1990s, Bosch saw a market opportunity in e-commerce and the company actively sought partnership with online retailers in many countries to reach more customers. The company established a partnership with e-commerce retailers T-Mall since 2011 in an attempt to penetrate the Chinese market more efficiently to raise brand awareness among B2C customers.

WHY THEY SELL ONLINE
In 2016, Bosch opened its e-commerce channel on Pepperfry to extend its presence and engagement with Indian customers. In 2018, Bosch announced a partnership with The Home Depot to distribute its products through online and offline channels. In addition to online retailers, the company launched its online shop in 2012 to provide a better option to customers in purchasing products through its website.
Sources
Sources

From Part 02
Quotes
  • "Consumers spent $517.36 billion online with U.S. merchants in 2018, up 15.0% from $449.88 billion spent the year prior, according to a new Internet Retailer analysis of industry data and historical U.S. Commerce Department figures. "
Quotes
  • "The U.S. household appliances market size was valued at USD 43.34 billion in 2016. "
Quotes
  • "Samsung's share reached 19.5% by units sold in the country last year, up from 17.3% a year ago, according to data from TraQline, a U.S. market research company. LG had 15.7% market share, while Whirlpool drew 15.4%."
Quotes
  • "Total appliance sales for the country’s 50 largest white-goods dealers rose a modest 2.3 percent last year, to a record $28.7 billion. "
Quotes
  • "Revenue in the Household Appliances segment amounts to US$15,167m in 2019."
Quotes
  • "Over the past five years, the Major Household Appliance Manufacturing in the US industry has grown by 3.6% to reach revenue of $20bn in 2018."
Quotes
  • "In 2016 consumers spent $4.0 billion on major home appliance online purchases, a 38 percent increase from 2015 sales, according to NPD’s receipt mining service, Checkout TrackingSM."
  • "Refrigerators, the largest category at 30 percent of industry sales, gained 40 percent compared to 2015 results."
Quotes
  • "Consumers spent more than $56 billion on everything from small home appliances and non-electric housewares products to home textiles and online purchases of major home appliances in 2016, according to global information company The NPD Group."
Quotes
  • "According to the report, e-commerce industry in the US accounted for 11.7% of the total retail sales for the year 2016, grew 15.6% year over year."
Quotes
  • "Major online retailers in Canada include Amazon, Wal-Mart, Dell, Staples, Costco, and Best Buy. "
From Part 04
Quotes
  • "Mit dem Ziel, die Customer Experience zusammen mit den Multichannel-Partnern und Pure Online Players auf ein neues Level zu bringen. Zentrale Rolle hierbei: Ein qualitätsvoller, aktueller Content, der täglich von Miele aufbereitet und den Partnern zugespielt wird, sowie ein Online-Beratungsassistent. Ein klarer Wettbewerbsvorteil für die beteiligten Händler auf dem Markt (With the goal to take the customer experience to a new level together with the multichannel partners and Pure Online Players. Central role here: A high-quality, up-to-date content, which is prepared daily by Miele and leaked to the partners, as well as an online consulting assistant. A clear competitive advantage for the participating dealers in the market)."