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As one act ends, another begins. The offline retail tug-of-war between Tencent and Alibaba entered 2018 with rapid, interlocking advances, dominating the social feeds of retail professionals.

Wanda said, "I'm not taking sides!" So Wanda Commercial partnered with Tencent, while Wanda Film partnered with Alibaba.

"Hey, weren't we supposed to be competing for new retail? Why did you take away the 'man's wardrobe'? That's not playing fair!"

"Nonsense! Selling clothes is retail, and it's the wardrobe that sells best on your Tmall!"

"You're tough! Just wait, I'll take the whole house away from you!"

So, on February 11, 2018, Alibaba and a management institution invested 5.453 billion yuan in Easyhome, acquiring a 15% stake and initiating comprehensive cooperation. At that time, Easyhome had 222 stores nationwide.

This union was a natural fit, mutually beneficial.

1. Easyhome's Grand Retail Dream

Speaking of new retail, Easyhome is definitely a pioneer.

As the oldest mid-to-high-end chain furniture store in China, established in 1999, Easyhome began industrial upgrading in 2016, drawing a powerful blueprint to upgrade from "big home" to "big consumption," focusing on family consumption and creating a mid-to-high-end family consumption ecosystem. Easyhome has already laid out Ankang imported food supermarkets, Yisheng fitness clubs, Fukang elderly care product supermarkets, and entered children's entertainment, cinemas, digital intelligence, achieving multi-format development. This aligns with Chairman Wang Linpeng's vision: with home services as the main body, build a comprehensive "family consumption ecosystem" covering design and decoration, building materials and furniture, home appliances and food, children's training, elderly care and wellness, fitness and beauty, culture and entertainment.

Behind this was a year of rapid store expansion in 2017. At the start of 2018, Easyhome released data showing that in 2017, it opened 60 stores, bringing the total to 222. These were not only in first- and second-tier cities but also mostly in third- and fourth-tier cities. From the official interpretation of "seizing market opportunities and occupying advantageous positions," it's clear that after rival Red Star Macalline passed review and began its A-share IPO journey at the end of 2017, Easyhome faced intense competitive pressure. Thus, rapid store opening became the core goal to maintain its industry position. Such high-speed expansion naturally demands significant capital, which is one reason for the cooperation. Additionally, the strong performance of listed furniture companies in 2017 provided a good valuation endorsement for this investment.

High gross margin, low frequency, and low rent for experience stores characterize the home furnishing market. Easyhome's third-party credit rating agencies showed that in March 2017, Easyhome's operating gross margin was as high as 50.65%!

However, consumers' impression of traditional furniture stores remains vague; they might visit once every few years, and the stores often feel deserted, seemingly operating on a "three years without business, but one sale covers three years" basis.

How to fully utilize these leased properties to create more consumption scenarios, drive foot traffic, and better convert and generate consumption chains is a pain point for all furniture stores and the core of brand consumption upgrade. Thus, around furniture stores, commercial complexes integrating dining, leisure, and experience formats began to emerge.

So, in 2017, Easyhome's new retail flagship products made their debut:

Yishijia EATOWN imported food supermarket: In January 2017, it landed at Easyhome in Shilihe, Beijing, and began upgrading the Ankang supermarket in Lize Easyhome from 2015.

After extensive research by the chairman in various countries, it introduced the successful concept of Italy's Eataly supermarket, focusing on "slow food culture," and connected with its own Haimaocao cross-border e-commerce supply chain. Its tone fits Easyhome's high-end service positioning.

Yishi Box EATBOX: On July 26, 2017, Easyhome's first unmanned convenience store landed at Beijing Century Golden Shopping Center, causing a sensation. Media and investors nearly crowded into the office of An Liying, CEO of Yishijia.

However, accustomed to high-margin furniture stores, they may lack deep experience and patience for new retail FMCG models. The CEO who built Yishijia and EATBOX, with nearly 20 years of retail experience, left at the end of 2017. As co-founder and COO, An Liying started her own unmanned convenience store, "Zero Unmanned Store."

The purple EATBOX standing in the lobby of Shilihe Easyhome, like most short-lived boxes in China, is now deserted and no longer popular.

How to conduct new retail based on existing properties? This is the second reason for the cooperation.

2. Easyhome for Alibaba

Undoubtedly, this is a good target: it has properties, brand, products, and profits. There is great space for upgrading and restructuring people, goods, and scenes.

3. How to Do It

In my view, there are at least several aspects where both sides have ample room for integration and transformation, which also align with the cooperation content disclosed in official reports.

The most imaginative scenarios are as follows:

1. 220 and more Easyhome stores + Hema Fresh

Alibaba's new retail trump card is still Hema, which has been validated and has brand influence. This might be a key factor for many offline companies choosing to side with Alibaba. Easyhome's locations are excellent; once Hema enters, it will likely bring massive offline traffic, which is exactly what Easyhome needs most.

2. Membership system transformation: Based on the integration of user information between the two parties, congratulations to Alipay for another victory.

3. Furniture and building materials logistics network: As one of the last blue oceans in the logistics industry, with Alibaba's stake in Easyhome, synergy with Cainiao is expected to grow rapidly in this niche.

4. Integrated home decoration services (design + procurement + renovation): Alibaba's online related sections, after introducing Easyhome or more deep partners, will monetize traffic in this field. In the future, it may sponsor a series of home decoration TV programs to open up this market and break through the bottleneck of regionalization in online home decoration.

The cooperation scenarios are broad; The difficulty of implementation is huge; Cultural conflicts are foreseeable; In the end, a controlling stake is unlikely.

The 2018 new retail transformation is underway. Happy Spring Festival to everyone!