It is rather difficult for current LED lighting business quickly enter into distribution channels established for traditional lighting industries. Offline businesses usually need huge upfront investments. Relatively, online sales have two obvious advantages: low upfront investments and wide coverage, which is more suitable for LED Panel Light this emerging market.
Online sales have two major features: wide purchase groups, without any regional restrictions; flat management, reducing intermediate links in circulation.
In addition, it is very hard for ordinary consumers to buy any high-quality LED lighting products from stores, supermarkets or other traditional channels. The over-expensive production cost blocked them from the residential lighting area. “They are too expensive to sell. No one would pay 50 USD to by a 50W bulb. Ridiculous!” said one of merchants of lamps. Currently, only 5% traditional lighting channels are also doing LED lighting business. WAL-MART is the only large supermarket that selling LED lighting products. Therefore, those who have some knowledge on LED lighting lamps and feel interested in this new lighting technology can only find what they want from the internet. Actually, compared with offline trading, LED is very popular in the online market.
According to a Taobao internal staff, they had once sold a type of LED bulbs at the price of 39.8 yuan (group price) on the website. Just a few hours, 7000 LED bulbs have been sold out. In order to satisfy the demands of buyers, Taobao had to undergo emergency replenishment and carried out the second round of group purchase, with the same product.
Online shopping can effectively reduce the purchase cost of terminal users, at least 15%-30% compared with traditional channels. At the same time, online selling also provides channels for brand promotion and products present.
Online prices for LED lamps are much cheaper than that of LED lights offline sold. There is no rent fee, no utility bill, no staff salary, but LED online merchants are responsible for the management and promotion cost of the trading platform. After calculation, although online selling prices of LED products are cheaper, the profit margin is almost the same for online selling and offline selling. The current trading profit of LED online business maintained at about 20%, which still have large upward space.