Raw Material Price Surge Causes Sharp Decline in Q2 Operating Profit
Rapid Increase in 'Robot Vacuum Cleaner' Sales Using Existing Distribution Channels
Exterior view of Thinkware premium offline stores located in 16 places nationwide. [Photo by Thinkware]
[Asia Economy Reporter Kwak Min-jae] The sales of robot vacuum cleaners by Thinkware, the number one black box company in Korea, are rapidly increasing. Thinkware's robot vacuum cleaner business utilizes its existing distribution network, incurring no additional costs for sales, leading to expectations that it could serve as an exit strategy for Thinkware, whose profitability has deteriorated due to recent raw material price hikes.
According to Thinkware on the 6th, sales of environmental home appliances, including robot vacuum cleaners, on a consolidated basis in the second quarter of this year reached 28.1 billion KRW, a sharp increase of 235.6% compared to the same period last year. This is a notable achievement amid a sharp decline in Thinkware's operating profit due to rising raw material costs. In fact, Thinkware's operating profit for the second quarter was 500 million KRW, down 87.3% year-on-year, signaling a red alert on profitability. A Thinkware official stated, "Despite the challenging external environment, robot vacuum cleaners accounted for 87% of total environmental home appliance sales in the second quarter, driving the strong performance in vacuum cleaner sales."
The company explains that selling robot vacuum cleaners through the existing black box distribution network incurs no additional costs. Over 25 years since its founding, Thinkware has sold black boxes and established 16 offline premium stores nationwide in cities such as Seoul, Busan, Daegu, and Uijeongbu. Thinkware's offline premium stores are directly operated and managed by headquarters, providing one-stop services including demonstration, consultation, purchase, and after-sales service (AS) for vehicle-related devices such as black boxes and navigation systems. A Thinkware representative explained, "Many customers visit the premium stores nationwide primarily to purchase or receive AS for black boxes or buy robot vacuum cleaners through existing online channels, so no additional facility investment or manpower deployment is required, making it effective for improving profitability."
Thinkware is the exclusive distributor in Korea for Roborock, a Chinese robot vacuum cleaner company. It also provides free AS for Roborock products at its premium stores, quickly targeting the domestic robot vacuum cleaner market. Until now, overseas home appliance companies were less preferred by consumers due to a lack of service providers and accessibility.
However, Thinkware resolved this issue by utilizing engineers working at the premium stores. A Roborock official said, "Since Thinkware is a manufacturer of black boxes and navigation devices, its engineers are well-versed in the overall AS process," adding, "Roborock's headquarters technical support team provides related training to iNavi engineers, ensuring thorough after-sales management and gaining customer trust."
A robot vacuum cleaner is installed at the Thinkware offline store so that customers visiting the store can experience the product. [Photo by Thinkware]
Since Roborock entered the domestic market in 2020 and recorded its highest performance, Thinkware's profitability is expected to improve further. According to the home appliance industry, Roborock's sales in the first half of this year increased by 267% year-on-year to 56 billion KRW. Its flagship products, such as the ‘Roborock S7 Plus’ equipped with both suction and mopping functions, hold the number one market share in Korea's all-in-one robot vacuum cleaner market. A Thinkware official said, "Although uncertain management conditions are expected in the second half of the year, we will focus on securing profitability by continuously expanding sales of Roborock robot vacuum cleaners and overseas black boxes."
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