The firm’s SaaS platform is driving an industry-wide digital transformation
SHANGHAI, March 28, 2022 /PRNewswire/ — On March 22, Qeeka Home (01739.HK, operator of Jia.com in China) (the “Company”), a SaaS enabled solution platform serving China’s interior design and construction (IDC) sectors, released its 2021 full-year financial results. For the past financial year, the Company reported revenue of RMB 1,107 million, a year-on-year increase of 20.8%, with net profit attributable to shareholders reaching RMB 74 million, surging 82.3% compared to the prior year.
The strong growth was a result of the success of Qeeka Home’s total SaaS-enabled strategy, a driver to an industry-wide digital transformation that has delivered higher overall efficiency and allowed the Company to redeploy the best of its resources to address the pain points and challenges facing the supply and demand sides in terms of the sales and delivery process, helping the Company realize robust growth.
Revenue increased 20.8% year-on-year, with huge potential in the market for housing stock
As an industry heavily dependent on physical operations, the home improvement sector has been hit hard by the recurring epidemic, especially in in-person scenarios such as home visits to take measurements as well as delivery and installation of the completed product. As China further tightens regulation and supervision of the real estate market, both the supply of new homes and the resale of existing homes have witnessed a significant downturn, affecting to various degrees the steady growth of the home improvement industry. To make matters worse, soaring prices of raw materials have led to a dramatic cost increase for stakeholders and an ever more competitive market. Taken together, many industrial players experienced growth stagnation and are facing the dilemma where profit margins decline despite an increase in revenue. The industry now stands at an inflection point where a transition to the market for existing housing stock is a must-do.
According to data from China Index Academy, the country’s property sales increased 1.9% year on year to 1.79 billion square meters in 2021, while investments in real estate development and new construction both witnessed a dramatic decline compared to the prior year. Yet when China’s substantial economic development and the increase in disposable income among consumers are taken into consideration, a step up in what shoppers expect from their home improvement initiative shows that demand for quality product is clearly on the rise. In response to the shrinking new housing market, renovating existing accommodations or upgrading newly purchased second-hand homes has proven to be an effective means of improving the quality of home life. Based on the calculation of planning the renovation of a home every 10 to 15 years, owners who purchased a home between 2007 and 2020 will be looking to improve at some point over the next 10 years. That 13-year period was a golden age for the country’s property market, pointing the way to a soon-to-begin similar golden age for the home improvement and renovation segment.
Despite the huge potential in the market for existing housing, there’s a very big difference between refurbishment of an older residence, partial improvement, and renovation of a more recently built home. Refurbishment of older buildings presents tougher challenges as such customers are more dispersed, their needs are more diversified while both the customer acquisition and necessary construction work are more challenging. In other words, to establish a presence in the market, installers need to shift from a “rough” business model to one that is much more refined, where customer expectations are met in all respects through upgrading of product quality, improvement in supply chain efficiency, optimization of organization management, strengthening of digital capabilities, and addition of quality-focused services.
As a leading platform in the industry, with superior data and technology capabilities, Qeeka Home has been committed to offering SaaS solutions and extended services to home improvement firms, helping them improve their abilities to manage their businesses, reduce operating costs and reap higher efficiency. The platform facilitated the standardization of the industry by developing relevant benchmarks and giving premium merchants the tools what they need to bring in more customers by upgrading its Qijia Bao consumer protection plan and launching a merchant star rating system. The data shows that the number of active paying merchants on the Jia.com platform rose by 18.3% year on year to 5,799 in 2021, including 2,242 newcomers. The merchant retention rate climbed to 73%, while the retention rate of new paying merchants reached 81%, representing strong growth across-the-board.
Despite the downward pressure faced by the industry, the Qeeka Home platform has served to empower home improvement firms as they cope with the uncertainty and the necessary upgrade process. The platform also acts as a stabilizer for the industry’s small and medium-sized merchants who need a powerful partner to get them through the rough patch. For the full year of 2021, Qeeka Home booked total revenue of RMB 1,107 million, a year-on-year surge of 20.8%, with gross profit amounting to RMB 590 million, up 14.0%. Net profit attributable to shareholders reached RMB 74 million, a significant increase of 82.3%, representing a solid growth.
SaaS strategy drives the transition to digitalization for installers
Due to inherent weaknesses, coupled with fierce competition, the industry saw a sharp rise in the number of firms that called it quits. Installers need to reduce costs and improve efficiency and the only way to get there is through digitalization. According to research data, the digitalization rate of the IDC industry right now stands a paltry 10%, with massive headroom for growth. As a long-established platform, Qeeka Home is poised to be the first choice among installers once they opt for a digital upgrade.
Qeeka Home’s offering covers two major business segments: the SaaS-based home improvement empowerment platform and a range of interior design and decoration brands. Revenue from SaaS and extended services totaled RMB 630 million for the year, up 17.3%. The growth of core businesses was, for the most part, driven by the steady advancement of its digitalization-focused SaaS-enabled strategy, including providing a one-stop solution that covers the gamut from marketing services to supply chain procurement assistance to innovative value-added services. The solution will help them cope with real-world problems and improve operational efficiency.
When it comes to digital marketing, Qeeka Home generates leads through its own brands, reputation and general recognition across the market, and helps installers convert prospects through big data matching and upgrading consumer protection products to enhance customer acquisition. In terms of supply chain empowerment, Qeeka Home has adopted a hybrid of centralized purchasing and new retailing, allowing firms to reduce back-end procurement costs and improve efficiency through digital processes.
As the bulk of potential customers shifts to Gen Z, online brand visibility and consumer reviews are going to become the determining factors when a purchase is made. To optimize the user experience, Qeeka Home has put much effort into making sure the platform delivers the most optimized shopper experience during the home improvement purchasing process. Ongoing positive reviews from shoppers led the platform to record a year-on-year increase of 8.3% in the customer demand rate in 2021, while the average marketing revenue per lead stood at RMB 707, up 7.6% year-on-year.
According to a report by the Lead-Leo Research Institute, second-hand housing and existing housing stock are expected to be the main drivers of the growing demand for home improvement in the future. This is a sign that acquiring and serving the customer have become much more difficult for installers, combined with a new set of expectations from consumers that have just entered the market. Digitalization is an inevitable must-do for industry growth, as online platforms will appeal more to future buyers than traditional home improvement firms. With the benefits that can be generated from digitalization literally staring the industry in the face, Qeeka Home has made it a top priority to meet the expectations of Gen Z shoppers, offer installers more empowerment initiatives based on the SaaS platform, further strengthen R&D and optimize the in-house organizational structure. All of these steps will go a long way in helping home improvement shoppers avoid making costly mistakes, while acting to fully protect the rights and interests of consumers as well as optimize the customer experience end-to-end, with the end goal being the realization of the Company’s vision of the satisfied customer who lives in a beautiful and comfortable home.
About Qeeka Home
Qeeka Home (01739.HK, domestic operator of Jia.com) is one of the largest SaaS enabled solution platforms in Interior Design & Construction (IDC) Industry in China. The company provides marketing service, supply chain service and other innovative value-added services to thousands of IDC service providers through the SaaS platform. Qeeka also operates several well-known IDC brands in China and provides consumers with capital protection and independent inspection services. Qeeka Home was founded in 2007 and listed on the main board of HKSE on 2018.
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Phone: (+86) 021-61740163