China’s Proptech Giant Beike Explores Home Furnishing Sector
A young Chinese couple bought an apartment, but furnishing gives them a real headache as they are always occupied with work. Even if they hired a professional construction crew, they wouldn’t have enough free time to closely check the project’s progress.
Here’s where Beiwoo comes in.
This nascent one-stop house renovation and furnishing services provider allows homeowners to monitor the process on an app in real-time by installing 360-degree panoramic cameras on the site. It also provides portfolios of qualified interior designers and construction crews, who are responsible for design, sourcing, delivery, setup, and cleanup.
The goal of Beiwoo is to make lives easier for homeowners, bringing a ready-to-move-in experience to them.
The aforementioned couple’s experience is not unique. Some problems have existed for a long time in China’s furnishing industry: it’s a fragmented marketplace full of unspoken rules, and homeowners don’t have access to all the information they need, which results in overcharging, delayed deliveries, and bad customer service…
Behind Beiwoo stands Chinese housing transactions and services giant KE Holdings Inc.(Beike)’s latest initiative started last year. Listed on both the New York Stock Exchange and the Hong Kong Stock Exchange, this company – which is also known as Beike – is a leading integrated online and offline platform for housing transactions and services in the domestic market.
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At the end of 2021, Beike revealed a strategic upgrade called “one body, two wings.” In this concept, “one body” refers to its core business, which is second-hand and new home transaction services, while “two wings” means its home renovation and furnishing offerings, as well as rental services.
Beike is the face of proptech in China, with the ambition to reinvent the country’s still undeveloped living and housing sector. It has a long-lasting DNA of providing high-quality services to customers.
Starting with Lianjia, its prominent nationwide brokerage brand, Beike has invested heavily in reinventing the once chaotic brokerage landscape with help of technology.
For example, the lack of an industry-wide listing inventory made it challenging for house buyers to access reliable and authentic property listings, thus causing inefficiency and a lack of transparency. To solve these problems, Beike has built a comprehensive online “Housing Dictionary” over the years, which contains authentic and unique property listings, coupled with a vast network of offline stores and agents.
Again stepping into the furnishing industry, Beike hopes to fix some persisting pain points by leveraging technology including VR/AR, AI, and big data analysis.
On Beiwoo’s app, homeowners can not only choose designers, but also create their ideal houses virtually by using its self-developed Building Information Modeling system, and check the process on time through the “Smart Constrution Site” feature. In addition, a platform “housekeeper,” a designer and a construction crew work together closely, communicating with the homeowner in a timely manner to ensure their satisfaction.
So far, Beike seems to have taken off well, especially in exploring opportunities in home furnishing and renvation.
Amid tough economic times, Beike released its Q2 earnings on August 23, posting net revenue of 13.8 billion yuan ($2.1 billion), which indicates a decrease of 43.0% year-on-year. Its gross transaction value (GTV) was 639.5 billion yuan ($95.5 billion).
Despite such challenges, the home renovation and furnishing segment showed a positive increase to 1.3 billion yuan ($189 million) in GTV, compared to 47 million yuan in the same period of 2021. Its foray into the industry has achieved solid growth.
“Our home renovation and furnishing services once again bucked market trends and achieved robust growth, owing to its full-service business model and the advantages on customer trust and traffic which we’ve built through our core businesses,” said Mr. Stanley Yongdong Peng, Chairman of the Board and CEO of Beike, in the earnings report.
The company’s CFO, Tao Xu, added that Beike will continue to make necessary investments in home renovation and furnishing services.
Beike’s strategy pivot is driven by the promising market and its own vision.
According to data from third-party research institution iResearch, the market size of China’s furnishing industry was 2,616.3 billion yuan at the end of 2020, and is estimated to reach 3,781.7 billion yuan in 2025, a CAGR of 7.6%.
Beike is looking into new areas to achieve future growth. There is strong synergy between the furnishing business and the home buying and selling business – many homeowners have a need to renovate their houses after completing a deal.
In order to strengthen its new business, Beike acquired local renovation services provider Shengdu earlier in April. Shengdu is a Hangzhou-based company with a significant presence in eastern China.
There’s no doubt that the digital transformation of China’s real estate and furnishing industry still has a long way to go. Beike is well-positioned to capture this potential and provide consumers with a better customer experience.