The bellow report is translated from VRtuoluo reporter’s in-depth interview of the Cardboard and VR All-in-One production in ShenZhen, China. I feel it’s very interesting and a very good insight of the sales frontline of VR devices.
VR cardboard has over 30 million sales per month while VR all-in-one device is less than 0.2 million. Lay aside the great difference between VR cardboard and VR all-in-one device sales data, what the reporter want to present is the living conditions of these atypical manufacturers behind the sales data and the VR industrial change in their eyes.
Around 20 VR hardware wholesalers stays at Seg Factory, mainly in Block 1,3,4. The reporter visited 12 of them, including 4 direct-sales stores and 8 agencies, and mainly asked about sales trend, price fluctuation and selling methods.
Extremely Low Profit VR Cardboard vs High Profit VR All-in-One
Regarding the sales, VR cardboard and VR all-in-one device have polarized sales result and profit margin.
The insane VR cardboard: a single store’s highest monthly sale can reach 300k while profit margin is next to zero.
The reporter first traced the sales result and the collected data shows that each stores’ monthly sale varies from thousands pieces to hundreds of thousands of pieces. Among the 12 manufacturers, 2/3 of them have less than 30k monthly sales. They are mainly agencies, only one of them have over 30k sales per month. However, most of the direct-sales stores have over 30k sales, among them VRboss tops all with 300k sales per month.
VRboss owner Mr.Li told the reporter that although some VR Cardboard manufactureres didn’t open stores in HuangQiangBei Industrial Area, their sales are way over 300k. And Shenzhen have a dozens of these manufacturers.
Per the reporter’s understanding, there are around 200 VR cardboard manufacturers in Shenzhen. Therefore even if the monthly sale reaches 30 million, given the huge numbers of manufacturers, each one’s share is insignificant after distribution.
And in terms of profit, “VR Cardboard’s profit margin is squeezed next to zero, the business is hard”, Liu Ling told the reporter.
VR One Box is one of the most representative product. Its wholesale price is around 9 RMB (1.301 USD) while its cost is 8.5 RMB (1.2287 USD), and the profit is merely 0.5 RMB (0.07228 USD) per unit. The manufacturer told the reporter that this kind of product depends on the quantities, and it is very hard to make a profit. And during the visit, we noticed that every VR hardware agencies have VR One Box, it is a “must have” in VR cardboard stores now.
VR All-in-One Monthly Shipment Less Than 1000, Profit Margin Around 10% to 15%
As for all-in-one, we discovered during the interaction with wholesalers that they are very sensitive to questions related with sales, usually neglect the questions or muddled through. But the reporter still managed to get some VR all-in-one device market data from the VR cardboard wholesalers:
The VR all-in-one device price varies from hundreds to over a thousand RMB in HuaQiangBei market, the cheapest one is only 250 RMB(36.1397USD), but it doesn’t have gyroscope, so it is called as “the fake VR all-in-one”; the version with gyroscope is around 400 RMB (57.8235USD). These cheap VR all-in-one device mainly use chips like RK3128 and RK3228. And for manufacturers, its production process is almost the same as smart phones, except for the optics part; and per their understanding of VR all-in-one device, it just means to make a goggles like phone and wear it on the head.
However, after the visit, the reporter noticed that people’s perception of VR all-in-one device can be summed up as below:
- the whole market is reluctant to sell VR all-in-one device.
- because nobody wants to sell, the competition is relatively less fierce and the profit margin can reach 10% – 15%, way ahead of VR cardboard.
- the shipment is low, over a thousand per month is already good.
The reporter learnt from another agency Mr. Wan that “Oumi VR all-in-one device is the first to test the market and it is the top seller as well, but from last May to this July, its shipment is only around 20k and it is already pretty good among the VR all-in-one device market.” After calculation, the monthly shipment is just over a thousand as well. Therefore for the quantity-oriented HuaQiangBei market, it is obvious that VR all-in-one device is a dragger.
Sales Model: 60%-80% Sell to Out of China, “Gift” + Free Porn is the Mainstream
The reporter learned from the oversea market manager Mr. Jia Tao that oversea (out of China) sales is the main channel for VR all-in-one device, consists of around 80% of the total volume. And during the visit, this percentage was further confirmed by manufacturers. Furthermore, this overseas sales percentage is the same for VR cardboard market as well.
VRboss owner Mr. Li mentioned that the overseas market is around 80%. Lingjing Era’s oversea sales is slightly lower, but also reaches over 60%.
“Oversea(out of China) consumers has different consumer habits in comparison to domestic(Chinese customer) ones, they tend to accept new tech more and are willing to try while domestic(Chinese) consumers focus more on practicability, and people are unwilling to pay for something lacking substantiality.” VR Cardboard manufacturer Mr. Liu Wei commented.
And when asked about sales model, almost all manufacturer mentioned one keyword: GIFT.
Direct-to-sales stores and agencies all say that most retail customers considered VR cardboard as a gift. Overseas customers usually give it as a birthday or holiday gift to their friends and relatives. However, domestic(Chinese) customers are mainly cell phone manufacturers and they order customized products. For example, OPPO(the mobile phone brand which is top 1 sales number in China) give out VR cardboard as a gift for the cell phone. Apart from that, VR Cardboard with free porn or adult products bundle sale are also common sales model.
However, VR all-in-one device’s sales model is slightly different, though still serves as a “gift”. Per introduction, the wholesale customers are mainly real estate agents. They give VR all-in-one device as a gift to properties buyers.
Change: VR Cardboard’s Price Drops up to 40% in Half a Year, VR All-in-One Drops Several Hundreds in Price
Price is the second aspect of the reporter’s investigation, however current VR Cardboard market are very price sensitive. The reporter compared the price of May and October.
North Longkese area factory store manager Mr. Wu said VR Cardboard’s price fluctuation is more notable, every product’s wholesale price all drop over 20 RMB (2.8962USD).
Their three main products’ price all dropped, ranging from a dozen percent to around 40%. Mr. Wu said,”if the shipment is bigger, then there is still possibility to lower the price, but no more than 1-2 RMB (0.1448-0.2896 USD) ”
The reporter did the same price investigation with agency stores as well. As shown in the feedback data, though price fluctuation is less notable, the drop still exists, ranging from 4 to 25 RMB (0.5792-3.6203 USD).
Same situation occurred to VR all-in-one as well. The reporter has collected the wholesale price for two types of all-in-one, RK 3128 chip type all-in-one dropped 60 RMB(8.6887USD) in price while RK3228 dropped up to 300RMB (43.4436USD).
Unbelievable! Price Drops, and Sales Drops 50% Too!
Usually lower price better sales, but the situation is exactly the opposite now. The sales drops sharply with the dropping price at the same time.
“Current sales volume is only half of April’s and May’s. “many VR manufacturers reported the same problem.
Acutally in April and May, the first group of VR enthusiasts have already brought the product. However, the VR Cardboard and all-in-one’s less desirable experience can hardly bring any public praise and thus their user didn’t motivate other people to buy the products, which in the end lead to a drop in sales.
The whole VR market is still growing, especially for VR Cardboard. Its sales increase evidently after Taobao kicked off the Buy+ Program. However, the growth pace is not as fast as before.
With the geographical advantage of ShenZhen and the natural instinct of HuaQiangBei market, these people are very sensitive to market trend and they are capable of realizing an idea in less than a month as well. Therefore if VR hardware can no longer bring much fortune to them, they will switch to something else rapidly.
In the reporter’s point of view, the HuaQiangBei manufacturers are just pure business man, they are more realistic and pragmatic, because afterall money is king.