Smart Lock: 10 Years of Fierce Battles, Reshuffling, and Perseverance
Ten years ago, people from other places who worked in Guangdong could easily find landlords on the streets, with the identifier being a heavy chain of keys hanging from their waist.
Today, in the new home decoration scene, whether it’s a real estate agent or an old landlord, it’s rare to see someone carrying keys. In the new-style homes of big cities, smart locks have replaced keys as the standard. According to data from AVC, the sales of smart door locks in China in 2021 reached 4.58 million sets, a year-on-year increase of 31.4%. The logic of growth comes from two aspects: first, the proportion of smart locks as standard in real estate refined decoration is getting higher and higher, which has generated demand for smart locks.
The intelligence of locks, for landlords, means they don’t have to send keys from afar or change locks with tenants; for tenants, it adds an extra layer of security and convenience, no longer worrying about forgetting or losing keys. The second aspect is that in the context of self-owned homes, security is the primary foundation of home Internet of Things.
According to the “2020 China Smart Home Ecosystem Development White Paper”, users have the highest demand for three categories of products: home security, smart voice, and smart networking, with respective proportions of 92%, 83%, and 71%, driving the growth of smart door lock consumption. The surge in demand is also reflected in corporate sales. For example, according to the smart lock brand “Kaadas “, the company’s total channel shipments exceeded 2 million sets in 2021.
At the same time, the pace of financing and market expansion is almost synchronized. After completing nearly $100 million in strategic financing in March last year, “Kaadas ” has recently received a C round financing of 600 million RMB. In this round of financing, the lead investor is the Asian Investment Limited Partnership Fund (hereinafter referred to as “Asia Investment Fund”), followed by Core Capital, Creation , Easy Investment, Morgan Stanley China Fund.
Among them, Creation has made a second follow-up investment. In addition, Kaadas has received a comprehensive credit line of 1 billion RMB from six major banks: China Merchants Bank, Construction Bank, Industrial and Commercial Bank, Shanghai Pudong Development Bank, Standard Chartered Bank, and Shanghai Bank.
In fact, smart locks have appeared in the domestic market for a relatively long time, and the smart door lock industry today also shows three major camps: professional lock brands, Internet brands, and cross-border brands.
So, in the fierce competition, how can a professional lock company embrace technology and strengthen its moat? What should a truly consumer-demanding smart lock have? What factors are needed for the brand building of smart homes? Perhaps, we can see a little bit of it in Kaadas’ meticulous crafting of a good lock.
Easy to Make, Hard to Perfect: The Challenge of Smart Door Locks
On one hand, Internet companies are sending smart locks into thousands of households through low prices and binding traffic in the process of building ecosystems, hoping to establish longer-term relationships with consumers. On the other hand, the “bad money opportunity” brought by the incremental market has also led to countless OEM small factories joining the industry’s chaotic battle, with counterfeit products as common as two-digit numbers on Pinduoduo.
According to the analysis of Headline Research Institute, the current competitive landscape of smart locks is still relatively scattered. This is mainly because, without the emergence of a monopolistic enterprise, there are always new entrants increasing, in addition to professional smart lock brands like Kaadas, Huawei, Xiaomi, and Alibaba are also eyeing this continuously expanding “entry cake” from the Internet brands and home appliance giants like TCL, Midea, and Haier.
These three camps of players have their respective advantages, such as internet companies themselves having traffic support, which gives them a relatively strong advantage in channels and distribution; home appliance giants have also been able to attract a certain number of consumers with the brand effect formed over the past few decades, and the brand stickiness with customers is the primary factor for trying new things;
However, in terms of quantity and products, professional door lock companies still dominate, and the new players in the market are not yet enough to constitute a threat. Currently, the total number of professional and electronic lock companies reaches 84.6%, while the total proportion of technology and internet companies is only 10.8%.
However, it is not easy to break through in the fierce market competition as competition intensifies. A good smart lock is not easy to make, especially for consumer electronics products that require technological attributes, where capital, research and development, manufacturing, channels, brand, and service are all indispensable and key factors to consider. The true breakthrough lies in whether one can create unique market opportunities under the premise of truly finding consumer needs.
Understanding consumers requires getting close to them. After the “Thousand Lock War” began in 2015, the increase in the number of smart locks also sparked consumer concerns about the safety, after-sales service, and intelligence level of smart door locks. This is because in the early stage of the entry of smart locks into the market, when most manufacturers were still in the stage of technological research and development not yet mature, the “price war + marketing” offensive approach had already become the most direct means for many manufacturers to open up the market.
In fact, the material and research and development costs of smart door locks themselves are higher than those of traditional mechanical door locks, and their intelligence requires a dual match of hardware and software, so the average selling price of mainstream smart door locks is usually around 2000 yuan.
When bad money drives the price below 1,000 yuan, the primary way to capture consumer mindshare is through low pricing. However, concerns may arise regarding the safety and reliability of the lock, the level of home network integration, and the quality of after-sales service.
Keady is one of the earliest batches of smart lock companies in China, and during the process of growing with the industry, it also hears the closest sounds to the battlefield. In 2013, Keady officially began to enter the retail market, and in 2015, when the C-end market was still not fully developed, Keady officially formed a team to enter the engineering market.
This decision-making ability stems from Keady’s long-term market observation. At that time, the real estate smart lock sector had a stronger rigid demand for smart door locks compared to the consumer market. Moreover, to build consumer trust, after-sales service needed to keep pace. In 2017, Keady committed to providing a three-year warranty for smart lock products sold through official retail channels.
With 1-hour quick on-site service, immediate response from professional after-sales personnel, 24/7 after-sales service hotline, and tens of thousands of terminal service outlets, Keady has become the first brand in the industry to propose a “three-year warranty” service, which also makes up for the consumer expectations that were lowered during the industry price war. It is also noteworthy that compared with 10 years ago, the main consumer groups have changed, with the post-90s generation beginning to take the stage and holding the decision-making power over family purchases.
All industries are innovating and iterating in the hope of appealing to young people, and professional lock companies are no exception. Keady’s approach is no different, which is to get close to young consumers. For example, in terms of product design, the design concept is to pursue a fashionable and simple appearance with a sense of technology.
In 2022, Kaadas launched the 2022 Spring Creative Collection Campaign in collaboration with the College Award of the China College Advertising Art Festival. 1,830 universities and over 5,000 departments participated in the creative collection, exploring the understanding and attitudes of young people towards smart locks. This is the first and only brand in the smart lock industry to enter the campus with the College Award. In addition, Kaadas has deeply penetrated mainstream social media platforms such as Xiaohongshu, Weibo, Bilibili, Douyin, and others to promote its smart locks to young users.
The decision-making that follows market demand is the core to attracting consumers, and therefore, even today with the continuous change of consumer groups, Kaadas has always occupied the top list of the industry.
Innovation at the Core: Engineering the Smart Door Lock
In 2021, the Kaadas brand ranked first in the smart door lock transaction on Tmall. The founder of Stone Technology, a research and development company, Chang Jing, once mentioned in an internal letter that “the development stage of a company will be divided into 0-1 and 1-N. From 0-1, a company only needs to find a unique value point to enter, while in the 1-N stage, it needs to extend the short-term unique window period and start to lay out long-term unique value to ensure the sustainable development of the company.”
The transition from 0 to 1 tests the product innovation power, including product technology research and development, supply chain level. From 1 to N, it tests the comprehensive capabilities of the team, including production and manufacturing, channel distribution, brand building, and other aspects of competition. First, let’s look at the product innovation power stage from 0 to 1.
In 2009, Su Zhiyong, the founder of Kaadas, a professional lock industry company, analyzed the competitive landscape of the door lock market at that time and believed that smart door locks under the trend of digitalization were a new emerging industry with great potential for growth and imagination. At that time, most players in the market came from the hardware industry or small teams of Internet companies, which allowed Su Zhiyong to see the opportunity to create a new brand. Su Zhiyong has been in the lock industry since 1986 and has witnessed the industry transformation from mechanical locks to smart locks.
Thirty-six years of in-depth research on locks has enabled Su Zhiyong and his team to make decisions quickly on industry dynamics. After starting a business, the first thing Kaadas did was to accelerate research and development.
This is because smart locks have corresponding requirements for different key fields such as mechanics, transmission, structure, hardware manufacturing, electronics, wireless communication, servers, and Apps, and the difficulty of research and development is much higher than that of traditional mechanical locks. For example, in order to better match the hardware and software of smart locks, it is often necessary to make secondary development based on existing hardware and software products.
Today, Kaadas still invests a large amount of research and development costs every year, with research and development investment accounting for nearly 10% of revenue. In terms of research and development capabilities, Kaadas has three research and development centers, a team of hundreds of researchers, and has gathered internationally and domestically renowned researchers in electronics, structure, industrial design, and testing, and has reached more than 300 patents, and can independently develop all types of automatic lock bodies.
In 2016, Kaadas launched the first domestic pull-push smart lock hit product K7, and quickly reached the first place in the Taobao crowdfunding category. K7 was the first domestic pull-push smart lock at that time, and its breakthrough point was the use of an automatic lock body, which was different from the traditional mechanical lock body that needed manual operation to lock.
In simple terms, as long as the door is closed, the bolt and the frame will automatically lock when they touch the main bolt, so there is no need to worry about forgetting to lock the door. In addition, the K7 full lock consists of more than 200 parts, using high-quality alloys and high-quality steel to cast the automatic lock body, with a total weight of 7KG, which is twice as heavy as the ordinary pull-push lock on the market, which is much higher than the industry standard quality. The success of K7 is inseparable from manufacturing, and Kaadas’ manufacturing capabilities have almost kept pace with its research and development.
Today, Kaadas has three large-scale production and manufacturing bases across the country: Dongguan, Zhejiang, and Zhuhai.Drawing on Foxconn’s Industrial Internet 4.0, Kaidi has advanced CNC machine tools, fully automated production lines, and professional product testing laboratories, making it the only company in China with a complete intelligent lock industry chain.
This breakthrough product helped Kaidi break into the market. Subsequently, Kaidi intensified its brand strategy and investment efforts. In March of the following year, it officially signed Liu Tao, who had just appeared in the drama “Joy of Life,” as its brand ambassador and carried out advertising campaigns through channels such as CCTV, airports, and high-speed rail stations. During this period, Kaidi truly achieved the transition from stage 0 to 1 to stage 1 to n.
At the new playing field, what remains unchanged is Kaidi’s long-standing technical refinement. At present, Kaidi is also continuously improving in lock body research and development, for example, with the unique advantages of the fully automatic lock body, the motor is integrated into the lock body, eliminating the drawbacks of mechanical lock bodies such as loud noise, slow operation, lock body jamming, and poor unlocking experience, bringing users the advantages of quick door opening response and automatic locking when closing.
The pursuit of excellence in research and manufacturing has built a deep moat for Kaidi. Today, facing the new competitive landscape, Kaidi has also jumped to the outside of the circle, showing a different industry role. The comprehensive channel integration opens up a lock. From Kaidi’s product channels today, it cannot simply be described as “diverse,” but more accurately as comprehensive.
Unlocking Success Through Comprehensive Channel Integration
In China, Kaidi has online channels such as Tmall, JD.com, Suning Easy Buy, and also distributes through non-store distribution, property, traditional distribution, 3C (Gome, etc.), supermarkets, and has many brand image counters and exclusive stores across the country.
In other words, as long as consumers want to buy a smart door lock, they can see Kaidi in any way. In addition to the C-end channels, Kaidi also cooperates with B-end real estate developers. It not only has long-term strategic cooperative relationships with dozens of leading real estate companies such as Vanke Group, Country Garden, China Overseas Land & Investment, China Resources Land, and Gemdale, but also ranks first in the industry with an 18% brand preference rate and has won the “Top 500 Preferred Supplier Brands of China Real Estate Development Enterprises” for five consecutive years.
From the perspective of achievements, in Kaidi’s more than ten years of development, it has continuously gained customer recognition through its own technical advantages. When the market space of an industry continues to expand, the influx of new players is an inevitable trend, and in fierce competition, the role of the enterprise may sometimes be one of the competitors; but when it has passed the 0 to 1 stage of meticulous cultivation, with the continuous enhancement of technological research and development strength and manufacturing capabilities, the role of the enterprise may no longer be just a competitor, but an invincible technology holder.
The process of the industry gradually changing from blue ocean to red ocean is a fierce environment that insiders need to face, but at the same time, the injection of fresh blood is also an acknowledgment of the prospects of the smart lock industry. The joint promotion and exploration of all parties, such as the traffic gene of the Internet, the brand gene of cross-border players, and the technical background of professional lock companies, can accelerate industry education and make smart lock products more perceived by more users.
After the training in the domestic market tends to stabilize, Kaidi is also exploring the layout of the overseas market. Currently, Kaidi has successively opened up overseas markets such as Southeast Asia, the Middle East, and North America, and has reached strategic cooperative agreements with more than 10 international companies. Channels include Amazon, eBay, local e-commerce platforms, as well as regional agents and national agents’ B to C methods.
Whether it is to open up the market with product power or continuously broaden its own channel choices and strengthen brand building, Kaidi has been running on the path of exploring smart door locks with a long-distance runner’s form and its long-term value, which may become the reason why capital is willing to keep investing. In the process of technological development, errors and setbacks often accompany it, but the craftsman spirit itself is the permanent password to open the smart door lock of technological progress.
And finally, the true direction of technology is the existence of people without perception, as Maceij Kranz said in “The Age of the Internet of Things,” “When we no longer talk about the Internet of Things as a unique phenomenon, but simply integrate the Internet of Things into our daily business and life, then we can be sure that the Internet of Things has succeeded.” Just as today, it is no longer necessary to carry a key out of the door and there is always a password at home.