Why Deli Tools can beTop2 Hand Tools Brand in China? It can start by saying that Deli Tools has been founded in 1998, but at that time besides the name this company that has been founded in 1998 had no link at all with Deli Group. It was a different company. In 2014, Deli decide to go on the tool market. Deli’s distributor, sales network require to develop this product because they were confident about their ability to sell it, and our expertise on the B2B market and the fact that the tool markets were fragmented gave us a lot of confidence about succeeding in these tools market. That’s why in 2016, after two years of exploring that market, seeing our chances to succeed, Deli decided to acquire that company that has been founded in 1998 with the same name as us, so in 2016 we acquired Deli and Deli became Deli Tools and join Deli Group. 2021, five years later that acquisition, Deli Tools is now the No. 2 hand tools brand in the Chinese market right behind SATA.
So Deli Tools in a few key figures. Deli Tools is the Top 1 growing brand. To give you an example of that, from the acquisition of Deli Tools in 2016 to 2021, the turnover has quadrupled. So we multiply by four the business within five years and it makes us the fastest growing brand in China. Deli Tools is the No.2 hand tools brand in China right behind SATA as mentioned earlier in terms of business & turnover, and Deli Tools is the Top 5 online tools brand on all e-business platforms, and these also include power tools, so it is every tool segment, since two years Deli also decided to go on the power tools market, so this one included both hand tools and power tools.
Why there is such a fast success, a quick growth for Deli tools in China. The first main explanation is Deli’s deep market penetration. In China, Deli tools is distributed through 25 branches. It has one branch per province almost. These 25 branches sell our products to 250 territory partners that could be considered as our subdistribution network and these partners sell Deli’s products to 10,000 retailers throughout Chinese markets.
Another explanation for Deli Tools can be Top2 Hand Tools Brand in China, for that Deli mainly focused on B2B activities, so the idea when we release Deli tools brand after totally reshaping the brand what is to make sure that every worker in China and every decision-maker would be aware of deli tools brand would know the brand and would be able to be convinced by that brand. so that’s why when we released Deli tools, we work on a lot of communication campaigns including POSM or promotion on store materials, making sure that every consumer once again every worker when they would go to the stores to purchase tools they would face our brand at some points. Deli also invested a lot into national exhibitions making sure that every decision-maker attending these big exhibitions, would see Deli brand, would be able to go through our booth and be convinced by our brand, by our products.
Deli Tools in the past five years from the business point of view. The first point has been to develop a one-stop solution for both hand tools since 2016 and power tool that has been once again started two years before that event. The second point is we reshape Deli image when we acquire Deli in 2016 and the third point will be product offering an improved user experience, we developed a new design improving once again through micro innovation the user experience. Two milestones will come soon in Deli tools brand and it will help to move to another scale.
When Deli Group acquired Deli tools in 2016, Deli decide to set up the strategy – provide a one-stop solution to the worker, to the decision maker, to our customer. And that’s why there is some figure that we believe are quite representative of that strategy when we acquired Deli in 2016, the number of items we had by then was 2,000. After adjusting our product strategy, defining our quality standard, defining which product tools match these quality standards, will match our brand, will match our appealing expectation. We adjust these 2,000 items to 800, so we reduced more than half the number of items we had. So in 2016, from 2,000 to 800, but then in the five years later we extend again to 2,500 items, not duplicating the items but covering more and more categories, so we switched from 2,000 to 800, and then extend again to 2,500 but this time extended our category coverage. So this strategy led us to today covering more than 16 hand tools categories, all the hand tools categories almost and the power tools that has been initiated two years ago, but that is still yet to be developed further in the coming years.
The visual identity is an important part, but Everyone knows packaging that is not what people purchase at the end of the day, what they want to see is a good product inside the package and that’s why when we acquire Deli tools, we start to rework on some product design, making sure that these designs would be iconic enough for our product offer, so here you can see a plier design made by our industrial design studio in Hamburg, and we already rework some items creating a very iconic design, language for each and that this is a running change, it means we still have some old designs from the previous company but it is something we plan to keep implementing, keep adjusting our industrial design, making sure that all products are iconic enough and well represent our brand ambition being the No. 1 on Chinese market.
The coming milestone for Deli tools, is not only for the Chinese market, it really concerns the global market. Two years ago we decided to go to the power tools segment. But let’s face it, when we acquire Deli in 2016, it was mainly a hand tools company, and that's why we didn't know much about power tool. Power tool, hand tool two totally different markets at the end of the day. So when two years ago, we decided to go to the power tools segment, We also decided to surround ourselves with experts, with people who know well that market because we didn’t, so two years ago we hired people from Bosch, from Worx, who really understand the power tools market, who really can give us valuable insights about how can we get a competitive advantage on that market, and who can also totally bring us the consumer insight we need to succeed. Now, there has been two years, we have already release some items. But we know that if Deli wants to become the No.1 on that specific power tools market, we must have our own factory. Why? Because once again we have a very strong industrial know-how, this is something we did from the beginning once again in 1981 when we set up the company, it was by then a factory. So this is something we always had in our DNA, and furthermore, we know that if we don’t control the cost of our goods, if we don’t manufacture, we won’t be able to become a key player, so it’s really something we want to set up by the end of 2022, beginning of 2023 to have our own factory running, producing for the first time power tools for Deli. We also aim to design a whole power tour product line in house, using our industrial design institute in Hamburg of course but also working with some other design studios in Germany who has power tools experience, and the idea is ready to design both the outside and the inside, so the idea is not to retake some mechanism from the supplier and we create a power tool know it’s ready to design everything, mechanism, and the shape of the product. So to make it short and concrete, by the end of 2022, beginning of 2023, we plan to have, for the first time developed by our own team, a world power tool product line designed in-house, manufactured by Deli.
Another key milestone will be how to approach the B2C segment of the tools market. We saw in China a quickly rising trend, it means people start to purchase tools for their personal use, for home crafting, for gardening, and when these end-users purchase tools, they have totally different expectations than professionals. That’s why Deli developed a whole product line assortment for that specific needs for that specific market segment which is a personal tool.
To sum up, Deli Tools has become the second-largest hand tool brand in China, combining various factors, and at the same time looking forward to the development of Deli Tools brand.
