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How hardware tools succeed in the US tool market
The US market is an important target market for Chinese tool companies to export. Understanding the organizational structure of the US market is of great significance to Chinese tool companies. The US DIY market has a total size of $280 billion and has 40,000 retail channels. The two-step distribution channel represents more than 50% of the entire sales scale. They will be distributed through many retail branches. The US DIY user market has two aspects related to customers: two-step channels and mass market. This is fundamental to the study of the US market structure. The two-step channel is to sell the product to an independent distributor as a producer, who then sells the product to the local DIY market and customers. The mass market, mainly refers to the super market like Homedeport and Lowes. These two completely different channels have their own characteristics. In such a market, how do we focus on the current status of DIY customers? How do the market design adaptation products for them? Understand what is happening in the current market? According to our last market survey, the United States has 380 million people and 100 million residents own their own houses. The high housing rate in the United States has also laid the foundation for the US DIY market. Higher income and higher home ownership rate make the entire DIY market very active. Unfortunately, the housing market was hit hard after the 2007 economic crisis. (Note: The crisis mentioned by Bill Lee occurred in 2007, and we generally think that the impact of the crisis on China began in 2008.) The high housing ownership rate of the middle class requires high labor costs. Because in the United States, the cost of hiring someone to do housework for you is very high, so the United States is a paradise for DIY. Ordinary Americans go to the tool store to buy the products they need. After they return home, they repair and organize the houses. After 2007, the great changes in US real estate have made American people more focused on small projects, such as repair and maintenance of houses. After the crisis, the US industry expects 3% of new homes to bring market growth. The growth started in 2009 may be more radical, but this is what we hope. Of course, lower housing borrowing ratios, higher unemployment rates, and less optimistic about the economic situation make customers spend less and less on housing updates. But beyond that, the US market is still a huge growth market. Especially if your product is focused on improving the family, the US will still be a good market. Let's take a look at the market channels to understand how to reach consumers. Two-step distribution. The two-step channel involved in the North American Hardware Retailers Association is also called the independent retail channel. There are 40,000 stores here. As producers, you have to sell the products to wholesalers, then they sell them to independent retailers, and retailers to local customers or markets. It takes a lot of time, patience and commitment to enter this market. American wholesalers have different wholesale models: cooperative. Some wholesalers are members of retailers, such as ASTUREVALUE and DORTBEST, which have annual sales of about $3.5 billion. They are not chain stores, but a form of membership-based cooperation. DORTBEST has more than 4,000 members. These major wholesalers have many branches around the world and have their own procurement centers in China. Independently owned wholesale channels. OREAL supports 6,000 retail customers with $1 billion in sales. Their buying group, like PROR or DA, represents a regional retailer. For example, they have nine regional retailers, with sales of $1.6 billion, and representatives of smaller retailers, with annual sales totaling $3 billion. OGAIN also has a lot of business in China. For example, in Tianjin, there are some commercial arrangements. Wholesalers in the United States have a large number of procurement specialists, and all products in the tool are done by their own buyers. If you want to sell to the United States, you should be familiar with these buyers. Wholesalers prefer producers to find them instead of just one product for display. They want suppliers to have a complete line of products and uniquely designed projects to attract them. In the United States, there are three main channels for retail: 20,000 tool stores with annual sales of $4.5 billion. Tool shops are small in size, with a typical operating area of ​​5,000 square meters to 10,000 square meters, and each transaction is about $60. These tool stores are mainly focused on home repair and maintenance. More than 56,000 family centers. In addition to tool products, there are also wood and even home appliances. These family centers are generally large-scale stores. More than 9,000 timber stores. These products and services that focus on wood also tend to provide tooling products to customers. Independent retailers, tool shops, and family centers are all independent and have a working model to purchase goods as they wish. Usually 60% - 70% of products are purchased from major wholesalers, others are purchased from other special professional distribution agencies. What Chinese companies need to pay attention to is that they basically do not buy directly from manufacturers, and all channels are through wholesalers. In the United States, quite a few retail owners own a store. There are also many retail owners who buy some stores, and two or three stores can achieve higher efficiency and profit margins. Some retailers even have more than 100 stores, all of which are owned by locals and are closely linked to the local community, and some even have hundreds of years of history. Once again, the distribution channels in the United States are very well subdivided. Many business representatives in the United States need to find manufacturers to let others know about your products. Maybe you have to advertise for products and conduct detailed marketing to have a lot of selling points. . This is a very complex combination, there are many small customers you have to face, those small opportunities take a lot of time, patience and effort. But as time goes by, you will end up paying off. Let's take a look at the business growth of Homedeport and Lowes as market participants in the past 25 to 30 years. The two companies have branches in major US cities and are well-known American national brands. Both companies have roughly the same market strategy and want to work with them, especially if producers want to get in touch with them directly, it is very difficult. Homedeport's requirements are very high, and each store must be provided with the same high quality products and services, and must work very hard to improve the business, otherwise it will not be able to work with them. If you have established a partnership with them, it will bring you great benefits and room for growth. Therefore, for Chinese tool companies interested in entering the US market, it is necessary to establish a complete product line, quality service, long-term focus and professionalism, so that you can succeed in the US market.