After "de-Dong Yuhuiization", Dongfang Zhenxuan lives in the dilemma of "big anchor selling goods"

Why is Dongfang Zhenxuan still in the dilemma of being a "big anchor selling goods" after "de-Dong Yuhui"? This article will help you explore the reasons, and this article is recommended for companies or individual operators engaged in e-commerce live streaming.

The whole month of June can be described as an eventful one for Oriental Selection.

Previous public opinion focuses included "the style of Oriental Selection's live broadcast room has changed", "Oriental Selection's knowledge-based sales has turned into shouting sales", Yu Minhong apologized after complaining that "it was a mess" which caused heated discussion, and Dong Yuhui revealed in an interview program that he was "very painful" and "did not enjoy live broadcast sales", etc., causing the stock price to fluctuate.

On June 27, the Lifestyle Clothing account under Oriental Selection officially started broadcasting. According to a third-party data platform, the live broadcast lasted nearly 6 hours, with sales of nearly 2.5 million yuan and customer orders close to 300 yuan. Dun Dun, one of the popular anchors, said in the live broadcast room that he only knew he would also participate a few days ago, and the company arranged the shifts on its own "without discussing with the anchors" in advance ; when the public opinion storm swept in, the public relations department chose not to protect the anchors because they were "afraid of this and that." After his remarks became a hot topic, Dun Dun changed his words and compared the company to a big family. He expressed his dissatisfaction as a child complaining about "Mom and Dad". He did not want his friends who cared about him to be sad, and he did not want "bad people who are good at marketing to use this as an excuse to attack the company."

On June 22, another anchor Mingming was promoting Guizhou Tourism in Zhaoxing Dong Village, Guizhou, and used the phrase "broken mountains and rivers" to describe the terrain of the Yunnan-Guizhou Plateau. YoYo's Weibo post mocking local spiders was also picked up. Subsequently, Guizhou Tourism deleted all videos related to the Oriental Selection. On the morning of the 29th, the anchor Mingming posted an apology message online, and "disasters come from the mouth" was frequently staged, continuing to occupy negative hot searches.

On June 27, Oriental Selection stopped broadcasting for one day. On the evening of June 29, the official statement said that it had never asked the government for publicity fees, and insisted on not charging any companies or businesses for so-called slot fees. According to Chan Mama data, the total number of fans in Oriental Selection's live broadcast room decreased by about 380,000 from 30.411 million on May 30 to July 1. Since June, its stock price has been falling all the way. As of the close of Hong Kong stocks last week, the share price was HK$12.62. Judging from all the signs, the transformation and adjustment after "de-Dong Yuhuiization" has not been smooth, and the pain is still continuing.

1. Frequently being sabotaged by its own people, what happened to Oriental Selection?

From the short essay incident to the present day, Oriental Selection seems to have exposed its internal conflicts to the outside, publicly complained about them and affected its stock price more frequently than any of its peers.

This may be related to the fact that the anchors are transformed from teachers and are not very sensitive to the scale of public opinion. It is also related to the company's internal management and training mechanism for anchors and the company's business model that is different from that of traditional MCNs. During the promotion period, public attention increased, public opinion pressure increased, and it was easy to "say more and make more mistakes". Reducing the frequency of live broadcasts and being cautious in words and deeds became the common choice of big anchors.

After the live broadcast room was split, the "next Dong Yuhui" was not successfully replicated. According to Guosen Securities analysis, the popularity contribution rate of Dun Dun, the center of this Tucao incident, increased from 40%-70% at the beginning of the live broadcast room explosion in June 2022 to 100%-200% in June 2023, second only to Dong Yuhui's 300%. However, the number of its fans remains at more than 2 million, which is still a big gap with Dong Yuhui.

In the recent 618 mid-year promotion, Oriental Selection did not enter the top ten of Douyin live streaming sales. According to Chanmama data, as of 17:00 on the afternoon of the 18th, the top three of the 618 promotion Douyin influencer sales list (May 24-June 18) were Guangdong Couple, Jia Nailiang and Yuhui Xingxing. Make Friends and Oriental Selection ranked 10th and 11th, and Crazy Xiao Yangge ranked 17th.

Although it has been at the center of the public opinion storm and the GMV of the main account has declined, the profitability of Dongfang Zhenxuan is still considerable . In the final analysis, Huitongxing has diverted fans from the main account, and at the same time, it has made the positioning of each audience clearer. As a wholly-owned subsidiary, its revenue is also calculated on a consolidated basis.

According to the latest research report from Bocom International, Oriental Selection's revenue is expected to be 6.6 billion yuan and 7.4 billion yuan in fiscal years 2024 and 2025, respectively, up 45% and 13% year-on-year. The report further analyzed that Oriental Selection's adjusted net profit is expected to drop from 1.1 billion yuan in fiscal year 2023 to 690 million yuan in fiscal year 2024 and 840 million yuan in fiscal year 2025. During the period of strategic adjustment of its business, the stability of its major anchors and the decline in GMV of its main accounts have been questioned. However, Oriental Selection is still one of the institutions that has been "profitable for several years".

Previously, Jia Nailiang, whose cumulative live broadcast GMV exceeded 1.1 billion yuan during the 618 shopping festival, suffered huge losses at his MCN Yaowang Technology, which triggered the hot search topic #佳乃亮赚了,床上ＭＮ输坏了#. From 2021 to 2023, although Yaowang Technology's revenue increased year by year, it continued to be in a loss-making state, "increasing revenue but not profits", with losses of 700 million, 265 million, and 1.05 billion yuan in the three years respectively.

Comparing performance, after "Dong Yuhui took over", the profit margin of Oriental Selection is much better than that of Yaowang Technology and other institutions. The reason is that Oriental Selection does not position itself as an MCN, nor does it invest in traffic, which reduces a lot of costs for traffic operation and anchor sharing. It positions itself as a "product company" with a high proportion of self-operated products and relatively controllable profits.

Its online executive director and CFO Yin Qiang once said: "Because Oriental Selection's business model has no comparable model in the market, we are not a pure live streaming company, or we are not an MCN company." "First, we really don't buy traffic. Compared with other live streaming companies, we save marketing costs. Second, we are not an MCN company, and we don't share the profits with the anchors. Our costs for both are very low, or almost non-existent." Paradoxically, the small composition incident indirectly proves that Oriental Selection still cannot do without the appeal of Dong Yuhui's personal IP, and its reliance on super-head anchors is no different from other MCNs. It is not a pure product platform.

Most of the anchors are incubated internally, and adopt a compensation model based on equity incentives rather than commissions. Dun Dun said in the live broadcast, "The treatment the company gives me is really amazing." In April last year, the recipients of the equity incentive of Oriental Selection included 151 employees, who shared a total of 25.359 million shares. At that time, the stock value per person was about HK$4.87 million, equivalent to about RMB 4.27 million - but calculated at the current stock price, it has shrunk by half. According to the interim performance report for fiscal year 2024, the total salary expenditure of Oriental Selection during the reporting period was 625 million yuan, a year-on-year increase of 167.7%.

As the saying goes, fortune and misfortune go hand in hand. This model, which is different from the traditional MCN, guarantees the profit margin of Oriental Selection, and also weakens the binding of anchors to a certain extent. The promotion of Dong Yuhui to the position of senior partner of Oriental Selection and vice president of New Oriental Culture and Tourism Group is a compensation after the "small composition storm", but the internal conflicts caused by the distribution of interests and increased pressure, as well as the series of "complaints" and public opinion shocks caused by this, may be difficult to completely resolve. Multiple negative events are affecting the company's image.

2. The turning point of live e-commerce is coming

The overall environment has also changed dramatically. The various conflicts and contradictions in a company are all microcosms of the background of intensified competition and market changes. After the prosperity of the past few years, the turning point of live e-commerce has become increasingly obvious.

Even if pre-sales were canceled, the battle line was extended, and a price war was launched, it still could not change the fact that the 618 event was coldly received and the big anchors retired.

Faced with the "dawn of e-commerce promotions and the turning point of live streaming e-commerce", top anchors and the organizations behind them have transformed across industries and switched tracks to prepare for a rainy day. Yaowang Technology, the company behind the new top anchor Jia Nailiang, co-produced the variety show "Let's Farm" and the cultural and tourism variety show "Follow Me". Yaowang Technology also plans to launch 20 variety shows in 2024.

At 8 am on June 24, Xiao Yangge's apprentice "Red Light" started the video account premiere. After the first vertical screen paid short drama "Master Fu, Your Substitute Bride is a Boss" with over 100 million views, the second short drama of Three Sheep "I Made a Fortune in Ancient Times" has been prepared for production in mid-June. On June 9, Three Sheep Network CEO Du Gang released a video announcing that the Three Sheep Group will soon launch the "Three People's Live Broadcast Classroom" project to provide live broadcast training courses. From multi-channel development, cross-border entertainment, entering short dramas, to transforming live broadcast training, Three Sheep has tried everything.

On June 15, the Meiwan Youxuan Tmall flagship store was officially launched, marking the start of Mei ONE's layout of self-operated products. That evening, several products with the "Mei ONE Youxuan" logo were launched on Li Jiaqi's live broadcast room through the flagship store, including laundry beads, silicone quilts, latex mats, etc.

Wei Ya, who has retired from the stage, has recently attracted attention from the outside world again: on June 17, Wei Ya appeared in the "First Lesson of Entrepreneurship" of Zhejiang Platform Economy, recently established Qianmeng Culture, and released posters for three short dramas, "Substitute Boyfriend", "A Male Nanny Comes to My House", and "Don't Fall in Love with Your Brother". During the 618 period this year, Qianxun tried the "live broadcast + short drama" and launched "37 Days of Exclusive Love from Mr. Feng".

For Oriental Selection, will developing shelf e-commerce and laying out cultural tourism be an antidote to the failure of live streaming e-commerce sales?

On the afternoon of June 19, Oriental Selection held a self-operated new product launch conference in Beijing and disclosed the performance growth of its self-operated products to the outside world for the first time: in the second half of fiscal year 2024 (December 2023 to May 2024), the GMV of Oriental Selection's self-operated products exceeded 3.6 billion yuan, a year-on-year increase of 108% and a month-on-month increase of 74%. As of now, the total number of Oriental Selection's self-operated products exceeds 400, and the cumulative orders on Douyin have exceeded 100 million, ranking first in the food industry in terms of GMV. The Oriental Selection App has become the core channel for its self-operated products. 90% of self-operated new products choose to be launched on the App for the first time, and the GMV of the App has accounted for more than 40% of the GMV of the entire network.

From June 12 to June 15, Dong Yuhui led the team of "Traveling with Hui" to start the trip to Shanxi. In four days, the sales of live broadcast sales reached 168 million yuan, and the sales of cultural and tourism products were nearly 9 million yuan. The cultural and tourism account "Dongfang Zhenxuan See the World" under Dongfang Zhenxuan has released more than 2,000 videos, which have received more than 27 million likes and nearly 3 million fans. Recently, the Douyin account of "Traveling with Hui" announced that it will start live broadcasting in Chongqing from July 2 to 4.

Whether it is focusing on self-operated products or laying out the cultural and tourism industry, there are many shortcomings that need to be made up. Taking the "Meicai Kou Rou" incident as a lesson, the former needs to strengthen quality control, enhance supply chain capabilities, continuously improve the flow of its own channels, and get rid of its dependence on Douyin; the latter needs to deepen cooperation with local cultural and tourism departments, cultivate its own team, create products with differentiated experience and cost-effectiveness, establish a positive reputation, dilute the impact of a series of negative public opinions, and repair stock prices.

“The wolf has finally come”, who is swimming naked and who is swimming to the next shore?

Author: Mia; Editor: Akagi Pingzi

WeChat public account: Entertainment Unicorn (ID: yuledujiaoshou)