Re evaluation of Oriental Selection?

Visual China.

Text |BT Finance, Author |You Glass.

Recently, the popularity value of the live broadcast room with Hui has reached the top with a number of **hot search lists, and the number of ** people exceeded 1.5 million at the beginning of the live broadcast, and 300,000 "Mr. Red Carpet" movie tickets were sold out immediately, plus 300,000 or seconds, this live broadcast is called a sales nuclear explosion, all because Andy Lau and Dong Yuhui are in the same frame.

At the same time, Oriental Selection released its semi-annual report for the year ended November 30, 2023, with a revenue of 279.5 billion yuan, an increase of 344% and a profit of 24.9 billion yuan, a decrease of 574%。For a company that is on the rise, more than half of the profits** are undoubtedly unsettling to the market, especially in the context of high-speed revenue growth.

What are the reasons for the increase in revenue but not in profit? Dongfang Selection analyzes in the financial report, which can be mainly attributed to the increase in the inventory cost and transportation cost of its own brand, the increase in recruitment demand in the scale expansion stage, and the pull of R&D costs of "Dongfang Selection APP".

From 2020 to the present, live streaming has completed the transition from barbaric growth to standardized development, and various types of head anchors have begun to emerge. Tmall and ** quickly broke the restrictions of traditional shelf e-commerce and ushered in new development, and emerging platforms such as Xiaohongshu, Douyin, and Kuaishou have gradually found a way to monetize with independent characteristics through the form of live broadcast.

During this period, the anchor and the company behind it, as the content provider, have reached a delicate balance with the platform as the traffic provider and bearer. But what is somewhat cruel is that the weight at both ends of the scale is changing, as exemplified by the situation of Dong Yuhui and Dongfang Selection.

Although the above reasons are reasonable, there is also another layer of consensus in the industry:If Dongfang Selection wants to stabilize its performance, the current core is to maintain good cooperation with Dong Yuhui and his supporters. In the long run, de-anchoring, de-personal IP and even de-ByteDance may be the path worth practicing when Dongfang Selection seeks long-term stable development.

For most people, the representative of Dongfang Selection is Dong Yuhui. As an IP, Dong Yuhui may have fulfilled his mission, which is to attract fans and convert them into loyal audiences, and increase the order rate and repurchase rate in the live broadcast room. Dongfang Selection, as the driving force behind it, has also proved its strength, and can methodically support the live broadcast system from the backstage ** chain to the front end to the outward output, and the speed at which Dongfang Selection adapts to changes is not fast.

But if Dongfang Selection is regarded as a listed company, its relationship with Dong Yuhui is very delicate. Since the "Little Composition" caused a series of turmoil in December, Dong Yuhui and Dongfang Selection have been silent for a while. On January 9, Dong Yuhui's new account "Walking with Hui" made its live broadcast debut, and in less than a month from the opening of the account to the live broadcast, the number of followers of the new account quickly reached 4.03 million.

The strong fan appeal made Dong Yuhui's live broadcast room appear overnight to attract gold 1The grand occasion of 500 million yuan, the number of live broadcast likes on the day was 1.3 billion, and the number of fans increased by 3.3 million. In less than 10 seconds after the opening, "Walking with Hui" gained the first 100,000+** for 45 minutes, and the number of ** people reached 1.65 million, and once exceeded 2 million at its peak.

Especially Dong Yuhui's live broadcast room, Andy Lau was invited. On the evening of January 31, Andy Lau and Ning Hao appeared in Dong Yuhui's "Walking with Hui" live broadcast room. Subsequently, many topics such as "Andy Lau sang Wishing you prosperity in Dong Yuhui's live broadcast room" and "Andy Lau and Dong Yuhui 300,000 movie tickets in the same frame were on the hot search.

According to surging reports, the background of Andy Lau and Ning Hao's conversation with Dong Yuhui is that the movie "Mr. Red Carpet" directed by Ning Hao and starring Andy Lau will be released on February 10, the first day of the Lunar New Year. This means that the dialogue is not only a conversation, but also a live broadcast for movie tickets.

Andy Lau + Dong Yuhui" The chemical reaction caused by the combination is also reflected in the data of "live ticket sales". According to Dong Yuhui, at the beginning of the live broadcast, the number of people in the live broadcast room exceeded 1.5 million, and it continues to increase. The 300,000 movie ticket vouchers that were launched at the beginning were also sold out instantly; By the end of the live broadcast, all 600,000 "Mr. Red Carpet" movie ticket vouchers had been sold out.

In addition to some people's applause, Dong Yuhui's live broadcast also seemed to be very "popular". According to statistics from third-party institutions, the average contribution value of a single fan in Dong Yuhui's live broadcast room on the night of the debut was 125 yuan, the purchasing power of fans even appeared in the scene of "pressing" Douyin's top crazy Brother Yang.

On January 20th, Crazy Brother Yang brought goods for 8 hours, with sales of 200 million+, and the per capita consumption of fans was 1$7. Strictly speaking, the fan base is larger (1200 million) Brother Yang's daily live broadcast is not scientific compared with the live broadcast room with Hui Peer, which has the special meaning of "debut", but the GMV can be achieved in four hours of live broadcast time500 million yuan, Dong Yuhui's strength should not be underestimatedConsidering that Brother Xiao Yang's current live broadcast frequency is 4-5 days per month, the monthly volume of goods with Hui is indeed expected to exceed that of Brother Xiao Yang.

It is interesting to note that the noisy bustle of Dong Yuhui's gongs and drums did not continue to Dongfang Selection.

Xiaoxiang Morning News" reported that during the same time period on January 9, there were three anchors with goods in the live broadcast room of the main account of Oriental Selection. When Walking with Hui was launched, the number of fans of Dongfang Selection was 315380,000, and it has fallen to 31.51 million at 23 o'clock.

As of January 25, the number of viewers who entered the live broadcast room with Hui was about 42.4 billion, and the average daily sales of the live broadcast room can reach 50.05 million yuan at the highest. In the live broadcast room of Dongfang Selection's main account, the total number of ** people is less than 200 million, and the average daily sales are between 10 million and 25 million yuan.

From December 5 to January 31, Dongfang Selection's share price fell by 2217%；From January 1st to 15th, the number of fans of Dongfang Selection's Douyin account continued to be **, and the number of fans dropped by 18 in half a month10 thousand. During the small essay turmoil in December 2023, Dongfang Selection directly lost millions of fans, and the answer is not difficult to find out whether consumers recognize Dong Yuhui or Dongfang Selection.

Gray dolphin data shows that in the past month, Dongfang Selection and Hui Peer have performed almost the same. The total amount of goods brought by Oriental Selection is about 6100 million yuan, and Hui Tongxing 6400 million yuan, but the latter has only been on the air for half a month.

In the six months ended November 2023, Oriental Selection achieved revenue of 279.5 billion yuan, compared with 20800 million yuan; Net profit 24.9 billion yuan, compared with 5$8.5 billion; Adjust EBITDA to 59.5 billion yuan, down 133%。The sharp increase in revenue and the lack of profit are a dangerous signal for investors, at that time, the Oriental Selection has not yet experienced the test of "small composition", Dong Yuhui is on the air normally, and the results are even more eye-catching.

According to the 2023 fiscal year data released by Dongfang Selection in August last year, in the year ending May 31, 2023, the GMV of Dongfang Selection reached 10 billion yuan, and the total number of orders was 13.6 billion orders, of which the total revenue of self-operated products exceeded 2.6 billion yuan, and the gross profit was 1.5 billion yuan.

In the first half of fiscal year 2024, the gross profit margin of Oriental Selection increased from 47 in the same period of the previous year2% to 391%, and the income of institutional customers has also increased by 62% to 179810,000 yuan.

Behind the decline in profitability are a number of declining indicators, such as the gross profit margin of self-operated products.

According to the financial report, the number of self-operated products in the 2023 fiscal year will be 120+, with a total revenue of more than 2.6 billion yuan, and in the first half of the 2024 fiscal year, Dongfang Selection will rapidly expand the self-operated product camp, with more than 264 products. However, at the extraordinary general meeting of shareholders held not long ago, some investors pointed out that Dongfang Selection's current self-operated products are not yet brand power, but to drive sales.

The response of the management of Oriental Selection at that time was that the long-term purpose of the first is to expand the brand influence, and there will be no special requirements on profit margins at this stage, and the overall scale profits are guaranteed, "It's just a matter of earning more and earning less."

But the anchor Tianquan once said a "truth", in the live broadcast room, he said to the camera that the way to defeat Dongfang Selection is very simple, "Buy those eggs with a coupon of 10 yuan, balat and jelly oranges, etc., Dongfang Selection will definitely be a loss." ”

How much it has paid to promote Oriental Selection can also be seen from its sales expenses.

According to the data disclosed in the financial report, in the first half of fiscal year 2024, Dongfang Selection's sales and marketing expenses increased by 145 percent year-on-year6% to 5600 million yuan, and in the second half of fiscal year 2023, this part of the cost has already been thrown in a large amount. Marketing spending during this period increased by 70% quarter-on-quarter, which also directly led to a decline in net profit to 3900 million yuan, 32 less than in the first half of fiscal 20238%。

In addition, the R&D expenditure of Dongfang Selection in the first half of fiscal year 2024 is not lowDuring the reporting period, the year-on-year increase was 565% to 75.5 million yuan, mainly in order to do a good job in Dongfang Selection's independent app, so far there is no conclusion on how many orders have been transacted in the app. From June to November last year, Oriental Selection's total salary expenses, including share-based remuneration expenses, increased by more than 150%, and it spent 62.5 billion yuan, of which the share remuneration alone increased by 1296 per cent, accounting for 1 of administrative expenses4.3 billion yuan.

Investing money so boldly, Dongfang Selection's ambition is very clear, that is, to expand the scale and make more profits.

In the semi-annual report, Dongfang Selection revealed that in the future, it will increase investment in the construction of the first chain, and put the expansion of factories and the construction of front-end warehouses in first-tier cities on the agenda. By the end of November 2023, the number of Dongfang Selection's self-operated products and live broadcast e-commerce team has exceeded 1,500 people, including 643 people in the ** chain and product teamIt is conceivable that the performance of Dongfang Selection will continue to be under pressure in the future.

And from the perspective of traffic, the growth of Dongfang Selection may be approaching the ceiling. In November last year, Dongfang Selection fell out of the top five on the Douyin list, and even fell out of the top 10 in October. According to the third-party data platform, Dongfang Selection's sales in October and November have declined, respectively 20.9 billion yuan, 3900 million yuan.

The foundation of the development of social software is people, and opinion leaders known as KOLs often take on most of the responsibilities of enlivening the community atmosphere and stimulating the desire to communicate. When the business of the entertainment platform gradually developed to live broadcast, the anchor became the new KOL, Li Jiaqi, Luo Yonghao, Dong Yuhui are all like this, whether they want to or not, the beautiful wrists standing behind them, make a friend and Dongfang Selection have become an MCN company in the eyes of everyone.

But unlike the previous two, Dong Yuhui had already completed the strong binding with Dongfang Selection when he became famous, and the relationship between them was more complicated, which is also the reason why the small composition turmoil and its follow-up can spread for a long time.

In a sense, Dong Yuhui is the most successful "product" created by Dongfang Selection after choosing to cut into the live broadcast track, but for the company, it can't rely on a "hit", how to replicate Dong Yuhui's success on other anchors is a problem that Dongfang Selection has to think about.

Some people point out that the copywriting team keeps replying in the comment area, emphasizing that Dong Yuhui's contribution is not as much as the outside world thinks, which may be the performance of Dongfang Selection's attempt to decouple from him. However, in terms of results, things are not as good as they should be.

also suffered a suspension of broadcasting, and when Dongfang Selection Tianquan rebroadcast on January 16, the live broadcast room only received 5.8 million likes, and the number of fans increased by 1 on the same day90 thousand. According to the data of the third-party organization "Cicada Mother", the GMV of the live broadcast reached 750,000 yuan-1 million yuan, although it could rank first on the Douyin ** goods list on the same day, it was still far from the results of the first live broadcast of "Walking with Hui".

Obviously, Dong Yuhui's head effect in Dongfang Selection is extremely prominent, which has also caused many challenges to Dongfang Selection. In Dongfang Selection's positioning of itself, the word MCN has not appeared from beginning to end, it hopes to be "an excellent product and technology company with self-operated agricultural products as the core product", or "a cultural communication company that provides customers with a pleasant experience", He Yifan, a senior ** person, said that after all, a single super IP, "as a goodwill asset, the stability and sustainability of listed companies are too poor".

In addition to how to reasonably distribute benefits with overhead anchors, another challenge faced by Dongfang Selection is to pull with the platform.

It is understood that the effect of broadcasting on the Oriental Selection App is generally average, and the number of ** stays below 500 all year round, and the traffic pool mastered is only a drop in the bucket compared with Douyin. In the first half of fiscal year 2023, the second half of fiscal year 2023 and the first half of fiscal year 2024, the number of orders of Oriental Selection on Douyin was 70.2 million, 66.1 million and 59.6 million respectively, showing a downward trend day by day, and the number of followers also decreased by 40% month-on-month.

Since the emergence of Douyin, countless celebrities have emerged, from Liu Genghong to Yu Wenliang, from Xiucai to Wen Huijun, most of the newcomers and new accounts have become smash hits and disappeared in just a few days, and only half of them have become popular. ** And observers are keen to analyze the reasons for their popularity, but today, maybe they haven't stepped on a specific outlet, but ByteDance's algorithm has one day favored ordinary people.

The same is true for Oriental Selection. The platform can create gods and destroy gods, and only by spreading eggs in different baskets can we ensure revenue, and there is nothing wrong with de-IP, but it is necessary to think in the long term and gently.

Luo Yonghao and Simba have actually set a good precedent for Dongfang Selection. or let the anchor himself show his willingness to retire in front of the stage, which tests Dongfang's ability to select and play with the anchor and make better career plans for him; Either promote the anchor to empower other small anchors, and build the team with Hui as a matrix, prompting Dong Yuhui to move from the front of the stage to the behind-the-scenes management, which tests the long-term and continuous first-chain ability and talent training system of Dongfang Selection.

If you want to draw the "impossible triangle" between MCN, anchors and platforms, patience is more important than ambition.