Text: Wang Huiying
Edit Midnight
On the evening of December 21, 2023, at the end of the live broadcast of the "Oriental Selection Live Room", the anchor Dong Yuhui bowed deeply to say goodbye.
When Dong Yuhui reappeared in the live broadcast room, 20 days had passed. On January 9, 2024, Dong Yuhui has been promoted to senior partner of Oriental Selection, and the live broadcast room has also become a new account "Walking with Hui".
An important change is that Dong Yuhui no longer appears in the Dongfang Selection live broadcast room, and also has an independent studio and account.
Source: Oriental Selection WeChat***
It is worth noting that Youhui is a wholly-owned subsidiary of Dongfang Selection, and 100% of its revenue and profits are merged into Dongfang Selection, the difference is that Dong Yuhui has more autonomy over what goods he sells with Hui, and will hold more shares in the company.
At this point, the "small composition" led to the end of Dong Yuhui's exodus, but the internal turmoil exposed by Dongfang Selection lowered the evaluation of it by the outside world. And Dongfang Selection's latest financial report has cast a shadow on its future.
On January 24, Dongfang Selection announced its interim results for the six months ended November 2023, and the financial report showed that during the reporting period, the company achieved a total revenue of 279.5 billion yuan, a year-on-year increase of 344%；Achieved a net profit of 24.9 billion yuan, down 574%。
Despite the year-on-year increase in revenue, the phenomenon of Dongfang Selection's increase in revenue but not profit is very obvious. You must know that during the reporting period, Dongfang Selection has not experienced a turmoil, and Dong Yuhui has not left the Dongfang Selection live broadcast room.
After the release of the financial report, the share price of Dongfang Selection exceeded 15% in a row, and the market value evaporated by more than HK $4.2 billion.
Dongfang Selection said in the financial report that this is mainly due to the substantial growth of the company's business, which has led to an increase in the inventory cost and transportation cost of self-operated products. In addition, in order to expand the scale of self-operated product selection, recruit more employees for the live broadcast business, invest more sales and marketing expenses, and develop and launch the "Oriental Selection APP", which has also caused a significant increase in cost expenditure.
The cost is high, but the money in the first chain, talent training and self-developed APP cannot be saved. To get out of this predicament, we must also seek new growth.
The one who can help Dongfang select is still ByteDance.
Not long ago, Dongfang Selection released a number of tiktok-related positions, including tiktok overseas store operation, content operation manager (tiktok), oriental selection business manager (tiktok), etc., with a monthly salary of between 20,000-40,000 yuan.
In terms of attacking overseas markets, Dongfang Selection chose to join hands with its old partner ByteDance, and as soon as the news came out, Dongfang Selection's stock price rose in response.
This time, Dongfang Selection is facing a broader market and a more complex environment, can it break into a new world?
A year and a half after the start-up, Yu Minhong, the founder of New Oriental, appeared for the first time at the analyst meeting of Oriental Selection and responded to questions from the outside world as the CEO of Oriental Selection.
This node is delicate. Dongfang Selection has just experienced a turmoil, and the high-level blood has changed, whether it is the company itself or the investors, they need to be at the helm to stabilize the morale of the military.
To add insult to injury, the latest financial report of Dongfang Selection did not satisfy the market.
On January 24, Oriental Selection released its interim results report for fiscal year 2024, which showed a sharp contrast between the rapid growth of revenue and the declining net profit.
Specifically, in the six months ended November 30, 2023, Dongfang Selection achieved revenue of 279.5 billion yuan, a year-on-year increase of 344%。Among them, the revenue of self-operated products and live broadcast e-commerce business was 241.1 billion yuan, a year-on-year increase of 366%；University education income 36.6 billion yuan, an increase of 23 percent year-on-year9%；Institutional client income 179810,000 yuan, a year-on-year decrease of 62%。
From the perspective of profits, Dongfang Selection is not optimistic. Net profit attributable to shareholders of the company24.9 billion yuan, down 57 percent year-on-year4%；Adjusted EBITDA is 59.5 billion yuan, down 133%。In addition, during the reporting period, the gross profit margin of Oriental Selection increased from 47 in the same period last year2% to 391%。
The increase in revenue does not increase profits, and the decline in gross profit margin all point to a problem, although Dongfang Selection's e-commerce business is very profitable, its operating costs are also becoming higher.
At the financial report meeting, Yu Minhong, chairman and CEO of Oriental Selection, and Yin Qiang, CFO of Oriental Selection, also explained the profit situation from two aspects, the first is the increase in market investment, and the second is the increase in employee option fees.
Specifically, in terms of market investment, its R&D expenditure during the reporting period was 75.5 million yuan, a year-on-year increase of 565%, mainly due to investment in Internet technology systems and applications; Sales and marketing expenses increased by 145% year-over-year6% to 5600 million yuan.
It should be made clear that the above-mentioned investment is mainly placed on the self-operated business of Dongfang Selection. In the planning of Oriental Selection, it is very important to deepen the cultivation of self-operated products.
In terms of revenue, the total revenue of self-operated products reached about 1.9 billion yuan, contributing 7881% of e-commerce business revenue. The financial report also mentioned that due to the increase in the proportion of revenue from self-operated products, the gross profit margin of this part of the revenue also increased from 425% year-on-year decreased to 329%。
The growth of self-operated business has accelerated, and investment has naturally risen.
As of November 30, 2023, the number of self-operated products selected by Dongfang has exceeded 264, and the number of self-operated and live broadcast teams has increased from 1,103 to 1,587, of which the number of ** chain and product teams has increased from 346 to 643; The number of self-operated products has rapidly expanded from 120 to more than 264.
According to Dongfang Selection, the company has achieved the control of food safety and transparency through first-class monitoring and "one-shot" shooting; With the advantages of brand influence and growth rate, the company has established cooperation with leading businessmen; In 2023, the company will additionally add warehousing networks in Qingdao, Kunshan and Xinjiang.
Focusing on the construction of the upstream and downstream of self-operated business, real gold is needed. When analyzing costs and gross profit margins, Dongfang Selection believes that the company's business has grown so fast that "the inventory cost and transportation cost of self-operated products have increased", and the total cost of revenue has increased by 55%, spending 1.7 billion.
Driven by the above-mentioned investment, the scale of Dongfang Selection is also increasing. As of November 30, 2023, Oriental Selection had 1,785 full-time employees and 720 part-time employees, an increase of 525 and 310 respectively from the same period last year.
This was followed by an increase in administrative expenses, which increased by 129 year-on-year during the reporting period6% to 1$4.3 billion, mainly due to the increase in share-based remuneration expenses - the Company's total compensation expenses (including share-based salary expenses) were 62.5 billion yuan, a year-on-year increase of 1677%。
Exchanging profits for growth is not a manifestation of the healthy development of an enterprise, but whether it is self-operated products or the cultivation of talents, Dongfang Selection has to do it.
Self-operated products, is the story that Dongfang Selection has told since its inception, self-management means that the platform has high profits, a large right to speak, and a broad space for future development, this thing must be done, but now Dongfang Selection still needs time to polish the ** chain.
In terms of talent training, especially anchor training, on the one hand, the deeper the binding between Dongfang Selection and Dong Yuhui, the greater the risk, and it is imperative to cultivate new anchors who can contribute to GMV. Yu Minhong also mentioned that if Dongfang Selection only relies on Dong Yuhui for development, then this is not a normal company.
On the other hand, after the "small composition incident", Dong Yuhui has focused on walking with Hui, although the company with Hui belongs to a subsidiary of Dongfang Selection, but it is a fact that the popularity and GMV of Dongfang Selection's live broadcast room have declined, and it must also seek new growth on its own.
At the interim results analyst meeting, Yu Minhong said that the diversion was not so obvious to the account of Hui's peers on the issue of whether it caused diversion to Dongfang Selection, and many fans were fans of both accounts at the same time. Moreover, from the perspective of sales, although the daily traffic of Dongfang Selection is not as high as that of its peers, the sales volume of Dongfang Selection is relatively stable, so it has not been greatly affected in terms of sales.
Despite this explanation, the market is still worried about the future development momentum of Dongfang Selection, how to find new growth, change the situation of increasing income but not increasing profits, and the pressure is on Yu Minhong.
"I, an old helmsman, will continue to lead the development of Oriental Selection. Please rest assured, I will do things in a hurry, and use my own efforts and resources to bring Dongfang Selection well. Yu Minhong said to the market and investors.
wants to bring the Oriental selection well, and the breakthrough is in the **, Yu Minhong gave a new answer - going to sea. At the same time, Yu Minhong chose to board the ByteDance ship again.
Recently, Dongfang Selection has released a number of positions in the direction of TikTok to recruit for the overseas business. Among them, it involves positions such as operation manager, content operation manager, business manager, TikTok overseas store operation, etc., and the monthly salary range is set between 20,000 yuan and 40,000 yuan.
As early as 2022, there was news that Dongfang was selected to go to sea. In July 2022, it was reported that some faculty and staff who had left the company received invitations to the position of anchors of New Oriental, including TikTok.
At that time, it was less than a month before Dong Yuhui and Dongfang Selection exploded, and all aspects of development were in the early stage, and it was still too early to talk about overseas business; The Oriental Selection has been established for a year and a half, and is facing the pressure of profits, and is in urgent need of new growth points, and it is logical to focus on overseas markets.
There are many companies with the same idea as Dongfang Selection, and Three Sheep has been broadcast in Singapore, and a single live broadcast has been listed in TikTok's top 1 sales GMV list in Singapore; Make a friend not only brings goods overseas, but also lays out overseas e-commerce training business; Qianxun Culture has a number of million-dollar Internet celebrities in the United States.
With the saturation of the domestic market, many leading players in the live broadcast industry have set their sights overseas. Overseas, it has become a consensus to do domestic business again. In 2023, data from the Crowley Index Institute also shows that nearly 30% of MCN institutions in China have begun to involve going overseas, and there are 14Nine per cent of institutions are preparing and waiting.
From the perspective of the market, the overseas live streaming market is still a blue ocean, and it is important to seize the first-mover advantage. According to iiMedia Consulting data, in 2023, China's cross-border live broadcast e-commerce market is expected to be 2845800 million yuan, a year-on-year growth rate of 155%; In 2025, the market size will reach 828.7 billion yuan.
After seizing the first-mover advantage, it is also important to choose a platform with large traffic, a wide audience, and a tone that matches its own tone.
Just like Douyin's influence in China, TikTok is also a platform with a huge number of users overseas.
In the United States, the country with the largest number of TikTok users in the world, according to Demandsage data, TikTok's MAU in the United States reached 1more than 600 million, which is close to 45% of the total population of the United States; In second place, Indonesia, the number of TikTok users reached 11.3 billion; In addition, among Southeast Asian countries, Thailand has the highest TikTok penetration rate.
In the second half of last year, TikTok's e-commerce market in North America soared, and the single-day GMV of TikTok Shop's U.S. station exceeded $33 million during Black Friday. According to Fastmoss data, it is expected that by the end of 2024, TikTok's closed-loop e-commerce data in the United States will reach $100 million.
According to 36Kr, this year, TikTok Shop has set a GMV target of $50 billion, which has more than doubled compared to the target figure of $20 billion in 2023.
Huge traffic has converged into wealth, attracting domestic live broadcast e-commerce players going overseas. If Dongfang Selection wants to focus on the live broadcast e-commerce business and achieve new growth, it must enter this new arena.
The particularity of the cooperation between Dongfang Selection and TikTok is that in the development of Dongfang Selection, Douyin or ByteDance is a very important driving force behind it.
Source: ByteDance's official website
Once, Yu Minhong led the New Oriental team to transform and create the Dongfang Selection Douyin account, the platform gave traffic, and Dongfang Selection became popular, and reached 10 billion yuan in GMV in a short period of time.
The current Oriental Selection and TikTok are very similar to the Oriental Selection and Douyin a year and a half ago. The difference is that at that time, Dongfang Selection and Douyin were in the honeymoon period and cooperated smoothly; Now that Dongfang Selection and TikTok have cooperated, they have experienced actions such as Dongfang Selection entering other platforms, stopping broadcasting on Douyin for three days, and doing self-operated apps.
Yu Minhong said early on: "The business model established based on external platforms is very fragile. However, it is not realistic to go overseas alone, and Dongfang Selection needs a platform that is familiar with the local model, and it needs a platform that is recognized by local users.
Dongfang Selection has found ByteDance again, and this time, Dongfang Selection will face greater opportunities and challenges.
The overseas market is a blue ocean with great opportunities, but is it easy for foreigners to make money? Before answering this question, it is necessary to objectively analyze the challenges of enterprises such as Oriental Selection going overseas.
First of all, to enter the market of new soil, there is a problem that must be faced - localization. Whether it is the North American market or the Southeast Asian market, it is not easy to localize from people to goods.
From the perspective of "people", Dongfang Selection is currently not recruiting anchor-related positions, and it can be judged that it is still dominated by the company's anchor employees. At this time, it is still unknown whether it can cultivate "overseas Dong Yuhui" in the new market.
Dongfang Selection's positioning is very special - to be a national consumer brand company, rather than an MCN agency that relies on anchors. Under this positioning, Dongfang's selection of investment, product selection, and self-operated products are all responsible for their own teams, and the anchor is just the anchor and does not need to be responsible for other links.
However, the core of live broadcast e-commerce is still "people", and the phenomenal anchor is very critical to the driving effect of live broadcast room traffic and GMV.
From the point of view of "goods", if you cooperate with TikTok, Dongfang Selection must first adapt to the full custody model. In short, Dongfang Selection only needs to focus on supply, and the rest of the work is undertaken by TikTok.
Under this model, stability and low risk are advantages, and in the new market full of uncertainties, it is conducive to the development of Oriental Selection; On the other side of the coin, Dongfang Selection has no choice, and its operation is packaged and handed over to the platform, so it is necessary to transfer all its energy to the goods and the first chain, and this is the test of the East Selection chain.
Only when the best products continue to be good, the chain is perfect, and the scale is improved, the goods will be beaten down and more consumers can be attracted. In the overseas market, Dongfang Selection is from 0 to 1, and the cost of investment may be higher.
From the perspective of "field", it is also debatable whether Dongfang Selection's unique model of bringing goods is suitable for overseas people. In China, different from traditional anchors, the style of Oriental Selection is "combined with astronomy and geography to tell about commodities", but the premise is that the domestic "selling" anchors are saturated, and the differentiated style of Oriental Selection stands out, while overseas is still a market that has not yet been fully cultivated, and whether "cultural" anchors can attract foreign consumers needs time to verify.
Of course, localization is only an initial problem, and with the further deepening of going overseas, the company will also face problems such as team management and profitability in the later stage of operation. More importantly, in this cooperation with ByteDance, it is still unknown how much traffic support and strength TikTok can give Dongfang Selection.
On the road to expanding the territory, it is not easy to take every step, and the pressure of Dongfang selection is visible to the naked eye.
The current Oriental Selection is still developing, but its development is not so stable, and sometimes there are turbulent waves. Yu Minhong acknowledged the instability of Dongfang's selection at the analyst meeting.
It is the "people" that cause the instability of the Oriental Selection, and the confidence that supports the Oriental Selection to go to sea is also the "people" of the Oriental Selection.
Dongfang selects some anchors, the source is Yu Minhong's personal Weibo
A year and a half ago, Yu Minhong led the New Oriental team to "start a new business", opening a door for the development of New Oriental. Whether it is Dong Yuhui or other Oriental selection anchors, their advantage lies in their own knowledge level. In the face of overseas markets, it is the "killer feature" of Dongfang Selection to speak fluently with consumers in English and use more authentic language to describe the goods.
In addition, with the experience of the domestic live broadcast e-commerce market in the past year, Dongfang Selection is no longer a novice in the industry, and has the experience of front-end live broadcast and back-end layout of the first chain.
January 28th is the "Spring Festival Gala" activity day in the Oriental Selection Live Broadcast Room. Dong Yuhui, who has not appeared in the Dongfang Selection live broadcast room for a long time, appeared and shook hands with the anchors one by one. When the host recited the New Year blessings, perhaps it was joy, perhaps it was pressure, and Dong Yuhui cried emotionally. Yu Minhong also said, "Because of everyone, I can stick to my job." ”
In the past two months, Dongfang Selection has frequently appeared on hot searches, and the pressure is indeed not small. Now Yu Minhong is solving the problem of "people", and only by doing a good job in team management can he lead Dongfang Selection to find more growth and tell a new story.
The header picture of this article**Yu Yu gossip WeChat***