Image source @Oriental Selection
Text | Come to New Vision Business
“We are not a live broadcast company, nor a star-making MCN organization, but an agricultural product technology company and cultural communication company.” said Dongxu Sun, CEO of Dongfang Selection.
In just 10 days, New Oriental Online (01797.HK) and Dongfang Selection have experienced a double sky of skyrocketing and slumping, hot discussions and doubts coexisting. Hong Kong stocks opened today (6.30), and the stock price of New Oriental Online fell 48.11% to 18.84 Hong Kong dollars from this month’s high of 33.15 Hong Kong dollars. As of press time, the stock price of New Oriental Online was HK$18.840, up 9.66%, with a total market value of HK$18.8 billion.
Speaking of the recent ups and downs of stocks, Dongxu Sun, CEO of Oriental Selection, said that the secondary market itself is unstable, and there are hot spots and hype factors. But in the final analysis, the overall secondary market is positively related to the company’s business performance, and short-term fluctuations are not within the team’s consideration, but in the long run, the stock price is a result of performance, not a target. Dime, we are still serious about making products.”
Sun Dongxu said that the positioning of Dongfang Selection’s live broadcast room, the future strategic layout of the supply chain and self-operated products, and the denial of the attributes of the star-making MCN organization, “We are not a live broadcast company, nor a star-making MCN organization, but It is an agricultural product technology company and a cultural communication company.” Sun Dongxu said.
01 Treat the ups and downs of core data rationally
In terms of time chain, the bilingual live broadcast of the Dongfang Selection live broadcast room has been carried out for more than six months, but the explosion happened on June 10 without warning.
From the review point of view, neither the internal team nor the background data of the Douyin team can tell a clear event factor, and it is more generalized in “long-term investment, quantitative change causes qualitative change”.
Cicada’s mother data shows that since the live broadcast room of Oriental Selection reached a high of 61.673 million viewers on June 18, it began to enter a downward range. On June 21, the number of viewers dropped to 39.404 million, and sales also increased from 6675.3 on June 16. The high point of 10,000 yuan fell to 35.172 million on the 21st, and the characteristics of hot-spot driving and emotional consumption are obvious.
Regarding the decline in data such as stock price, number of viewers, and sales, Sun Dongxu said that on the one hand, the team has a clear understanding of unexpected popularity, and it will definitely decline after reaching the peak; secondly, the live broadcast room itself is also consciously “braking”, such as The supplier wants to sell 40,000 items, but as a platform, it needs to evaluate the supplier’s production capacity and qualifications, and sell it on the premise of guaranteeing services.
However, during the experience, it was found that many of the books in the live broadcast room were “pre-sale”. For example, “Chinese History Hidden in the Map” will not be shipped until July. A netizen who bought Wuchang rice said that the product is currently on pre-sale, and Dong Yuhui even joked during the sale that “the previous rice has been sold out, and the pre-sold rice is still being hulled.”
In this regard, Sun Dongxu explained that the selection of pre-sale products, including self-operated rice and individual book categories in the mall, is based on the live broadcast room’s strong control over quality and complete supply chain. Because the appeal of some customers is to place orders in advance instead of constantly staring at the live broadcast room to see when the products are on the shelves. For such customers, the Dongfang Selection live broadcast room will choose to pre-sell products with partial standard and strong quality control.
In response to the sharp pullback in the stock price of New Oriental in the past two trading days after the violent rebound last week, analysts believe that this is the behavior of the institution to make full use of market sentiment and the rapid upward trend to cash out, reflecting the overvaluation of the underlying. Ye Shangzhi, chief strategist of First Shanghai Securities, explained that the valuation of New Oriental Online is too expensive, and it remains to be seen whether the transformation is successful.
China Merchants Securities Research Report downgraded New Oriental Online to neutral, because the current valuation is too aggressive. The research report believes that the current valuation of New Oriental Online needs to correspond to a daily average GMV of nearly 30 million yuan and a price-earnings ratio of 35 times for the live streaming business. This extrapolation assumption is too radical, so the rating is downgraded to neutral.
In addition, CITIC Securities reminded that the company still needs to accumulate and verify its supply chain management capabilities. There are still risks of policy changes in the live broadcast e-commerce and education industry, the risk of a decline in the flow of live e-commerce business or an increase in traffic costs, and the loss of traffic due to the loss of the anchor team. risks, as well as reputational risks arising from product quality or quality control issues.
02 Will focus on supply chain and self-operated products
At present, New Oriental is considering building its own supply chain. “There is no way to control the quality without building a supply chain. The products in the live broadcast room are not only rice, noodles, grains and oils, or establish a strict quality audit reward and punishment mechanism like Taobao,” said an industry source. .
In this regard, Sun Dongxu made it clear that he said that in the future, Oriental Selection will focus on supply chain construction and self-operated product cultivation. At present, Dongfang Selection has reached a cooperation with the domestic leading logistics company, and will give priority to the delivery of products in the Dongfang Selection live broadcast room. “The optimization of warehousing, logistics and distribution can greatly improve customer satisfaction, reduce operating costs, and benefit the platform to give more profits to customers and industrial chain links, which is conducive to maintaining the ecologically healthy development of Dongfang’s selected self-operated products.”
As for self-operated products, Sun Dongxu revealed that Dongfang Selection is increasing its investment in self-operated agricultural products. In the future, it will launch 5 to 10 self-operated agricultural products every month. It is hoped that by the end of the year, there will be dozens of models and 100 SKUs within a year.
In the future, the platform will invest in supply chain construction and self-operated products. At present, there is no clear plan for Dongfang Selection. Sun Dongxu said that he needs to wait for the popularity to pass and the data in the live broadcast room to stabilize before making further clear plans. As for the proportion of external chain products and self-operated products in the future, Sun Dongxu said that the core is customer-centric, but in the short term it will still be dominated by external chain products. , and may also try self-operated production in the future.
The quality control problem of external chain products. Recently, Dongfang Selection has been on the hot search again due to product quality problems, including when a customer complained about bad reviews due to steak quality issues. . In this regard, Sun Dongxu said that this is also an important reason why the live broadcast room needs to reach a good cooperative relationship with suppliers. The live broadcast room sells 50 to 60 million goods every day, and it is impossible to do customer service for every item. For this reason, a customer service team of 10,000 people is built Too expensive and not professional enough. In addition, as a selection platform, Dongfang Selection should not undertake the customer service work of all suppliers, which is unreasonable and inefficient, and will seriously affect the customer experience.
As what the live broadcast room can do, Sun Dongxu said, it is to strictly test the wastage rate and after-sales complaint rate of the supplier’s products. If the data is much higher than the industry average, it may not continue to cooperate in the future.
In addition, Sun Dongxu believes that one of the advantages of Dongfang Selecting as a self-operated path is that the investment cost of the platform will not be particularly high, because the brand and sales links that are particularly difficult in the agricultural product industry have been opened up, and the high-cost investment in the cold chain distribution link. It can be solved through cooperation with logistics companies. In the future, the platform will follow the wave of consumption upgrading and the pursuit of quality into agricultural production.
03 The core is the brand of agricultural products, do not make stars and do not pursue the top
What kind of scale will the future Oriental selection live broadcast room be? Is it to be a top-notch like a brother and a sister or a mid-waist?
Regarding this issue, Sun Dongxu said that Oriental Selection is not guided by high profits, because objectively speaking, there may be certain hidden dangers in the quality control and safety of high-profit categories, and different platforms have their own cognitive limitations. Reluctance to do things like this that could put goodwill at risk. And although agricultural products have low profits, they can generate scale through volume and repurchase.
Cicada’s data shows that currently, food and beverages account for the highest proportion of Dongfang’s selection and sales categories, accounting for 42.43%; followed by fresh vegetables and fruits, accounting for 26.35%; the third is books, audio and video, accounting for 10.14%. From the perspective of the industry, Dongfang’s selection of food, fresh products and other products is mainly due to the oligopoly of traffic, and it is more cost-effective to attract low-priced agricultural products. E-commerce products themselves are a combination of profit and traffic products.
From the perspective of the unit price of customers, the unit price of Dongfang’s selection is stable at around 70 yuan, compared to the 130 yuan per customer in the live broadcast room, which is still at a lower position. Zheshang Securities said that this is mainly because it sells fewer high-customer unit-price categories such as cosmetics and 3C home appliances. If the category can be expanded in the future, there is a large room for improvement in the unit price.
In addition, according to the data of Cicada Mom, the commission ratio of Oriental selection for different categories and even different products of the same category is also different, ranging from 0%, 10%, 20%, to 35%. In this regard, Sun Dongxu explained that many primary agricultural products have low profits but high cost performance. Therefore, from the perspective of customers and suppliers, the live broadcast room must not only ensure customer satisfaction, but also try to meet the principle of making money for suppliers. .
“At the beginning of New Oriental ‘s transformation, many people are not optimistic about the platform’s live broadcast of agricultural products, saying that agricultural products are very prone to problems, the quality of fresh products is unstable and the profit margin is low, but the transformation of New Oriental cannot be completely considered from the perspective of economic value, but also from the perspective of social responsibility. Consider the problem from an angle,” said Sun Dongxu.
As for the principle of not charging pit fees, Sun Dongxu said that the main reason for this decision is that the essential purpose of suppliers paying pit fees is to increase the probability of product listing and brand promotion, but once the live broadcast room takes this money, It is easy to be “kidnapped”, and the selection of goods cannot be completely made from the perspective of quality.
As for the role of pit fees as the platform’s “streaming”, Sun Dongxu said that “streaming” is an operation method in the live broadcast ecosystem, which is reasonable to a certain extent, but it is not the only method. Oriental Selection still hopes to rely on word of mouth to ferment and spread.
As for the two topics that are currently hotly debated on the Internet, “how much is a six-yuan corn distributed to farmers” and “how much is the share of sales to the anchor”, Sun Dongxu did not respond directly. He said that the incentives for employees are mainly through equity and There are two ways of salary, and Dongfang Selection is not a star-making MCN organization, and its core is the brand of agricultural products. (This article was first published on Titanium Media APP)
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