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On July 25, Dongfang Zhenxuan announced that Dong Yuhui would no longer be an employee of the company and that he would acquire Yuhui Tongxing, with a personal stake of 100%. Many people believe that personal IP and large companies must be separated. Is this really the case? Friends who want to understand this issue are recommended to read this article, hoping it will be helpful to everyone.

Dong Yuhui finally left Oriental Selection, and the journey with Hui became a journey alone.

On July 25, Oriental Selection issued an announcement that Dong Yuhui would no longer be an employee of the company and that he had acquired Yuhui Tongxing, with an individual stake of 100%. The decision took effect on the same day.

Later, Yu Minhong published an open letter on his Douyin account and WeChat public account "Old Yu Chat", revealing more details. The most important thing is that Yu Minhong will bear the funds for purchasing Yuhui Tongxing, which means that "the company is a gift to Yuhui." So far, the storm caused by the short essay incident at the end of last year seems to have finally come to an end.

Many people believe that personal IP and large companies must be separated. But in our opinion, whether personal IP should be separated from large companies depends on whether the IP model is compatible with the company model and whether the goals are consistent. Those with the same goals, such as Li Jiaqi and Mei ONE, Simba and Xinxuan, can still be a community of interests. But the business model of Dongfang Zhenxuan from the beginning was contrary to the super IP model.

1. The patterns are different, and breaking up is inevitable

Dong Yuhui is a super IP selected by Oriental. He was born in a specific historical stage when New Oriental was seeking business transformation and Douyin live streaming e-commerce was emphasizing content.

After becoming a super IP, its development path will inevitably follow the path of infinitely magnifying the value of the IP. In this process, the IP itself can have its own interests and choices.

Dong Yuhui wrote in his essay, "Love life, read thousands of books, and see mountains and rivers", which may correspond to daily product promotion, celebrity interviews, and cultural travel. But no matter what you do, maximizing the value of the IP itself is the first priority. In the field of live e-commerce, IP is a channel with high viscosity and large-scale traffic. All goods serve the IP, and the greatest value is created by the IP.

Therefore, the importance of Dong Yuhui to Yuhui Xingxing, which is completely dependent on Dong Yuhui's IP, is self-evident. During the 618 period this year, the Yuhui Xingxing live broadcast room, in which Dong Yuhui was absent, sold up to 50 million in 4 days. On June 28, the Shenzhen special, the live broadcast in which Dong Yuhui participated directly led to sales of 120 million yuan.

Dongfang Zhenxuan's plan for itself was mentioned in its financial report, "Using Dongfang Zhenxuan as a brand, we are committed to becoming an e-commerce platform for China's high-quality agricultural and other products." Simply put, Dongfang Zhenxuan wants to be a self-operated channel brand mainly focusing on agricultural products. What it wants to do is to be a channel business. In the channel business model, "goods" is the core, and people serve goods. It is necessary to do a good job in the supply of goods and fulfillment services, emphasizing more, faster, better and cheaper.

Therefore, Oriental Selection has been building its own supply chain and developing its own APP since 2022.

It seeks suppliers nationwide, promotes its own products, and expands its own sausage factory. In terms of warehousing and logistics, Dongfang Zhenxuan has established its own product warehouses in many cities across the country through cooperation with SF Express and JD.com, and its room temperature delivery covers 99% of the country. Dongfang Zhenxuan has also tried to launch an instant retail business "Hourly Delivery" in Beijing and other regions, and launched more than 50 self-operated products.

Channel business certainly needs IP and traffic, but the premise is that traffic should serve the channel and the goods. This is in tension with the business model of super IP that revolves around IP services.

In Yu Minhong's vision, if there was no Dong Yuhui, Oriental Selection would still sell agricultural products, but it might do it "step by step and with caution."

Dong Yuhui and other New Oriental anchors were once the traffic that Oriental Selection needed. But the day Dong Yuhui became a super IP, the conflict between him and Oriental Selection began to brew. Super IP can certainly bring super traffic, but the traffic generated by a super IP is centered on the IP, not the channel. In other words, super traffic may not always be beneficial to Oriental Selection, and it may also have a counterproductive effect.

Facts have proven many times that a super IP and its distorted force field have an impact on the channel business of Oriental Selection, and this matter is not subject to anyone's personal will.

In the first three trading days after the Xiaozhaowen incident, the share price of Dongfang Zhenxuan fell by 20%. Dong Yuhui resigned yesterday, and the share price of Dongfang Zhenxuan fell by 30% after the opening today, and has now fallen back to the level of mid-June 2022.

Yu Minhong has mentioned more than once in public the impact of public opinion on himself and his company.

In a conversation with Wumart founder Zhang Wenzhong in June, Yu Minhong said that the number of times he was abused, accused, and insulted online this year was "more than in a hundred lifetimes." In yesterday's open letter, he mentioned that no matter which live broadcast room he appeared in the past six months, "he would be intensively attacked." As a result, "the development of both companies has become extremely uncertain, the stock price has fluctuated violently due to external influences, and the company's credibility and reputation have dropped sharply."

Therefore, the separation of Oriental Selection and Super IP is inevitable, it is just a matter of time and method.

It can be seen from the announcement that Yu Minhong made the decision to separate from Dong Yuhui at the end of the fiscal year in March. In the end, Yu Minhong, who had been on the verge of collapse many times and was experienced, also found a relatively decent way to separate.

2. Helpless, both sides suffer

However, from the business logic of people, goods and traffic, this separation may be a lose-lose situation.

Oriental Selection needs a stable source of traffic, and Dong Yuhui also needs Oriental Selection’s supply chain capabilities and product selection capabilities. However, due to the contradictions and tensions between the two parties’ models, he made a helpless choice.

Next, Dong Yuhui's path may be relatively easy. He can follow Hui's path as he wishes, but he needs to supplement his supply chain management capabilities, IP operation capabilities, and corporate governance capabilities.

But he himself is not very willing to engage in live e-commerce, which is also an uncertain factor. Even more difficult is Dongfang Selection, which has the ambition to become an online Costco.

Dongfang Zhenxuan’s goal is clear, but its implementation model, capabilities, and timing are all shortcomings. It wants to be a self-operated channel brand mainly focusing on agricultural products, which is inherently difficult in terms of category, and has a higher test of quality control and logistics. In addition, the supply is scattered and the circulation chain is long.

The rise depends on traffic, and the life and death depends on the supply chain. The channel business with self-operated brands as the core is also a heavy-mode business. Dongfang Zhenxuan built its own supply chain and invested in logistics very early, but these are not its strengths. Its strengths are content and brand, and the brand is also built on content.

Among its current self-operated products, the ones with the highest sales volume shown in the APP are eggs, South American white shrimp, sausages, chicken breasts, etc. At the latest self-operated press conference, it released a number of new summer self-operated products at once, including Oriental Selection self-operated crayfish, sour plum soup, mineral water, summer quilts, T-shirts, new Chinese short sleeves, cooling bras, etc. - these products have become the currency of many channels, and the price competition is extremely fierce. Any vertical channel that pursues the share of its own brand is doing it, such as JD Jingzao, NetEase Yanxuan and even Pangdonglai.

Oriental Selection’s target audience has never been very clear. On a mass platform with limited customer orders like Douyin e-commerce, it wants to emphasize cost-effectiveness, but is often criticized for its high prices.

Without fully consolidating its supply chain capabilities, Dongfang Zhenxuan began to face the common problem of vertical e-commerce - traffic problems. In fact, after Dong Yuhui became a super IP and formed a rift with the original live broadcast channel, Dongfang Zhenxuan's business model has always lacked the link of traffic that is compatible with the model.

Yu Minhong said at the shareholders' meeting on the 26th that he would personally lead the anchors in the future, but the effectiveness remains to be verified.

Douyin e-commerce has passed the traffic explosion period. After the platform's support focus shifted to low prices, commercialization, and shelf e-commerce, it is difficult for Dongfang Zhenxuan to obtain large traffic from Douyin e-commerce and nourish its own self-operated channels. The outlet of live e-commerce only belongs to the bookmaker platforms such as Taobao and Douyin. For merchants and anchors, traffic is like quicksand and needs to be obtained repeatedly. Moreover, the potential energy has passed, and it is difficult for Dongfang Zhenxuan to produce the next Dong Yuhui.

Therefore, what Yu Minhong said during the live broadcast with Zhang Wen Zhong, "Eastern Selection is also a mess now", may not be entirely self-deprecation.

The core of Dongfang Zhenxuan is people, goods and traffic. Without the nourishment of big anchors and large traffic, the differentiated supply chain capabilities can hardly be said to have an absolute advantage. At the same time, there is oversupply and the price competition of e-commerce is extremely fierce. As a self-operated channel brand mainly focusing on agricultural products, Dongfang Zhenxuan will face many challenges in the future, and its value will be re-evaluated by the market.

NetEase Yanxuan, Benlai Life and even Vancl, which once relied on traffic to gain momentum and then faced traffic challenges, will jointly constitute a reference system for the market to evaluate the value of Oriental Selection.

Author: Li Shangyang

Source: WeChat public account "Narrowcast"