Oriental Selection is rushing to test "low price and high quality"

The two-year anniversary of Oriental Selection has once again been pushed to the forefront because of its "howling" live broadcast. In the context of the rise of cost-effective consumption, "low price and high quality" is the main theme of the current e-commerce industry, and Oriental Selection is also taking this big test.

On June 9, 2022, Dong Yuhui's bilingual live broadcast of steak sales went viral on major platforms. With overwhelming traffic pouring into the Oriental Selection live broadcast room, Dong Yuhui opened up a new track for knowledge-based live broadcasts and became a popular top-selling anchor, while also helping New Oriental and its teachers, who were in a difficult transformation period, to successfully "re-employ".

However, Oriental Selection, which is about to celebrate its second anniversary, has been pushed to the forefront again because of its "howling" live broadcast. Recently, New Oriental founder Yu Minhong did not hesitate to comment on Oriental Selection as "a mess" during a live broadcast with Wumart founder Zhang Wenzhong. The related topic quickly became a hot search, and Oriental Selection's market value evaporated by about HK$2.6 billion in two trading days.

In fact, excluding the accident caused by Yu Minhong's self-deprecation, the current situation of the Dongfang Zhenxuan live broadcast room is already very different from when it was popular two years ago. The reasons behind this are not only the problem of "de-Dong Yuhuiization" itself, but also related to the new changes in the field of live broadcast e-commerce.

1. Oriental Selection’s calculations went astray

The fact that Yu Minhong criticized the live broadcast room of Dongfang Zhenxuan in person as "a mess" in the live broadcast room in full view of the public, regardless of the impact, is not unfair at all. Jingzhe Research Institute learned from the third-party data platform "Cicada Mama" that since February 4, the daily sales of Dongfang Zhenxuan's live broadcast room have declined significantly, and in most cases are lower than its average of 10 million to 25 million yuan since the beginning of this year (January 1 to June 7, 2024).

In addition, according to the monthly ranking of influencers on Chanmama, Dongfang Zhenxuan was ranked first in December last year, but since January this year, it has fallen from 4th place to 9th place in April. On the list of influencers on June 1-6, Dongfang Zhenxuan has fallen out of the top 10 and ranked 12th.

Regarding the decline of Oriental Selection, quite a number of netizens believe that this is because after the implementation of "de-Dong Yuhui", Oriental Selection's knowledge-based live broadcast has lost its appeal. It is also for this reason that Yu Minhong gave a "messy" evaluation, and on June 1, the topic "After Dong Yuhui left, the style of Oriental Selection's live broadcast changed" became a hot search.

It is certain that the sudden change in the style of the live broadcast room is the main reason why "Dongfang Zhenxuan" has become a hot search topic, but Yu Minhong's motive for commenting on it as "a mess" is probably not just a problem with the live broadcast format. After all, as the top manager of a company, Yu Minhong can see many problems that the spectators cannot find.

Although the popularity of the Oriental Selection live broadcast room began with Dong Yuhui's bilingual live broadcast, Oriental Selection may never have thought of making Dong Yuhui the core of the live broadcast room, but instead adopted a platform-based development strategy. So after the online hit on June 9, Oriental Selection announced that it was trying to build its own supply chain and vigorously develop its own products. In less than two months, Oriental Selection launched an independent app on August 5.

However, the platform development of Oriental Selection has not been smooth.

In July 2023, the Oriental Selection live broadcast room was shut down for suspected illegal traffic diversion by displaying the QR code of its own app and guiding consumers to its own app to place orders and purchases.

Subsequently, Yu Minhong posted on his personal WeChat public account "Lao Yu Xianhua" that the lively business model built on external platforms is very fragile, and there is still a long way to go to lay a solid foundation for long-term development.

Since then, Dongfang Zhenxuan has started to try multi-platform development, and officially announced its entry into Taobao Live in August last year, and then opened stores on JD.com and Pinduoduo to sell goods. However, Dongfang Zhenxuan's multi-platform development strategy has not made significant progress. In addition to the Taobao store with 5.82 million fans, Dongfang Zhenxuan's JD.com store has only 468,000 followers, and Pinduoduo's Dongfang Zhenxuan flagship store has only 27,000 followers.

In the process of Dongfang Zhenxuan's platform development, Dong Yuhui, as a major contributor, is gradually being removed from the platform. In December last year, the "Little Composition Incident" broke out, triggering an online confrontation between Dong Yuhui's fans and Dongfang Zhenxuan. Afterwards, Dongfang Zhenxuan CEO Sun Dongxu was removed from his position, and Dong Yuhui left the Dongfang Zhenxuan live broadcast room and opened a separate account "Traveling with Hui".

But now it seems that "de-Dong Yuhuiization" does not seem to bring more help to the development of the Oriental Selection Live Broadcast Room.

According to media statistics, from January to March this year, the sales of the Oriental Selection live broadcast room were 557 million yuan, 228 million yuan, and 286 million yuan respectively, while the sales of the "Walking with Hui" live broadcast room were 889 million yuan, 450 million yuan, and 626 million yuan respectively. In addition, on the monthly list of influencers on Chan Mama, "Walking with Hui" has been ranked in the top 3 this year.

Therefore, it is not difficult to see that Dongfang Zhenxuan originally wanted to use the platform development strategy to leverage the traffic of Dong Yuhui and various platforms to do its own business, but after two years of tossing and turning, it found that its calculations were "wrong". The reason is that Dongfang Zhenxuan's platform strategy is too grand at the strategic level, so it is out of the rules of the game of live streaming. So although the goal is clear, it has always been standing still.

2. The awkward period of “head live broadcast room”

The reason why Oriental Selection’s development has stagnated is that it has overlooked a key issue: to this day, the core of live streaming sales is still the live streaming content and products.

In terms of live broadcast, without Dong Yuhui’s Oriental Selection Live Broadcast Room, it is difficult to replicate “knowledge-based live broadcast”.

It should be pointed out that when the Oriental Selection live broadcast room received a huge amount of traffic due to the "knowledge-based live broadcast", in addition to Dong Yuhui himself, other anchors such as Xiaoqi, Yoyo, Dundun, Mingming, etc. also gained a lot of fans with their own charm. However, there is only one Dong Yuhui, and it is difficult for other similar anchors to reach the level of Dong Yuhui in terms of influence.

As for the product level, Oriental Selection has also been in trouble. In June 2022, "Oriental Selection was complained that peaches were moldy and hairy" became a hot search. On the 30th of that month, the China Consumers Association released the "618" consumer rights protection information, and Oriental Selection was named. On March 15, 2023, Oriental Selection's South American white shrimp was mistakenly sold as wild shrimp, which caused heated discussions among netizens. At the same time, Oriental Selection also found that the suppliers involved had problems with short weight and insufficient quantity, and that large shrimp were mixed with small shrimp.

Then, on March 15 this year, after the media reported that several food companies were suspected of violating regulations in producing pork with preserved vegetables, Dongfang Zhenxuan found that the manufacturer of the "Yuhuiyuan pork with preserved vegetables" it was selling was the company involved. Although Dongfang Zhenxuan took the initiative to apologize and refund, a series of quality control problems also exposed that the supply chain that Dongfang Zhenxuan had built for platform development was not reliable.

Combined with the sharp drop in traffic after the "de-Dong Yuhuiization" and the frequent failures in product quality control, the "sudden change in the style of the live broadcast room" of Dongfang Zhenxuan now seems more like a manifestation of "anxiety". Because the live broadcast sales track has also undergone tremendous changes in the past two years.

As the most cutting-edge sales channel in the consumer market, live streaming has always been a barometer of consumer market trends. Since the "Li Jiaqi incident", consumers' demand for "low price and high quality" has continued to increase.

In December last year, CICC published an article titled "In-depth: The rise of cost-effective consumption, high-quality supply promotes demand", which mentioned that cost-effectiveness has become an important new consumption trend, domestic consumers tend to be rational, pay more attention to product quality and utility, and there is a huge demand for high-quality supply.

However, in the field of live streaming e-commerce, it is difficult for leading live streaming studios to strike a balance between low prices and high quality.

As an open sales channel, live streaming does not increase sales costs for merchants. However, the top live streaming rooms participate in it as middlemen, and they want to get a share of it, whether in the form of slot fees or commissions. In addition, when the live streaming rooms of top anchors participate in live streaming, they often excessively pursue low prices and ignore the rationality of product prices, which has a negative impact on merchants.

Nowadays, looking at major live streaming platforms, popular labels such as "lowest price on the entire network", "exclusive price for live streaming rooms", and "price protection" have become standard features of top live streaming rooms. Because of the "siphon effect" brought by huge traffic, top live streaming rooms often have more bargaining power when selecting products, and with the low price advantage obtained through negotiations with merchants, these top live streaming rooms can continue to attract traffic and consolidate their position.

However, some merchants could not bear the strong demand for low prices from the top live broadcast rooms. According to media reports, in October last year, the live broadcast host Simba sold a mattress originally priced at 20,000 yuan for 4,980 yuan in the live broadcast room, and also gave away a five-zone black and gold mattress and Jin Saozi wok as gifts. The ultra-low price brought a surge in orders to Simba's live broadcast room, but it also triggered protests from offline dealers. In the end, the relevant companies were forced to remove the relevant products online under the pressure of public opinion.

When it becomes increasingly difficult for leading live streaming studios to gain low-price advantages, reducing the frequency of live streaming and gradually fading out of the market has become the choice of most people.

In February this year, Xiao Yangge's personal account fell out of the top 20 of the sales rankings. Subsequently, "Xiao Yangge" announced in a live broadcast that he would reduce the number of live broadcasts this year. Simba, the top anchor of Kuaishou, also revealed in mid-March that he would suspend live broadcasts for two years. In addition, some celebrity anchors have also reduced the frequency of live broadcasts, and the entire live broadcast sales field has a clear trend of de-heading.

3. Livestreaming sales faces the challenge of “low price and high quality”

In the context of the rise of cost-effective consumption, "low price and high quality" is the main theme of the current e-commerce industry. When both users and platforms need "low price and high quality", the top live broadcast rooms as middlemen have become the source of premium, so they are under pressure to be eliminated by the ecosystem, and it is reasonable for Dongfang Selection to fall from the altar.

In fact, the main supply of "low-price and high-quality" products comes from small and medium-sized businesses, because only by stripping off the brand premium can the products on the shelves be priced low enough. As a necessary scene for bringing goods, the live broadcast room still needs the role of the anchor to connect consumers and products. Therefore, e-commerce platforms are increasingly encouraging new merchants to broadcast themselves and supporting mid-level anchors.

For example, in the second half of last year, Taobao Live launched support policies such as "Merchant Super Broadcast", "New Broadcast Plan" and "Eco-Rising Stars Entering Taobao Plan", which helped merchants and anchors grow rapidly during the promotion period in terms of cash, traffic, and off-site investment. In February this year, Taobao Live also launched a full hosting center, providing "nanny-style" operation services from account cold start, official cargo support to marketing planning.

Douyin launched the "Douyin New Merchant Plan" in August last year, providing all-round support policies to new merchants, including zero threshold entry, commission refunds for product card orders, 100% premium subsidies for freight insurance for 7 days, and permanent free use of official data tools. In February this year, the "Douyin New Merchant Plan" added two new rights and interests: "Exclusive support for new merchants' dynamic sales" and "Limited-time subsidies for new merchants' promotional traffic." For merchants who meet the requirements, the Doudian platform will bear the premiums for freight insurance orders within 30 days, and provide traffic coupons of up to 1,000 yuan. Merchants who complete designated cash consumption tasks can also receive a Qianchuan red envelope incentive of up to 5,000 yuan.

Xiaohongshu also launched store broadcasts on the eve of 618 this year, launching new ways of playing such as "store broadcast ranking competition", "store broadcast new star plan", "super store broadcast day" and "store broadcast coupons", covering top merchants, small and medium-sized merchants and new merchants. It is reported that during the 618 period, Xiaohongshu will also rank the live broadcast rooms based on factors such as transaction amount, number of transactions, and audience stay time, and publish Xiaohongshu's 618 brand list and store list.

It is worth mentioning that while major platforms are reducing the cost of live streaming sales and maintaining the platform’s pricing power, they are also vigorously managing inferior products.

In February this year, Douyin E-commerce released a data report titled "Platform Governance in This Year", which showed that more than 90 million yuan of special sampling funds were invested in 2023, and more than 150,000 unqualified products were intercepted. For hot-selling categories such as flowers, oysters, and hairy crabs, the platform launched official quality control standards, conducted pre-warehouse inspections, and sampled more than 30 million items in total.

The "2023 Taobao Live Security and Compliance Governance Report" released by Taobao on April 11 showed that last year the platform held more than 10,000 live broadcasts targeting counterfeit goods and successfully cleared out about 600 anchors. In terms of consumer quality assurance, it invested 10 million yuan and conducted random inspections on more than 6,000 products.

In addition, Taobao has dealt with 240,000 live broadcast rooms in response to false advertising, involving 55,000 anchors, and has also dealt with nearly 1.7 million live broadcasts in response to various risks.

Judging from the industry trend, the live streaming sales track has entered the deep water zone. Facing the core goal of "low price and high quality", e-commerce platforms will actively allocate resources to small and medium-sized businesses and mid-level anchors to reduce the redundant costs within the live streaming sales ecosystem. In the future, live streaming e-commerce will also enter a two-way "improvement" stage from content to products.

In the ever-expanding and accelerating live streaming sales track, small and medium-sized businesses and mid-level anchors still have the opportunity to seize the right development opportunities. However, for the "platform-based" live streaming rooms that "take advantage of traffic" for their own purposes, as redundancy in the ecological chain, there may not be much room for development.

Author: Cheng Yu