Oriental Selection sells memberships for 199 yuan/year. Who is buying it?

Recently, the "Selected Members" of Oriental Selection was officially launched. So, what are the reasons behind Oriental Selection's increased investment in paid membership business? Why does Oriental Selection emphasize the implementation through its own APP? Let's take a look at the author's analysis and interpretation.

Oriental Selection, the first! Became the first live broadcast organization to create paid membership!

On October 17, the official account of Oriental Selection posted a message: "Oriental Selection App" selected members are officially launched!

The link to "Selected Members First Release" can be seen in a prominent position on the Dongfang Selection App's homepage and the screen. Selected members cost 199 yuan per year, and Dongfang Selection said that "you can save up to 12,000 yuan a year by becoming a 'Selected Member'". If a user purchases a membership and does not enjoy the full 199 yuan discount within a year, Dongfang Selection will refund the remaining card fee in cash or use it to deduct the next year's membership fee.

In fact, as early as October 13, there was news that Oriental Selection had launched internal App paid membership testing, but it was unexpected that it would come so soon.

Image source: Internet

Priced at 199 yuan/year, would you buy it?

A single stone can cause a thousand ripples, and Oriental Selection has once again reached the top of public opinion. The reason is: Oriental Selection has become the first live broadcast organization to create paid memberships!

It is obvious that Oriental Selection's intention is to transform Douyin's traffic into the private traffic of the Oriental Selection platform and to maintain old users through a membership system. The launch of paid membership this time is a test of the platform's user stickiness and product service capabilities.

So, what is Yu Minhong's confidence in getting users to pay? What is so special about the membership model of Oriental Selection? What is its prospect? Why does it emphasize self-operation? What is Oriental Selection's ambition?

Let’s find out today.

1. The confidence of Oriental Selection

The fact that Oriental Selection became the first live broadcast organization to launch a paid membership system was not groundless or a temporary whim.

As early as January this year, Oriental Selection CEO Sun Dongxu proposed to build a paid membership system, and in a live broadcast on July 19, he reiterated that Oriental Selection would establish a membership service system in the future.

Now that we have a goal, where is the confidence?

In my opinion, there are mainly the following aspects.

1) High-quality content: During the live streaming process, Oriental Selection not only recommends high-quality products, but also provides valuable content output through knowledge sharing and interactive sessions.

A representative example is Dong Yuhui, who focuses on recommending agricultural and sideline products and daily necessities. He uses his knowledge of literature and history, combined with his understanding of the products, to provide consumers with product recommendations with cultural connotations through vivid stories.

These content-rich live broadcasts provide more added value to viewers, which helps to enhance user stickiness and make viewers willing to pay for them.

2) Huge user base: Oriental Selection has attracted a large audience through its content advantages.

According to its financial report for fiscal year 2023, as of May 31, the number of people following Oriental Selection on Douyin reached 41.8 million, and the number of fans increasing by about 5,000 per day, which laid the foundation for the launch of its paid membership system.

Only when the number of viewers reaches a certain scale can the paid membership model have sufficient audience support.

3) Brand influence: Dongfang Zhenxuan has established a good brand influence in the market through its successful live streaming sales model.

As of October 14, the GMV of Oriental Selection on Douyin alone exceeded 50 million. The sales data was relatively stable, and it still maintained the power of a leading live-streaming e-commerce organization.

Moreover, through fans' evaluations and suggestions for improvement of live broadcasts and products, the brand influence of Oriental Selection has been objectively promoted, which also makes consumers have higher trust and acceptance of the paid membership services it provides.

4) Supply chain advantages: Oriental Selection is also actively building its own supply chain system.

For example, in January, it invested 17.52 million yuan to expand its own sausage factory, cooperated with SF Express/JD Logistics to establish 20 self-operated product warehouses, the supply chain and product teams accounted for more than 31% of the total number of people, and currently has 155 self-operated products.

According to data from the 2023 fiscal year, revenue from self-operated products has exceeded 2.6 billion yuan, accounting for 58% of total revenue.

All of the above give Oriental Selection certain advantages in product selection, and it can provide some exclusive or high-quality products to enhance the value of paid membership.

5) Strong operational capabilities: The Oriental Selection Team has rich experience and professional skills in live broadcast operations.

In terms of the live broadcast team, the Douyin platform's six major live broadcast room matrices and its top first- and second-tier anchors are evenly distributed; in terms of personnel ratio, the total number of self-operated products and live broadcast teams has reached 1,103 people, and recruitment work has also been started in terms of member operations.

Therefore, we also have the ability to effectively promote and operate the paid membership system and attract more viewers to become paying members.

2. Oriental Selection

The membership system is nothing new, and domestic consumers have long since changed from the previous "everything is free" to today's "willing to pay for better services". Therefore, companies at home and abroad are also promoting their own paid memberships in a timely manner.

The more famous overseas companies are Costco and Walmart, while in China, the two giants "Cats and Dogs" are more distinctive.

1. Costco Membership

Introduction: Costco adopts an annual membership system, charging an annual membership fee of 299 yuan in China, which can be said to be very cost-effective, and paid members enjoy 9 exclusive benefits.

Features: Costco selects about 3,800 SKUs, and sells goods in large packages and large specifications. The small but fine SKUs ensure the sales and purchase volume of a single SKU. This gives Costco better bargaining power when negotiating with suppliers, and can bring greater concessions to members at a cheap purchase price.

Advantages: The core of its model is to attract customer loyalty through high-quality goods and services, and to use the ultimate cost-effectiveness to attract consumers to join as members. As a result, the opening of the first store in Shanghai was very popular.

As the number of members increases and sales volume grows, Costco's bargaining power becomes stronger, and it is able to provide more high-quality and low-priced goods. Some of Costco's products are even 30%-60% lower than the market price, thereby attracting more members, ultimately forming a virtuous circle and achieving viral expansion.

2. Sam's Club

Introduction: Sam's Club is mainly operated on a membership basis. Members need to purchase membership cards from merchants to obtain shopping rights. There are two types of membership cards: ordinary cards costing 260 yuan and premium cards costing 680 yuan. The latter enjoys more benefits and discounts.

Features: Sam's Club also selects about 3,500 SKUs, and its merchandise sales are mainly in large batches and full boxes. It is famous for providing a large number of different brands of goods, and is not limited to a certain country or region, so consumers have a wide range of choices.

Advantages: The core of its model is to attract customer loyalty through high-quality goods and services and establish a "loyal customer" business model. Through the large-batch full-case sales model, customers can enjoy lower commodity prices, achieving the goal of efficient operation and reducing logistics costs.

3. JD Plus

Introduction: JD Plus is a membership system launched by JD.com. The annual card is 198 yuan. There are also joint memberships with other brands, such as No.1 Store, Ctrip, Starbucks, etc. Members can enjoy special shopping and service rights, including free shipping on goods in the mall, Super PLUS members will receive 200 yuan worth of Jingdou every month, JD Energy Service, "door-to-door pickup" after-sales service, exclusive member gift packages, etc.

Features: JD Plus membership is consumption-oriented, that is, the more you consume, the more discounts you get, and the JD Beans have currency attributes.

Advantages: By becoming a JD Plus member, consumers can enjoy more services and more discounts, while improving the convenience of shopping. Cooperation with third parties can also motivate consumers.

4. Tmall 88VIP

Introduction: Tmall 88VIP is a membership system for users to enjoy shopping discounts and multiple privileged services. The price is generally 888 yuan/year, and users with a Taobao score of 1,000 points only need 88 yuan/year. After activation, you can enjoy membership rights and activities on platforms such as Youku, Ele.me, and Xiami Music, as well as a 5% discount on shopping at Tmall Supermarket and Tmall International Direct Sales.

Features: Tmall 88VIP manages users in different levels through the points system and membership system, and can provide different services to customers at different levels. At the same time, points can also be exchanged for various coupons and gifts to increase user loyalty and interactivity.

Advantages: There are many cooperation platforms, covering food, clothing, housing, transportation and daily necessities.

At present, the scope of paid membership of Oriental Selection does not exceed the current popular membership system.

However, Oriental Selection has stated that more activities will be exclusive to its own app, and the sales method will be different from Douyin. Moreover, its own products mainly complete user conversion by providing high-quality content, high quality and high unit price.

Therefore, it is highly likely that Oriental Selection will follow the path of Sam's Club.

But in the final analysis, Oriental Selection and Sam are on different tracks.

The former is a live broadcast organization, while the latter is warehouse-style retail. The two have certain similarities in terms of membership systems, but whether they have specific prospects requires consideration of multiple factors.

Dongfang Zhenxuan has a large traffic advantage in the field of live streaming, with a huge number of fans and high loyalty, which is its basic base and biggest advantage. Therefore, if Dongfang Zhenxuan can serve its existing users well and form a demonstration effect, then the number of its users and even members will achieve a second explosion.

Sam's Club has a long-term advantage in the supply chain, as mentioned above, with efficient operations and low logistics costs. If Oriental Selection can learn from and integrate the model of Sam's Club and innovate with its own advantages, then its membership system will also have certain advantages, but this will take time to make up.

However, the success of a membership system also needs to consider other factors, such as membership size, member activity, member retention rate, member conversion rate, etc.

If Oriental Selection’s membership system cannot effectively attract and retain members, or cannot provide members with competitive offers and services, then its membership system will be limited.

In addition, there are differences between Oriental Selection and Sam's Club in terms of market positioning, product selection, service experience, etc.

Oriental Selection focuses on agricultural products and food, focusing on quality and differentiation, while Sam's Club focuses on daily necessities. This requires Oriental Selection to create a competitive membership system based on its own characteristics and market demand.

To sum up, whether Oriental Selection’s membership system has prospects requires consideration of the comprehensive impact of multiple factors, including traffic advantages, brand influence, market competition, operational capabilities, etc.

If Oriental Selection can leverage its own advantages, effectively promote and operate its membership system, and continuously optimize member rights and services, then its membership system will have a fertile soil for survival.

3. Oriental Selection’s Persistence

In addition to building a paid membership system, CEO Sun Dongxu also emphasized that it must be achieved through self-operated apps.

Some products and features are even exclusive to the App!

So why should we highlight our own apps?

Speaking of this, we have to mention the ban on the Douyin version of Oriental Selection in the middle of this year.

Although Oriental Selection had plans to build its own system before, I believe this incident has made it feel more urgent, including attempts at WeChat mini-programs, JD.com/Tmall stores, and Taobao Live.

There are many benefits to building your own app.

1. Improve user experience: Self-built apps can provide a more personalized platform, where Oriental Selection can provide more convenient, fast and personalized services, thereby improving user experience.
2. Increase user stickiness: By providing more marketing and promotion opportunities in the App, Oriental Selection can more flexibly formulate and implement various marketing activities to increase user stickiness. At the same time, these activities can also help improve brand awareness and user loyalty.
3. Improve operational efficiency: Self-built apps can more conveniently collect user data, conduct data analysis and business insights, thereby helping Oriental Selection better understand user needs, optimize operational strategies, and improve operational efficiency.
4. Build an independent brand image: By building its own app, Oriental Selection can better spread its brand philosophy and values ​​and build an independent brand image. At the same time, this can also enhance users' awareness and recognition of the brand.
5. Build private domain traffic: Building your own app helps build private domain traffic, which means that Oriental Selection can better control its own traffic resources, reduce its dependence on third-party platforms, and improve profitability.

4. The ambition of Oriental Selection

By building its own app and creating a paid membership system, the "Oriental Universe" is about to emerge.

In this universe, Oriental Selection does not need to rely on others. It can control rights, preferential subsidies, broadcast time, consumption data, and of course the most important income, etc.!

Creating paid membership is not only to improve user experience, increase user stickiness and brand advantages, but also to enhance user trust and dependence, expand business scope, improve service quality and efficiency, reduce marketing costs, and build a cultural platform, thereby further extending commercialization.

Creating its own app is a test to extend from the public domain traffic pool to the private domain traffic. Through its own app, Dongfang Zhenxuan can obtain more data and improve the user experience. In addition, Dongfang Zhenxuan can also gradually guide fans to its own platform through the app to achieve more refined operations and sales conversion.

However, we also need to remind Dongfang Zhenxuan that self-operation requires more manpower and resources, and without the platform's traffic guarantee, it will also face the situation of poor conversion, and Dongfang Zhenxuan needs to be prepared. In addition, Dongfang Zhenxuan still has a gap with other brands in terms of product SKU, supply chain management, pricing, etc.

Whether ambitions can be realized requires not only courage and determination, but also strength!

Author: Huanghe understands operations, WeChat public account: Huanghe understands operations