Oriental Selection becomes popular in the past year.

Author | Hu Miao Editor | Luo Lijuan

June 9th is a significant day for every EAST BUY employee.

On this day last year, the number of fans in EAST BUY ByteDance live broadcast room reached 1 million, marking the "qualitative change" of EAST BUY's online transformation to live streaming and sales. In the following half month, EAST BUY quickly broke through and approached the threshold of 20 million fans, becoming the top anchor for sales on the ByteDance platform.

Now, EAST BUY has been popular for a year.

In this year, EAST BUY changed its name from "EAST BUY Online Technology Holdings Co., Ltd." to "EAST BUY".

It has developed more self-owned products, from the early dozen to the current 126.

It has also expanded its selection team. Currently, its selection team of nearly 200 people is the largest department in the EAST BUY organizational structure. The launch of the selection system has also greatly improved the selection efficiency.

It also launched equity incentives, granting 30.459 million shares of stock awards to 154 eligible participants (grantees).

However, on the other hand, as of the first quarter of 2023, relevant data shows that EAST BUY's traffic and GMV have declined, and there is already a significant gap compared to the peak traffic period.

EAST BUY's stock price has also fallen. At the end of January this year, EAST BUY's stock price reached HKD 75.55 per share, and then fell continuously. As of the Hong Kong stock market closing on June 8th, EAST BUY's stock price was HKD 31.45 per share, and its market value has shrunk by more than 50%.

Regarding the decline in traffic, EAST BUY CEO Sun Dongxu had already estimated it in June last year during a 24-hour dialogue. He said: "It is difficult to sustain such a particularly hot trend because people have aesthetic fatigue."

However, as a listed company and the main carrier of EAST BUY's business transformation, EAST BUY still needs a sustainable commercial answer.

01 A Big Shrimp Taught EAST BUY a Lesson

In this year of popularity, EAST BUY has been in the spotlight, and every move has attracted external attention.

For example, EAST BUY founder Yu Minhong attaches great importance to the reputation of the company, and this live streaming and sales company that has transformed from EAST BUY Online also cherishes its own feathers.

However, the "Wild Shrimp False Advertising Incident" really taught EAST BUY a lesson.

The origin of this incident was that in the early days of popularity, EAST BUY's live broadcast room sold a popular sea-caught shrimp, advertised as 100% wild. A consumer who originally worked in the seafood industry found that this shrimp was actually a farmed shrimp, not a wild shrimp, after checking the information. After complaining for half a year without result, the consumer decided to sue "EAST BUY". This incident quickly sparked heated discussions around "315" this year and even made it to the top of the hot search list.

Image source: Internet

Subsequently, Sun Dongxu and Yu Minhong responded to the matter. Sun Dongxu said: "The shrimp is not EAST BUY's own shrimp. The company appreciates all kinds of criticism and supervision. If there is a problem, we will actively face it and correct it."

At the Yabuli Annual Conference in March of this year, Yu Minhong talked about the big shrimp incident and said: "We recognize this mistake. Why? Because we lack experience, we did not do it intentionally, we admit our mistakes, we make up for our mistakes, and we strengthen our system building capabilities in the future to prevent such errors from occurring as much as possible."

After receiving consumer complaints in July last year, EAST BUY had already removed the product from its shelves. It is reported that EAST BUY has also discussed this matter internally many times. An EAST BUY insider told All-Weather Technology, "As long as one person in our selection team lived by the sea at that time, they would know that 100% wild is impossible."

To some extent, this also reflects that EAST BUY was still immature at that time and did not have the ability to undertake such a huge traffic.

Starting from June 9th last year, EAST BUY boarded the roller coaster of traffic. In just half a month, its ByteDance fans reached the threshold of 20 million. Now, EAST BUY's ByteDance fans have reached 30.27 million.

With traffic comes a huge number of suppliers.

Sun Dongxu told All-Weather Technology last year: "We have only dozens of products for live streaming every day, but we receive thousands of samples. Countless manufacturers hope to cooperate with EAST BUY. They are blocked at the door every day. Many manufacturers' business personnel are downstairs. There are also people who impersonate EAST BUY selection personnel outside to deceive others."

On the other hand, EAST BUY, which became popular in the early days, did not perform "professionally" in product selection.

In the selection process, suppliers fill out forms, the selection team screens them, then sends samples, EAST BUY conducts taste tests, market research, and finally goes live. The whole process takes 2-4 weeks.

Many selection personnel are old employees who have transitioned from EAST BUY's online period, rather than professional product managers. EAST BUY holds several tasting meetings every week, and all employees can join and naturally become product judges.

Even in product display, the early EAST BUY office was filled with temporary shelves.

After the false propaganda incident of big shrimp, EAST BUY also started to update its selection team.

In the past year, the selection team has been the most expanded department within EAST BUY. On BOSS Zhipin, the recruitment demand for product managers is ranked first when searching for "EAST BUY". As of now, EAST BUY's product selection team has grown to nearly 200 people and is still recruiting.

In terms of product selection process, EAST BUY has developed a "Three-Body" system in-house. The process is still the same as before, with suppliers filling out forms in the background and EAST BUY conducting screening, but it has become more standardized than before.

02 Binding Dong Yuhui

Another topic that has been hotly debated around EAST BUY this year is whether they can keep Dong Yuhui.

Dong Yuhui has played an indispensable role in EAST BUY's success.

As a former high school English teacher at EAST BUY Online, Dong Yuhui stepped onto the live broadcast stage with a steak frying pan and Wuchang rice in his hand, and spoke of "Original cutting" and "Romance in the world".

He spent a period of six months with other anchors when no one was watching. Dong Yuhui once said that for a long time, only five or six people watched the live broadcast, two of whom were his parents and two were YOYO's parents. He also experienced a morning without selling a single item. Once he sold more than 70 yuan in one go, but it was Dong Yuhui and YOYO's parents who placed the order.

When the first batch of fans were attracted by his self-deprecating humor and the fact that his face was as big as a steak frying pan and resembled the Terracotta Warriors, EAST BUY's alternative live broadcast style quickly gained popularity.

Even now, compared to other anchors at EAST BUY, Dong Yuhui still has absolute popularity. As of now, Dong Yuhui's ByteDance fans have reached 10.88 million, while the number of fans of other anchors such as Dondon, Mingming, and YOYO is around 1-2 million.

In terms of sales ability, Dong Yuhui also has a higher influence.

Image source: Haitong International Securities Research Report

According to Haitong International Securities statistics, in August-December 2022, Dong Yuhui's live broadcast sessions saw growth in viewership, GMV, new fans, and conversion rates. In December, Dong Yuhui's monthly GMV growth rate reached 55.5% in his live broadcast sessions.

In March of this year, Dong Yuhui's average daily live broadcast viewership was 9.5 million, which has declined compared to last year. However, compared to other anchors, his growth rate in live broadcast viewership reached 31.6%, with an average GMV of 17.45 million, and a growth rate of 35.8%, which is still significantly higher than other anchors.

Unlike the contractual relationship between live broadcast companies and anchors, the income of many sales anchors comes mainly from commission sharing. EAST BUY and its anchors have more of an employer-employee relationship. This has also led to outside attention on Dong Yuhui's income situation, and rumors that he will leave EAST BUY have circulated multiple times. In April of this year, EAST BUY announced that it would grant a total of 30.459 million shares to 154 employees. Based on the closing price of HKD 29 per share on that day, the total value is approximately HKD 8.83 billion.

Among them, Yu Minhong was granted 1.5 million shares, worth approximately HKD 43.5 million; Sun Dongxu was granted 3 million shares, worth approximately HKD 87 million; and EAST BUY CFO Yin Qiang was granted 600,000 shares, worth approximately HKD 17.4 million.

Excluding these three executives, the remaining 151 employees will share 25.359 million shares, worth approximately HKD 735 million. Based on this calculation, each person can receive shares worth approximately HKD 4.87 million.

Industry insiders believe that Dong Yuhui must be on the list of stock incentives, but the announcement did not indicate how many shares he will receive.

However, in February, Dong Yuhui responded to his salary and stock options in a live broadcast, saying that his salary is at the level of group executives and has exceeded his expectations. Yu Minhong also gave him a lot of stock.

Dong Yuhui himself seems to be less concerned about money. In a live broadcast in April, he said that he had rejected endorsements or business opportunities worth more than 10 times 100 million yuan from last year to this year.

In order to "bind" Dong Yuhui, Yu Minhong also publicly made a promise, saying: "EAST BUY is a company whose shares are almost all public, so I don't have the problem of second-generation succession. However, for talents like Dong Yuhui, it is possible to consider whether they can take over in the future."

Dong Yuhui laughed and said nothing.

Not only Dong Yuhui, but EAST BUY also wants to bind more partners.

According to the incentive plan disclosed by EAST BUY earlier, it plans to authorize a limit of approximately 101 million shares, accounting for 10% of the company's issued shares. The share award announced in April is only 3% of the company's issued share capital.

The incentive targets of this plan include company employees, directors, executives, related entities, and service providers.

03 How to Seek New Growth with Declining Traffic

Currently, EAST BUY has six ByteDance live broadcast accounts. The large account has a fan excess rate of over 30 million and is the main battlefield of EAST BUY. In addition, there are five vertical accounts, including "Watching the World," "Beautiful Life," "Self-Operated Products," and "Books," with a total of over 10 million fans.

In 2023, EAST BUY's (large account) traffic and GMV have shown a significant decline.

According to Haitong Securities data, from January to March of this year, EAST BUY's daily GMV fell by 20 million yuan, and the number of viewers fell by 10 million.

Image Source: Haitong Securities "EAST BUY March Summary"

In the period from June to December last year, the GMV of EAST BUY remained above 20 million yuan, and the number of viewers did not drop below 10 million, with a peak of over 25 million.

In comparison, "EAST BUY's Beautiful Life" has made significant improvements.

According to Guolian Securities, based on data from Gray Dolphin, EAST BUY (all matrices) saw a significant increase in GMV revenue from live streaming business on May 27th, with a total GMV of 92.4 million yuan, setting a new record for GMV revenue in 2023. Among them, the GMV of Beautiful Life contributed the most, with a daily GMV revenue of 80 million yuan, accounting for 86.6% of the total daily GMV revenue; the number of viewers also reached a new high in 2023, with 9.71 million people.

Regarding self-operated products, according to EAST BUY's financial report, in the six months ending on November 30, 2022, the total revenue of EAST BUY's self-operated products and live e-commerce division was 1.766 billion yuan, of which the total revenue of self-operated products exceeded 1 billion yuan. The gross profit of the self-operated products and live e-commerce division was 749 million yuan, with a gross profit margin of 42.5%. EAST BUY is also continuously updating its self-operated product categories, with a total of 126 products launched on its "self-operated products" account.

On the other hand, cultural tourism seems to be a new story that EAST BUY wants to tell.

Since last year, EAST BUY has been cooperating with relevant functional departments of various provinces and cities to carry out outdoor special sessions, and has gone to Ningxia, Jiangsu and Zhejiang, the Greater Bay Area, Yunnan and other regions to promote local specialty agricultural products.

At the same time, "EAST BUY Sees the World" is also operating in sync with the special sessions.

In May of this year, EAST BUY held a Shanxi special session in the ancient county of Taiyuan, which attracted a lot of attention. On the first day of the session alone, EAST BUY sold more than 100 Shanxi specialty products, with a total sales of over 75 million yuan.

In the following five days, "See the World" successively live-streamed historical sites in Datong, Shuozhou, Xinzhou, Taiyuan and other places, and sold 54 million yuan worth of local agricultural and cultural tourism products.

The total sales amount of the two accounts is about 130 million yuan.

In the earlier Yunnan special session, "See the World" was led by Dong Yuhui in Lijiang, Yunnan. In just two days, the total sales of Yunnan travel groups and hotel rooms exceeded 50 million yuan.

EAST BUY sells Fenjiu in Shanxi. Image Source: Live Broadcast Screenshot

Recently, including Yu Minhong and Dong Yuhui, the special session team went to Sichuan again, and they will start live streaming in Dujiangyan on the 9th and 10th. On the EAST BUY side, it is stated that in the future, outdoor special sessions will also be held in various provinces and cities at a monthly rhythm. Currently, many places have expressed a strong desire to invite EAST BUY.

Whether it is introducing featured products in outdoor settings, or showcasing tourism products while walking and shopping, perhaps the EAST BUY "knowledge + selection" live streaming model is more suitable.

On the other hand, each session requires the selection of more than 100 representative products in the local area, which is also a great test of EAST BUY's product selection ability. Just like the "fake bird's nest incident" that damaged Ximba's reputation, EAST BUY cannot afford another incident of false advertising.