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among the many apprentices who want to become the "chinese version of sam", oriental selection is another important player after hema. however, hema is no longer obsessed with being the chinese version of sam, and oriental selection is accelerating its layout.

recently, yu minhong finally took a small step to "match sam". an insider from new oriental said,inside the north building of new oriental's headquarters in haidian district, beijing, oriental selection's smart retail cabinets have appeared.

source: provided by interviewee

according to interviewees, all products sold in smart retail cabinets are oriental selection’s self-operated products. like the smart convenience cabinets on the market, users need to scan the qr code to place an order through wechat or alipay, and then they can open the door and get the purchased goods. this is also an important step taken by oriental selection towards the sam model after launching paid membership and hourly delivery services, which means that oriental selection has begun to test the establishment of offline retail.

hidden behind the smart convenience cabinet is yu minhong’s “sam’s dream”.at the recent shareholders' meeting, yu minhong said that oriental selection will rely on new oriental's approximately 800 teaching points to build oriental selection member stores. in the subsequent financial report for fiscal year 2024, yu minhong further explained that new oriental will add offline smart vending cabinets and other channels to promote self-operated products in new oriental's offline outlets.

oriental selection is committed to becoming the chinese version of sam step by step. sam's expansion path in china is: first establish offline membership supermarkets, and then launch e-commerce business. oriental selection takes the opposite path, first developing online e-commerce business and then building offline membership stores.

however, dongfang selection has not yet become sam, but sam is "blocking" the path of dongfang selection.

when oriental selection was trying to become the "online version of sam's," sam's e-commerce business was already booming. in fiscal year 2023, sam's club achieved sales of approximately 80 billion yuan in china, of which online sales accounted for approximately 47%, or approximately 37.6 billion yuan in online sales. walmart cfo rainey also said that in the first half of 2024, about half of sam’s sales growth in china will come from online channels.

sam’s ambitions in the e-commerce field are huge. 36 krypton reported that walmart china recently completed a management adjustment, and the e-commerce business of sam’s club stores was transferred to sam china cmo (chief purchasing officer) zhang qing to report. after this adjustment, sam's e-commerce business in china will be further opened up. in the new quarter financial report, sam also stated that it will accelerate the growth of e-commerce sales and expand omni-channel and other plans.

sam’s online channels account for nearly half of its revenue. behind this is the fact that sam has captured a large number of middle-class people who consume online. the latest data report shows that china has 257 million new middle-class people. the popularity of sam's in the e-commerce field has also put dongfang selection, which is trying to become an "online sam's", at a disadvantage.

this disadvantage directly points to the competition for the middle class group. sam, who has always been positioned as a middle-class family, has begun to invade the target group of oriental selection.

the audience of oriental selection is mainly young white-collar workers and senior middle-class people in first- and second-tier cities, but sam has already adopted the "one-hour fast delivery" of e-commerce platforms and the "purchasing agency, packaging, and rental membership cards" spontaneously formed by consumers on social platforms. through other forms, it has reached a wider range of consumer groups, including single white-collar workers and other people living alone, as well as exquisite mothers and small families. this middle-class group has gradually become sam's audience.

in addition, young people from small towns and generation z also account for more than 20% of the oriental selection audience. the latter is not sam’s target group in the traditional sense, but sam has completed hunting these groups. sam’s second quarter report disclosed,gen z and millennials accounted for about half of new members in the second quarter, sending a positive signal for future growth of the business.

however, sam is hunting more than just eastern selection. with sam's sinking strategy, some big anchors with "sam dreams", such as simba and xiao yang, are also within sam's sniping range.

in the beginning, yu minhong’s goal was just to be an “online version of sam”.

the first sign that oriental selection is learning from the sam model is the launch of the paid membership system in 2023. after consumers spend 199 yuan per year to become a member, they can enjoy the exclusive benefits of paid membership. paid members are expected to save up to 12,000 yuan a year.

according to "city boundary" estimates,spending at least 100,000 yuan a year on oriental selection's self-operated products can save you 12,000 yuan in discounts.paid members can only use the "oriental selection" app and the "oriental selection member store" mini program.

in january this year, a set of data released by yu minhong showed that the oriental selection app has nearly 200,000 paid members, and the average monthly consumption of members is nearly 800 yuan.based on this calculation, since the launch of paid membership in october 2023, oriental selection has received nearly 39.8 million yuan in membership income in four months; paid members consume approximately 160 million yuan per month, and 200,000 members are estimated to consume 19.2 million yuan a year. billion.

once the profit model of paid membership is launched, oriental selection will take a completely different path from traditional e-commerce. yu minhong’s second move was to enter the hourly delivery business. in april this year, oriental selection launched the hourly delivery service on douyin. according to the latest financial report data, oriental selection has opened 27 front-end distribution warehouses in beijing within one hour, with a membership coverage rate of 73.5% in beijing.

however, yu minhong still has reservations about fully learning sam. at the financial report meeting in january this year, yu minhong bluntly stated that the advantage of oriental selection is online sales, and opening stores on the ground is not an issue that oriental selection needs to consider at this stage, and said that it is impossible to build a large number of offline channels. however, yu minhong also gave an open-ended response, saying that cost and efficiency calculations must be carried out to sell oriental selection products in ground stores.

however, since the first half of 2024, the various crises that have occurred in oriental selection have made yu minhong shake his thoughts.since the first half of the year, many anchors of oriental selection, such as dundun and mingming, have fallen into a crisis of public opinion due to their comments in the live broadcast room. yu minhong also closed the douyin comment area after suffering a lot of online violence. dong yuhui completely left oriental selection, and the stock price of oriental selection also declined. it shrank by 57% during this half-year period.

the most fundamental problem is the decline in profits of oriental selection. in fiscal year 2024, the adjusted net profit of oriental selection's self-operated products and live broadcast e-commerce showed negative growth, falling from 920 million yuan in the previous fiscal year to 710 million yuan, and the gross profit margin also declined. this dropped to 25.9% from 38.2% in the previous fiscal year. the reason for the profit decline points to factors such as sales and marketing expenses, which increased by 174.5% year-on-year to 870 million yuan.

alphabet list had previously analyzed in "yu minhong killed a "return to shake gun"" that after a year of accelerating online layout, sales costs were too high and oriental selection's profits dropped sharply. yu minhong naturally understood that in online channels , douyin brings the greatest benefits to it.

therefore, yu minhong shrunk online channels and suspended taobao live broadcast; at the same time, he bet on offline channels and began to lay out offline channels. oriental selection no longer stops at the "online version of sam", but benchmarks against sam and even surpasses it.on the second day of cutting and walking with hui, yu minhong said at the shareholders' meeting that new oriental will rely on about 800 teaching points to explore a combination of online and offline models to build an oriental select member experience store.

in the 2024 fiscal year financial report, yu minhong further explained that oriental selection will begin to promote offline self-operated products and conduct offline strategic cooperation with new oriental. increase product exposure by adding offline product promotion video advertising spaces and smart vending cabinets in new oriental's offline outlets. it is planned to conduct a pilot project in beijing first and then expand to offline outlets across the country in the future.

with the resignation of dong yuhui, oriental selection is no longer a live broadcast organization that relies on top anchors. live streaming is no longer the core asset of oriental selection. daduoduo data shows that in the past month,the average daily sales of dongfang selection’s douyin main account are 5 million to 7.5 million yuan.

it can be seen that the future focus of oriental selection is the "sam model":member store + front warehouse. sam has about 400 front-end warehouses in china. in the second quarter of this year, sam's hourly e-commerce order volume increased by 28%. data also shows that orders delivered within one hour account for nearly 70% of sam’s e-commerce orders.

the current number of front-end warehouses of oriental selection is 27, and the hourly delivery business cooperates with the douyin platform.whether oriental selection can replicate the miracle of sam's hourly delivery business is also an important part of whether oriental selection can realize the "sam's dream".

in fact, sam’s club’s e-commerce journey in china is not smooth.

according to 36kr, in the early days of sam’s e-commerce business, the procurement team was not very enthusiastic about cooperation. a person close to sam said, “about the end of 2021 and after 2022, as the online growth rate continues to increase, some orders will the online sales of our products are even better than offline, and the cooperation and interaction between internal teams have also improved significantly.”

sam, who entered china in 1996, started its e-commerce business in china in 2010. that year, sam launched its online store. four years later, the sam app mobile client was launched. in july 2015, sam's club entered the third-party platform "xia kitchen market", and sam's online coverage expanded from the city where the offline store is located to nationwide. andy wen, then chief operating officer of sam's club, said that as long as the consumer profile was similar, he would not mind entering other e-commerce platforms.

immediately afterwards, after the cooperation between walmart and jd.com began, sam opened an official flagship store on jd.com and cooperated with “jd daojia” for a “one-hour delivery” service. follow-up,sam's has covered more customer groups through its self-operated e-commerce platform's one-hour fast delivery (front warehouse), next-day city-wide delivery, and nationwide delivery.

it was the instant delivery service that opened up sam's e-commerce business, and sam's e-commerce business took off. in 2017, the number of sam members, who had been in china for 21 years, was still 1 million. as of 2024, sam had developed 4 million members in the chinese market in 8 years.

today, sam’s online channels account for half of its revenue in the chinese market. in fiscal year 2023, sam's club achieved sales of about 80 billion yuan in china, of which online sales were about 37.6 billion yuan.behind this, sam has accurately targeted the consumer needs of the middle class.

the 2024 new middle class insights report released by questmobile shows that as of july 2024, the number of new middle class users in china has reached 257 million. the age structure of the new middle class tends to be younger, mainly due to the participation of the younger generation. people aged 25 to 30 account for nearly 40% and become the main force of the new middle class. in terms of online consumption, the new middle class has shown extremely high activity.

sam's, whose online channels support nearly half of its revenue, and oriental selection, which is positioned as a high-end brand and relies on the middle class, compete for the same group of middle-class consumers who consume online. sam's pursuit of oriental selection is not limited to online channels, but also an invasion of the entire user group.

on the surface, although both sam's and oriental selection are aimed at the middle class, one is for large middle-class families and the other is for a broad range of middle-class groups.

daduoduo data shows that according to the eight major consumer groups, among the fans of oriental selection, cutting-edge white-collar workers, senior middle-class people, and sophisticated mothers are the top three, accounting for 60% in total. from the perspective of regional distribution, it is mainly distributed in third-tier and above cities, accounting for 80% in total. the user profile of sam's club is: middle-class people with an annual income of more than 200,000 yuan, 60% are housewives, and 60% are people aged 26-45.

for a long time in the past, sam's club had an obvious characteristic: big families, daily necessities consumed quickly, and no time for frequent shopping.however, with the popularity of sam’s concept of “purchasing, repackaging, and renting membership cards” on social platforms, sam’s user portraits are changing from the traditional big family. single white-collar workers, mothers, small families, etc. have also become sam’s user portraits. their consistent core is "the pursuit of ultimate cost-effectiveness."

for example, on xiaohongshu, the topic #sampackaging# has nearly 100 million views. the so-called packaging refers to taking the large-package products purchased by sam and then dividing them into individual pieces or selling them in small quantities. under this trend, not only "sam purchasing" has been turned into a business with a monthly income of 100,000 yuan, but "sam packaging" has also been turned into a business. for example, sam earns 300 yuan a day from setting up a stall. behind this is a wide range of people living alone.

this can be seen from the "sam's club supermarket purchasing hourly" that is engaged in sam's purchasing activities on douyin. this is a takeaway store that provides errands and sales services. it is not officially operated by sam. it focuses on "no need to apply for a card, and can deliver nationwide." , the fastest 1-hour home delivery” service, currently has 700,000 fans, and the highest gmv of live broadcasts in the past month is 5 million yuan. from the perspective of purchasing images,the main buyers of sam’s purchasing agents are mainly young white-collar workers, senior middle class, exquisite mothers and generation z, accounting for 80% in total.

and this may also be sam's intention. "pinzhi plsc" pointed out in "why sam doesn't crack down on purchasing agents" that some sam employees said that some sam stores have a cooperative relationship with purchasing agents and will arrange dedicated personnel to deal with purchasing agents. for example, purchasing agents will help digest the sales tasks of the stores.

through purchasing agents and packaging, sam’s consumer groups have radiated to a wider group of people.although these are not sam's target customers, the demand behind these businesses has also contributed to sam's growth.

sam is not only competing with oriental selection for the middle-class groups in first- and second-tier cities. some big anchors who have the dream of "becoming sam and surpassing sam" are also being hunted by sam, especially simba and xiao yang who focus on the sinking market. represent.sam's harvesting scope has begun to expand to third- and fourth-tier cities, and even the middle class in counties.

simba, who spent 2 billion yuan to build the "xinxuan supermarket" in 2020, dreams of "opening the supermarket to sam's, opposite the store, and learning from fat donglai." recently, simba announced that xinxuan supermarket will be re-launched in 2024. simba revealed that it has currently deployed ten warehouses in the country to achieve next-day delivery, and plans to expand the number of warehouses to 50 and even implement a "supermarket as warehouse" model.

xiao yang, the first brother of douyin, who is also entering offline retail, already opened a "xiao yang zhenxuan" supermarket in anhui last year. however, the supermarket model has not been replicated on a large scale.

behind the big anchors is the fan economy, which has traffic and appeal and can quickly attract offline traffic in the early stages. however, brand and supply chain building is a long-term process. and there is not enough time left for the big anchors who are still in the exploratory stage.sam is aggressively moving into sinking markets with consumption potential, seizing the market and occupying the minds of users.

on august 1 this year, walmart’s official recruitment account released a special job fair for sam’s new store in jinjiang, quanzhou, fujian. this is sam’s second sam’s club store in a county-level city after kunshan sam’s. sam is accelerating its layout in second- and third-tier cities. according to incomplete statistics, sam's club stores have been launched in liaobu, dongguan, yuecheng, shaoxing, lucheng, wenzhou and other places.

in addition, sam's purchasing agency system has already spread to third- and fourth-tier cities, bringing potential users to sam, and its influence in the lower-tier market cannot be underestimated. for example, on pinduoduo’s best-selling list of many product categories, sam’s own-brand products regularly break into the top ten, even though these products are not officially operated by sam. recently, there have been media reports that pinduoduo is suspected of cooperating with sam's. this is because pinduoduo has launched a sam's-only section. some sam's products are even labeled with tens of billions of subsidies, but they are not officially operated by sam's. currently, the sam area shows that 3.19 million+ products have been sold.

source: pinduoduo

according to "liya's grass planting notes", a member's mark (sam's own brand) mooncake is not available in the official flagship store of jd.com's sam's club store, but it is available on pinduoduo, and enjoys pinduoduo's tens of billions of subsidies. the price it only costs 147.9 yuan, which is 20.1 yuan cheaper than sam’s own.

although sam denied the rumor of cooperation with pinduoduo, sam is indeed popular in sinking markets.with the expansion strategy of sam's club, the online business centered around offline stores will also radiate to the middle class in the county and even young people in small towns.

compared with the "verbal declarations" of these big anchors, the real-time retail track has recently welcomed a new player. recently, miniso invested rmb 6.3 billion in yonghui supermarket and will become the largest shareholder of yonghui supermarket after the transaction is completed.

however, ye guofu, the founder of miniso, is interested in the "fat donglai model".miniso's latest financial report disclosed that the number of stores in mainland china will reach 4,115 in 2024, of which first- and second-tier stores account for 55%, and third-tier and below stores account for 45%. miniso has also been targeting online channels for a long time. "latepost" reported that miniso launched a new format "24-hour super store" this year, which is positioned as a front-end warehouse and focuses on immediate needs for one-hour delivery. it is currently open out of more than 200 stores.

"sam's model" and "fat donglai model" have become the top trends in the current real-time retail track. with the entry of dongfang selection and ye guofu, a melee about chinese supermarkets is beginning.

references:

"sam china coo changes, e-commerce business shifts to cmo reporting" 36 krypton

"shanghai supermarkets rush to front-end warehouses, sam becomes the "number one player" on the track? 》yiou.com

"2024 new middle class insight report: 257 million new middle class, beijing, shanghai, guangzhou and tianning account for nearly 20%" questmobile

"can simba, who gave up live broadcasting and opened a supermarket, create a second "fat donglai"? 》e-commerce headlines

"pinduoduo opens "sam's club", the 400 million middle class can't sit still" liya's planting notes

"real-time retail trends: meituan opened 800 warehouses to deliver wine and 680 front-end warehouses to deliver fresh food; hema restarted front-end warehouses; miniso entered the game" latepost