Home Tech Peripheral丨Keep Iteration: The business model is beginning to take shape, and a...

Peripheral丨Keep Iteration: The business model is beginning to take shape, and a “Li Jiaqi” is needed

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Tencent News “Periphery” Qi’an Keep, which started as a mobile fitness tool, has been officially launched in February 2015. Almost every round of financing is completed, it can push the financing amount and company valuation of the vertical field to a high point. Keep’s development process can be roughly divided into three stages: mobile fitness tools, a new generation of sports brands, and sports social platforms. After 6 years of development, the scale of Keep’s users has reached 300 million, and more than 6 million people sweat on Keep every day, with 40 million monthly active users. This unicorn, which is valued at US$2 billion and is at the forefront of the industry, has frequently reported IPO trends since 2021. When asked about the listing schedule, Keep is reluctant to respond more, but in the latest report, Keep will submit a prospectus to the SEC at the end of this month at the earliest. The listing time is as early as July, or it may be delayed to November. . According to media reports, Keep’s founder and CEO Wang Ning and other management expect Keep to go public in 2021 at the earliest and 2022 at the latest. Since its birth, the most questioned question for Keep is, what is the profit model? In the past few years, Keep has been exploring a viable commercialization path. At the strategy and new product launch conference on April 21, Keep launched the App 7.0 version, which further clarified the next strategic direction, “quality content, sports technology”. It is not difficult to see that Keep’s exploration of commercialization is beginning to bear fruit. From 1.0 To 3.0 , Keep Groping From payment for knowledge to brand creation, and from online to offline consumption scenarios, every step of Keep’s business iteration seems logical to follow. Keepland is not a successful attempt. In 2018, Keep launched the Keepland business and began to lay out offline sports space. The original intention of Keepland was to make an infrastructure for user experience and coaching training to connect the city and parallel to the content connecting the family. But the good times did not last long. Before 2020, Keepland was forced to reduce its business front because of the high offline costs. Coupled with the subsequent impact of the epidemic, Keepland closed its stores in Beijing and Shanghai one after another. Today, Keepland has only 9 stores left in Beijing. In a recent interview with the media, Keep partner and vice president Liu Dong said that Keepland is affected by the epidemic on the one hand, and Keep’s consumer goods business is developing very fast. In contrast, the offline business process will be slower. Keepland will always do it, but it is more stable compared with other businesses. “In the future, Keep will not shrink Keepland’s battle line, nor will it over-expand,” Liu Dong said. The thinking that Keepland brought to the Keep executive team is that a good coach can determine the full class rate and completion rate, how can we bring a good offline experience to the online, so that the restricted scene space is broken by the Internet? In Liu Dong’s view, Keepland can be regarded as an incubator for the online live broadcast business and coaching team, and the cognition generated offline can be amplified through the Internet. Keepland is just a trial and error when Keep is iterating from version 1.0 to version 2.0. Another detour appeared in the way Keep expands to the apparel category. In Keep’s strategic plan, clothing is an extremely important category of consumer goods. Under the industry background at that time, brands such as Li Ning and FILA were making more design-conscious sports life products, all of which were non-standard products. Keep also followed up and tried. The contradiction is that the cornerstone of Keep walking so far is to accurately grasp the needs of users, and products with a sense of design vary from person to person. In addition, Keep faces users directly through online platforms, with a single channel structure and few fault tolerance mechanisms, unlike traditional ones. Brands have distributors and product selection meetings, and their ability to personalize transformation is insufficient. In the end, Keep returns to functional clothing again, choosing relatively standard categories to reduce the user’s decision-making costs. Keep need one Li Jiaqi Catalyzed by the 2020 epidemic, users have further awakened their awareness of exercise, and home fitness has ushered in a turning point in the industry. The share price of American family spinning brand Peloton doubled six times within a year, and its market value soared to US$47 billion; the market value of yoga pants brand Lululemon surpassed Adidas to become the world’s second largest sportswear brand; Keep also enjoyed industry dividends through live fitness courses. Achieve substantial growth in DAU and MAU. In January 2021, Keep completed a new round of US$360 million in Series F financing. According to Liu Dong, this round of financing is mainly invested in live lessons, premium content IP, and intelligent hardware AIoT. This year Keep has no new financing plan for the time being. However, fitness live broadcasts are still in the early stages of development. After the platform has received a large number of new users, the next step is to consider how to retain them and lose users as little as possible. Jingjing Huang, vice president of Keep, hopes to create a team of Keep coaches and become a “Li Jiaqi” in the fitness industry, and to improve the commercial monetization ability of coaches through course fees, advertising, and e-commerce delivery. The proportion of Keep female users has always been greater than that of male users. Previously, the Keep fitness class showed a sense of element, which was not visually friendly for female users. Therefore, Keep decided to create a newer content ecological community, and to enhance the female user experience as one of the starting points. On the one hand, Keep has increased its investment in making official self-made IP content. For example, it has launched three new IP courses focusing on the sports needs of female users, namely “temperament ballet”, “hot sweat yoga”, and “fat burning party”, taking into account users’ different sports foundations, Sports preferences and emotional appeals are comprehensively upgraded in terms of motion design, visual and auditory perception. On the other hand, to promote the content supply of PUGC and brand institutions, users can either follow the official courses of the Keep professional system or follow the training courses for masters. Keep content monetization channels are mainly realized through members and advertisements. When assessing the quality of courses and IP, Keep values ​​the user’s stay time indicator and commercialization performance. At present, some IP courses have been added to Keep member rights. In Huang Jingjing’s view, the commercial value of content can be roughly divided into three levels. The first is to help brands reduce the cost of acquiring customers and connect users with the brand through content, which cannot be achieved by pure advertising bombing and sharing with talents. Secondly, content is the foundation of the platform. By providing users with content with a low learning threshold, it can support a certain membership scale. Third, the content itself can bring brand premiums, solve the “deep alley” problem, and achieve higher gross profit results. The problem is that online courses are Keep’s highest profit margin products, but on short video platforms such as Douyin and Kuaishou, a group of fitness KOLs are growing. They publish free fitness content, which makes it easier to gather fans and develop talents. Bring goods. This is likely to divert users of the Keep platform and affect its mall GMV. Liu Dong said that although Keep’s course presentation format is also a video, it is different from the short video in nature. For the same household, it is not a product to kill time, but a tool with recording functions. The commercialization path shows initial results What Keep, with 300 million users, lacks is not traffic, but the ability to monetize traffic. On March 14 this year, when Adidas announced the establishment of a partnership with Peloton, it mentioned that it would cooperate around Peloton’s high-intensity community attributes. Peloton is taking a road that combines “smart hardware + content”. Its revenue structure consists of equipment (bicycle + treadmill) revenue and subscription content. It will achieve profitability in Q4 2020, with a gross profit margin of 47.6%. The “live course + smart hardware” model of Keep will be available soon, and Peloton is ahead. The industry is curious about Keep. Will it become the next Peloton? Let’s first look at Keep’s revenue composition. It consists of three parts: consumer goods business, advertising business, and membership business, and consumer goods account for more than half, which is higher than the sum of the other two businesses. In 2020, the sales scale of Keep’s consumer products business will exceed one billion, achieving 100% annual growth. The growth of Keep’s consumer products business has not yet reached the ceiling. Currently, e-commerce channels are mainly concentrated on JD.com, Tmall and Keep, but have not yet expanded to other e-commerce channels; Keep can also promote sales growth by establishing live broadcast, community, offline and other distribution channels. Liu Dong told Tencent Technology that three years ago, the scale of Keep’s consumer products was only about 40 million, and three years later, it will reach a scale of 1 billion +, and this growth rate will continue in the future. The realization of consumer products depends on the scale of sales. In contrast, the profit margin of the membership business is higher. Keep has repeatedly released the positive news that the company’s commercialization is progressing smoothly to the outside world. In June 2020, Liu Dong stated that Keep has achieved overall profitability. “The direction of commercialization is very clear, one is sports consumer goods GMV, the other is online services, and ultimately hopes to produce some value-added services in sports solutions.” At this media communication meeting, Liu Dong further explained that the caliber of Keep’s profitability includes the company’s overall operating conditions. Members are high-margin Internet product businesses that can cover Keep’s mid-stage, research and development technology and other cost inputs; and consumer products The eating, wearing, using, and training scenarios covered by the section can increase user repurchase, and currently there are 8 million consumer goods users. For example, users will not buy bicycles repeatedly, but will buy clothing, food and other products many times because of sports. The gross profit of these two parts is higher than that of smart hardware, which is a big increase. This shows that Keep’s business model of membership + advertising + e-commerce is taking shape, and it works right now. But Liu Dong added that whether Keep will continue to make a profit depends on future business plans. The strategy at this stage is to continue to invest. It should be pointed out that among the consumer products that Keep eats, wears, uses, and exercises, GMV has the highest growth rate and share of smart products. The volume of food is small and the sales scale exceeds 100 million. China’s food supply chain market is transparent, and homogeneity is relatively more serious. What Keep can do is to combine food with scenes instead of inventing new products. Jin Yesi, an analyst in the fitness industry, commented that Keep’s monetization model is quite rich. Keep’s membership value-added services are different from other website members, and can form a closed loop of consumption with live lessons, household appliances, and sports consumer goods. (If you are concerned about e-commerce, retail and new consumer brands, welcome to add the author’s WeChat “CQ_Beatles” to communicate. Please note your name, company, and position.)

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