On May 30, 2019, the first Chinese Internet medical beauty platform, SY.NASDAQ (hereinafter referred to as “Xin Oxygen” or “Company”), which was listed on the market, disclosed its first financial report after listing. Data show that as of March 31, 2019, new oxygen achieved revenue of 206 million yuan, an increase of 81.8% year-on-year; net profit of 45.9 million yuan, an increase of 49.9%. In addition, the company is expected to achieve revenue of 2.6 to 280 million yuan in the second quarter of 2019, a year-on-year increase of 71.05 to 84.21%.
On the day of the earnings announcement, Xinxin’s share price closed up 5.67%, with a total market capitalization of US$1.644 billion.
Since birth in 2014, new oxygen is the darling of capital. In fact, the number of medical beauty service companies established in 2014 is very large, and most of the product forms are also very similar: from the community gathering popularity, to reviewing structured data, helping consumer decision-making, and finally settled on the trading platform. However, with the advantage of taking a small step ahead, the new oxygen has completed a total of 6 rounds of financing before the listing, with a cumulative amount of more than 1.5 billion yuan. In addition to the original Jingwei Venture Capital, there are many well-known enterprises and institutions such as Tencent, as well as BOC International and Sino-Russian Investment Funds (Table 1).
The strong support of capital has enabled Xinxin to maintain its continuous investment in content and technology, and gradually build up the core barriers to expansion and competition. The number of monthly active users (MAU) of the new oxygen mobile terminal increased from 1.08 million in the first quarter of 2018 to 1.93 million in the first quarter of 2019, an increase of 78.7%. The number of paying users also increased from 68,900 in the first quarter of 2018 to 127,300 in the first quarter of 2019, an increase of 84.9%.
What is the steady growth in revenue, net profit and number of users supporting new oxygen?
The secret of independence: the beauty diary builds a “chain of trust”
As a community-based product in the vertical field and a medical and beauty e-commerce platform, New Oxygen is connected to plastic surgery service providers and consumers. One of the core business is the diversion of plastic surgery institutions.
Due to the low threshold, medical and aesthetic institutions have experienced barbaric growth in recent years. There are about 10,000 medical and beauty institutions in the country, the industry is very scattered, and the operation is not standardized and transparent. The performance is uneven, the medical accidents are frequent, the quality of pharmaceutical products is high and low. The advantages and disadvantages are difficult to distinguish, the aesthetic level of doctors and consumers is not high, which leads to the problem of plastic surgery, which requires more money to repair treatment, which makes it difficult for consumers to judge which institution and doctors are trustworthy. This has formed two major pain points in the current plastic surgery industry: the lack of brand influence and the lack of trust in consumers.
These industry problems have made many plastic surgery institutions simply and simply rush to spend money directly to buy users, online beauty salons to promote promotion, advertising, online search engine launch, O2O launch and other comprehensive network. In this mode of attracting customers, the average customer cost of medical and beauty institutions accounts for 25% of income. According to statistics from Frost and Sullivan, in 2018, the total expenditure of medical institutions was about 31.3 billion yuan. Obviously, this part of the expenditure will ultimately be paid for by consumers.
From the perspective of consumers, the opacity of the industry is not standardized, which leads to a large number of potential consumers being on the sidelines. Promotion of information and discounts, etc. have little impact on the medical and aesthetic consumption decisions of these consumers.
Therefore, the new oxygen established the evaluation of plastic surgery institutions with the “beautiful diary” as the core. Just like the food evaluation of the public comment network, it became an important decision reference for users to understand and choose plastic surgery institutions, and the case of successful people is easier to let new The user establishes trust in a project, a hospital, or a physician.
In the initial stage, due to the particularity of shaping, the number of people who follow and browse may be much larger than the number of people posting and participating in the discussion. Therefore, the new oxygen is relatively radical in content operation, and the active PGC translates the cosmetic diary of the Korean Plastic Forum and the original professional medical beauty information, which is distributed through various social platforms. After that, I planned a free plastic surgery activity to encourage the senior face-lifting of the forum diving to know the UGC contribution. After accumulating a certain amount of “beautiful diary”, the new oxygen guides users to share the plastic surgery experience in the form of diary through operation and light incentives (such as rewards and recommended traffic support) to help users discover, evaluate and book medical beauty services. . However, due to the active operation of the company’s content, some consumers believe that the diary is a free childcare benefit. Despite these doubts, there are still more and more consumers who are accepting the practice of sharing plastic surgery experience, and there is also a great need for interaction.
New oxygen helps users and organizations build initial trust through reviews with real transaction records and a large amount of user feedback. According to Frost & Sullivan statistics, New Oxygen has the largest library of medical and vertical vertical content in the country, including short videos, live broadcasts, articles and photos. According to the company’s disclosure, as of the end of 2018, the “beautiful diary” of the platform has exceeded 2 million; in 2018, the average daily information consultation of platform users and medical service institutions reached 284,400, an increase of 79.6 compared with 160,600 in 2017. %.
Nowadays, “Beautiful Diary” has become a magic weapon for new oxygen to conduct user guidance. Through the new oxygen mobile APP, WeChat applet and new oxygen network, and leveraging the domestic social media network for content distribution, the new oxygen realizes the reach of a wider range of users, and attracts potential medical consumers with content. According to the company’s announcement, the content of the new oxygen platform in the fourth quarter of 2018 was more than 240 million readers per month on third-party social media distribution.
The analysis shows that in the past, most of the medical and beauty users searched the official website of the hospital through Baidu and communicated with the consultants. The decision period is usually 3-6 months. The new oxygen through the operation mode of the e-commerce platform, the buyer to do the shopping guide, the team to find the relevant resources, followed by the risk control mechanism such as the first payment guarantee, to promote the user to improve the efficiency of decision-making, the user is likely to place an order after one week of registration .
If the community content ecology is getting better and better, the new oxygen is very likely to grab more budgets from search engines and O2O sites. From the data of the number of monthly users (MAUs), the number of paid users, the number of medical institutions and their renewal rates, the community operation of new oxygen is developing rapidly in a benign direction.
According to the financial report, in the first quarter of 2019, the MAUs of New Oxygen APP increased by 79% year-on-year to 1.92 million; the number of trading users increased by 85% to 130,000 (Figure 1); the number of paid medical institutions was 2,701, compared with 1966 in the same period of last year; The amount of transactions contributed by new oxygen (similar to e-commerce GMV) increased by 68% year-on-year to 690 million yuan; the number of merchants purchasing information services increased by 136% year-on-year to 1,853.
In 2018, the average MAUs of Xinhua APP increased by 42% year-on-year to 14 billion; the number of trading users increased by 105% to 310,000; the number of merchants purchasing information services increased by 52% year-on-year to 3,256; and the renewal rate of paid merchants was as high as 87%.
In general, consumers can obtain reliable, transparent and comprehensive medical and beauty service information and professional knowledge on the new oxygen platform. Combined with the consumer evaluation and experience of the reference platform, it can help them improve decision-making efficiency, and can also make an appointment directly on the platform. The corresponding medical beauty service realizes a one-stop consumption experience.
Full range of support systems: creating a “brand service chain”
After five years of development, the new oxygen has already gathered 35 million users. To know that the total number of Chinese medical and beauty consumers in 2018 is only 20 million, users of new oxygen also include potential consumers who dive on the platform. In the medical and beauty consumers, new oxygen has established a certain popularity, but how to establish service barriers in the depth, so that existing consumers can form a professional and trustworthy position for new oxygen, and deepen their commercial moat. It is a major issue facing new oxygen.
Professionalism is ultimately reflected in the service, and New Oxygen builds brand awareness through three major initiatives.
The first is to provide a full service solution for medical beauty. New Oxygen provides all off-line services, including equipment, healthcare, consulting, design, pharmaceuticals, care products, insurance, and more. This service is not in the store, but is mobile, that is, the new oxygen establishes a central service station, provides service support to the organizations, and the support modules can be combined as needed.
The solution is mainly used in non-surgical projects such as optoelectronics and injection. Photoelectric projects have the characteristics of expensive instruments, fast updates, and difficult to grasp consumer preferences. One device is tens of millions and millions of dollars. It is undoubtedly a great pressure for medical institutions to purchase equipment by themselves. So the new oxygen launched a shared device, the hospital can rent equipment on a per-time or per-day basis, and give all the support. This model not only improves the turnover efficiency of equipment and personnel, but also greatly reduces the operating costs of the hospital.
At the same time, the new oxygen continues to accumulate consumer trust in the brand through standardized services and back-office guarantees. Consumers who want to worry about it, choose the new oxygen self-operated service to get the full process of their services.
The second is to establish a new oxygen school. Recruit medical professionals, evaluate the latest technology and clinical experience, and combine the trends reflected in the new oxygen data, consumer complaints feedback, and the experience of new oxygen in operations, integrated into the curriculum, Train and improve.
In order to support the development of this business, Xinxun recently recruited hundreds of full-time personnel with a medical background in optoelectronics, injection, surgery, medicine, training, consulting, and the main responsibility of the new oxygen central service station. Doctors, medical school curriculum system design, professional information review, rulemaking, etc.
The third is to establish a core doctor’s library, which is to bring together the most market-oriented doctors in the medical and beauty industry. This aspect is to provide more professional services and guidance for platform users; on the other hand, it is to establish a set of doctor training recommendation mechanism, so that doctors entering the professional library can get more referrals of new oxygen.
The core doctor’s library can be seen as a supplement to the new oxygen solution for the full service solution, because the full service solution is mainly for non-surgical items, and the surgical project consumers are more critical of the doctor’s choice, and the willingness to pay is more with the doctor’s Professionalism and popularity are directly proportional.
According to Xin Oxygen, the core doctors’ library will set up promotion and elimination mechanisms, which will be updated frequently to allow medical talents to flow. The evaluation doctor’s scoring indicators include: academic papers, hospital grade and word of mouth, doctors’ mutual evaluation, consumer evaluation, and new oxygen visits.
More importantly, this mechanism will likely form a market-oriented “advanced” channel for doctors in the medical industry. For a large number of doctors who have not yet formed a personal brand, the new oxygen core doctor library model provides them with a market-oriented “upgrade and blame” approach that is different from hospital promotion.
Specifically, past doctors have upgraded their personal brands through the three steps of platform doctor-core doctor-personal IP. In order to get through the three levels, doctors must have a high level of professional ability, but also understand the aesthetics of the public, as well as the combination of aesthetics and surgery, in addition to having a sense of service. To do this requires the help of external forces and long-lasting polishing. New oxygen provides such an environment.
New Oxygen is on the original service level, pulling out self-operated services, brand services, core doctors, and grading services. Its purpose is to acquire users with strong spending power, establish a professional service guarantee and brand positioning among them, and guide the other institutions to follow the improvement of service capabilities of the top institutions to establish a healthy development environment. .
“Medical and beauty market prices and services are becoming more and more reasonable.” New oxygen founder Jin Xing said, “In the past, China’s medical industry did not have any platform to build an effective market. An effective market will have its own mechanism. Under such a mechanism, unreasonable prices and bad institutions will naturally be eliminated.”
At present, the new oxygen platform has attracted 25,514 doctors with qualifications. By the end of 2018, the number of medical service institutions in the new oxygen platform reached 5,600, an increase of 40% year-on-year, of which 4,000 were medical service organizations with a penetration rate of about 40. % (According to Frost & Sullivan data, there are about 10,000 medical institutions in China in 2018) (Figure 2). The increase in the size of the institutions and users has promoted the rapid growth of the platform transaction volume. In 2018, the platform contributed a transaction volume of 2.11 billion yuan, a year-on-year increase of 75.7% (Figure 3). More importantly, the fee-paying rate and retention rate of the resident institutions are higher and the loyalty is high.
The current size of China’s medical and beauty market is 220 billion yuan. Compared with South Korea, there is still 6 times of room for growth. In the future, hundreds of millions of consumers and trillions of markets will be gradually opened. This process requires more quality doctors to support the service, leaving the doctors, platforms and institutions as big as the test.
New Oxygen Technology attracts users with content, communities and services retain users, and a larger user base attracts more medical institutions to enter, while richer content and services further attract more users and achieve higher stickiness, thus forming stronger Network effect. From the perspective of the organization, the medical and beauty institutions reach a wider range of potential customers through the new oxygen platform, and achieve efficient and accurate customer acquisition based on platform-based AI and big data capabilities, as well as access to SaaS services (2B professional software). Leasing use mode), professional training courses, etc. to improve the efficiency of business management. At this point, New Oxygen Technology has built a “content + community + e-commerce” model, effectively connecting users and medical institutions, and creating a one-stop online medical beauty service platform (Figure 4).
Source of profit: information service fee + scheduled service fee
According to the financial report data, the revenue of New Oxygen Technology comes from two major sectors: collecting information service fees and booking service fees from medical and beauty institutions. The information service fee refers to the platform to obtain advertising revenue by displaying the product information (including pictures, videos, links, etc.) of the medical beauty institution. The specific charging mode includes charging a fixed fee according to the daily content display, charging according to the agreed rate, and pressing each social media account. Post an article to charge a fixed fee, etc.; booking service is the user to subscribe to the products and services of the medical beauty institutions through the new oxygen platform, the platform receives a commission based on a certain percentage of the transaction amount, usually about 10%. In addition, the new oxygen platform also launched a “black card membership” service to expand the multi-currency model.
According to the prospectus, the total revenue of new oxygen rose from 49 million yuan in 2016 to 259 million yuan in 2017, and further increased to 617 million yuan in 2018. Its net profit has also been rising all the way. In 2016, it still lost 81.04 million yuan. By 2018, the net profit has reached 55.08 million yuan, an increase of 220% from 17.2 million yuan in 2017. The net profit margin was 8.9%, an increase of 2.3 percentage points year-on-year (Figure 5). Obviously, the company’s revenue and net profit doubled, profitability continued to improve, and gross profit margin continued to improve.
From the perspective of income structure, information services are the main source of income, accounting for nearly 70%. In 2018, the company’s information service revenue increased by 189.1% year-on-year to 420 million yuan, accounting for 67.3% of total revenue, which was nearly 27 percentage points higher than that of 2016; booking service revenue in 2018 increased by 74.7% year-on-year to 200 million yuan. In quarterly terms, the proportion of information services revenue in the fourth quarter of 2018 has increased to 69.4% (Figure 6).
The analysis shows that the new oxygen APP accounted for 84% of the online medical application time, accounting for 33% of the online medical beauty booking turnover. Since the realization of profit in 2017, the new oxygen has achieved a monopoly position in the vertical field, and its advertising market for the medical and aesthetic industry is also growing at a high speed. In 2018, the scale of the investment is 31 billion yuan, and it is expected to reach 79 billion yuan by 2023. How does new oxygen capture a larger market share?
According to industry insiders, the investment of 31 billion yuan in medical beauty is about 18.1 billion yuan. The online segment is further subdivided into a vertical medical service platform including new oxygen, which is about 1.3 billion yuan. In other words, the vertical medical service platform currently accounts for only 7% of online sales, accounting for only 4% of the entire medical market. The new oxygen in 2018 has an annual revenue of about 617 million yuan, which has accounted for about half of the vertical medical platform.
From this point of view, the new oxygen has a limited influence on the entire medical market. Therefore, in order to obtain more budgets in the future, it is necessary to establish a stronger influence and improve the community content ecology for medical institutions and users. Provide greater value. According to Frost & Sullivan’s forecast, by 2023, the vertical website’s share of the market will increase from 7% in 2018 to 25.6%, which is about 12 billion yuan, if the new oxygen is 60% (currently 50) %) is the revenue scale of 7 billion yuan.
Hidden worry: over-reliance on advertising revenue and giants to join the competition
For new oxygen, it remains to be seen whether the future development will be so beautiful. However, at present, its income structure shifts from pre-determined services to information services, which may bring some potential risks to the company.
Medical professionals in the industry said that merchants need to pay the resident fee for entering the new oxygen platform. The platform has a situation similar to Baidu’s bidding ranking. The higher the advertising fee paid by medical institutions, the more traffic will be obtained accordingly. Medical beauty is a profitable industry, and most medical institutions are willing to pay for it, as long as the platform can bring them traffic.
The trick of new oxygen is that it does not have Alipay as an intermediate guarantee link on the trading platform like Taobao. It can make all transactions happen on the platform. Consumers must go to the store to get the corresponding medical and beauty services. It is easy for organizations and users to fail. Platform trading, the platform will not get commissions, so advertising revenue becomes a core source of income that is increasingly dependent on new oxygen.
In addition to startups, the 100 billion-scale medical and beauty market and the extremely low market penetration rate have also attracted the efforts of the US group reviews and Ali Health (Figure 7, Figure 8). During the “Double 11” period in 2017, the sales volume of medical beauty products of Ali Health Platform increased by 520% compared with the previous year. In April 2018, the US delegation commented that the Beauty Division held a conference on the theme of “light medical beauty, new medical beauty, and smart beauty”, indicating that it would provide a safe and secure medical beauty service platform to connect merchants and consumers.
Analyst Chen Qiaozhen believes that the new oxygen is a traffic distribution platform. The advantage is that traffic can be aggregated, the platform information is transparent, users can search effectively, and the merchants on the platform can display the exposure, which solves the information asymmetry between the resource side and the demand side. The problem. “The listing of new oxygen illustrates the prosperity of the medical beauty market. But the Internet dividend is decreasing, and the traffic flow model needs to seek new incremental markets.”
Chen Qiaoqi seems that the future development of the medical beauty platform has three directions, one is to go to the upstream of the industrial chain, self-built clinics; the second is to strengthen the excavation of high-net-worth users in the middle, to do personalized consulting services; or to do medical clinics Information transformation.