A year after the F round, Keep pushes the offline gym again, can it work?

On February 18,| sports and fitness brand Keep announced that the company will launch a preferred gymnasium, which plans to expand to 100 in 2022. In addition to settling the Keep professional coaching team and continuing to implement pay-per-view, Keep also plans that the cost of each group exercise class will be reduced to less than 50 yuan.

Just on February 17, Keep was revealed that it was realigning its organizational structure for listing, and the sports content center was split to retain only the middle office, the consumer goods business moved south, and an experienced chief marketing officer was introduced.

Keep only said that the company will make similar "structural adjustments" at least once a year and does not respond to the listing-related news.

It has been more than a year since Keep was first rumored to be preparing to go public, and it has also been more than a year since Keep got a $360 million Series F round of financing from SoftBank, Hillhouse, Tencent, BAI and other well-known institutions, but all parties seem to be in a hurry to liquidate.

Returning to the line, Keep may complete the last piece of the "puzzle" in the field of fitness services. But in 2018, Keep once faced a situation of full-line contraction due to the hasty expansion of offline gyms and other businesses, is the new operating model feasible?

Keep, who is busy making consumer goods

Since the launch of the APP in 2015, keep has quickly achieved the head of the industry with a simple and professional style, and has been firmly in the leading position under the "chasing and blocking" of competitors for many years. In 2020, with the "home economy" and people's emphasis on healthy life, many new users have gathered again.

After winning the F round in January 2021, Keep has said that consumer goods businesses including smart spinning bikes, treadmills, and health foods will be the focus of next commercialization. The company has also previously aimed at the goal of covering the needs of fitness users to "eat, wear and practice", showing its "platform" ambitions.

According to Keep partner Liu Dong, Keep's income mainly comes from the consumer goods business, advertising business and membership business.

Among them, in 2020, the sales of Keep consumer goods were 1 billion yuan, contributing to the main revenue, and the advertising business ranked second, and finally the membership service.

New Consumption Daily observed that in Keep's APP mall, it mainly includes health food, sports equipment, home intelligence, clothing and other major categories, and it is estimated that the overall SKUs can reach tens of thousands, but most of them are OEM goods.

Among them, the health food classification sales mainly snacks and instant porridge noodles are the highest, with the monthly sales of popular explosive models of more than 20,000 yuan; many monthly sales of sports bracelets and counting jump ropes with a price of more than 100 yuan have reached more than 5,000. In 2021, a lot of money was invested in inviting Yi Qianxi and Yang Shuyu to endorse sports equipment and health food respectively.

However, what is quite "distinctive" is that Keep's product evaluation page only shows positive reviews, not bad reviews. After browsing, the New Consumption Daily found that the complaint about the quality of the product occasionally appeared in the comments in the form of "five-star praise".

In the sporadic spit that has been displayed, expensive and low cost performance are the main disadvantages of snack goods. After searching and comparing on Taobao, it is not difficult to find that the same snack in the Keep Tmall store is only half the price of the APP, and the same price from the foundry store is even lower.

In addition, the after-sales service of e-commerce business has also been frequently complained about. On the black cat complaint platform, in addition to the arbitrary deduction of membership renewal fees, complaints around "customer service prevarication", "delay in delivery", "failure to implement seven days without reason to return" and other issues also account for a large part.

Perhaps more tricky than FMCG snacks is the strong competition from Xiaomi and Huawei's sports technology products.

According to the sales data of Double Eleven in 2021, after the promotion began on November 1, Keep treadmills, spinning bicycles, counting jump ropes and other products quickly landed first in Tmall and Jingdong-related categories, and the sales volume of omni-channel half an hour exceeded 10 million, and the performance was not bad.

However, in October 2021, at the Huawei Developer Conference, Zhang Wei, president of Huawei's smart wear and sports health product line, said that Huawei has more than 320 million sports health users worldwide, and the global average monthly active life of related apps has reached 83 million, and Huawei's intelligent hardware has advantages in research and development capabilities, quality control, and data detection.

In contrast, keep APP users have also exceeded 300 million people, but the monthly active users are only 31 million. Although Liu Dong has said that Keep will continue to invest in research and development in intelligent hardware and AI technology, it is "not enough to see" in the face of technology companies such as Xiaomi and Huawei.

Fortunately, Liu Dong has also previously revealed that after deducting online APP expenses and operating costs of the entire company, Keep is still profitable. Perhaps this is one of the main reasons why Keep dares to expand offline gyms today.

How to break through the offline gym?

Fitness is an activity that requires willpower, online punch card only rely on self-awareness drive is difficult to adhere to for a long time, the need for offline fitness environment to stimulate "fighting spirit", while the use of professional fitness equipment demand is also common, so offline gym is an indispensable part of fitness services.

In 2018, Keep opened its first store in Huamao, Beijing, opened two more six months later, and expanded to Shanghai a year later. Unfortunately, gyms are shutting down much faster than opening stores.

It is reported that only 1 year has passed since the opening of a certain offline store in Beijing of Keep, and soon the Shanghai store was also shut down.

In order to be closer to consumers, most gyms are located near commercial centers, corresponding to higher rental space costs. According to media reports, the monthly rent of the previously closed Beijing store is about 40,000-60,000 yuan.

Because there is no traditional gym's annual card recharge model, consumers come and go, so the store fitness classes often need to be booked every night close to saturation to maintain stable operation, and the unit price of the class is generally 70 to 80 yuan. With such "demanding" requirements, there are not many stores that can meet the conditions.

Entering 2020, Keep once shelved the expansion of offline business, reorganized its strategy, and focused on consumer goods, and the offline sports space Keepland will not expand on a large scale until it explores a new business model.

In 2022, with Keep once again announcing the relaunch of offline fitness, Keepland re-entered the field of vision. This return, Keep chose the "group lesson model" of benchmarking competitors super orangutan and Happy Carving.

According to the data, Super Orangutan, founded in 2014, pioneered a gym model with no annual pass, no sales, and only a single charge. Each group class is priced within 65-90 yuan, and if equipment is needed, the price is between 100-130 yuan, and the number of people is often within 20 people. In addition, the group class will also introduce high-quality European and American fitness courses, which once made it an "internet celebrity store".

In 2015, The first store of Lucky opened, launching an innovative model of 99 monthly subscriptions, 24-hour no closing and no sales, which quickly attracted a large number of active users. Offline courses implement about 200 yuan of monthly group classes, the number of people teaching each time is 10 to 20 people, and the store area is smaller, and the venue of about 300 square meters can mostly ensure the effectiveness of the ping under full use.

In this model, Han Wei, founder and CEO of Leke Movement, has publicly revealed that after 6 years of entrepreneurship, through the assistance of digital wisdom middle platform, more than 90% of the partner stores can return the cost in 24 months.

Up to now, Super Orangutan has completed 9 rounds of financing, with a valuation of nearly US$1 billion; Leke has completed 7 financings, and there are many well-known capitals such as Hillhouse, IDG Capital, and PwC Capital. According to the plan, by the end of 2021, the number of stores in the country will reach 1,000.

The continuous success of offline competitors may be the reason why Keep is determined to make efforts offline, and at the same time, the original price of more than 70 yuan of class hours has been further pressed to a lower level than that of competitors.

But the store is not fully self-operated, Keep plans to cooperate with the traditional gym outside the Keepland store, the number of participants is 5-10 people, each session is priced at 49 yuan.

However, for now, the most critical competitiveness of offline stores, in addition to price, courses, and convenience of site selection, is largely related to services.

According to the Meituan APP, among the 9 Keepland Beijing stores that are still open, the reasons for the bad reviews are mainly due to operational problems such as deviations in service quality, lack of guidance, low teaching quality, and poor staff attitudes. The high-quality service experience and cost performance are the reasons why most consumers repurchase.

Perhaps in the near future, the offline "Internet + gym" track will be a new round of service and price tug-of-war.