Nearly a year after being rumored to be listed, Keep still seems to be preparing for landing on the capital market.
On the one hand, the sports technology company has recently made a wide range of organizational changes aimed at increasing the number of users, increasing revenue and improving organizational efficiency. According to Sina Technology, the organizational restructuring includes the split of RDC (Sports Content Center), the overall relocation of consumer business to Hangzhou, the introduction of CMO (Chief Marketing Officer), etc.; and just two days after this news, Keep announced a rather eye-catching new strategy - its sports space Keepland will cooperate with traditional gyms to launch a "preferred gym". It is reported that Keep plans to expand the "preferred gym" to 100 within the year.
For Keep, it is indeed a good thing to push the original small and beautiful Keepland to a more popular stage, which can not only promote the standardization of the industry, but also add a bright color to the listing of Keep. However, it should be noted that the gym market is still chaotic to this day, and it will undoubtedly take a lot of energy and cost to completely transform the industry, coupled with the strong competition of opponents such as Leke Sports and Super Orangutan, how many chances does Keep have to win?
Image from Keep promotion
Self-operated to cooperative, Keepland "prodigal son back"
Judging from the news revealed by Keep at present, it plans to include all its keepland fitness venues and 10 cooperative stores into the "preferred fitness gyms", and there are currently 19 preferred gyms. It is worth mentioning that Keep adjusted the price of courses in all preferred gyms to 49 yuan / session - which is far lower than the previous price of Keepland, and it is cheaper than the monthly pass of most high-end gyms that start at 100 yuan.
Specific to the operation model, Keep will send a team of professional exercise instructors to the group exercise classrooms of the cooperative gyms for operation, and transform the group exercise classrooms of these gyms into pay-per-use group exercise classes. It is reported that the current keep's cooperative stores cover gym brands including Ogilvy Oxygen Warehouse, Muscle Dog, Yuanli Yueti, Rongma Fitness, etc.
As an online sports technology brand, Keep's previous exploration of offline gyms has not been smooth.
Born in 2018, Keepland is the first attempt at Keep's "Internet + Gym" strategy, and with Keep's long-term reputation in the online fitness community, Keepland has indeed had a unique period of time, and its store range once expanded to Shanghai. But the good times were short-lived, and in 2019, a Keepland on Qingnian Road in Beijing was closed, and stores in the Shanghai area were also closed three times in a row under the heavy blow of the epidemic. By the end of 2021, Keepland had fully shrunk to the Beijing market, its home base, and the results of its external expansion in the past two years had been lost.
In the final analysis, Keepland's initial self-operated big store model did not accurately meet the needs of its customer base - for fitness enthusiasts and Keep fans, the free courses and paid courses on the Keep App are usually enough, while keepland's self-operated stores have fewer points and fees are not cheap, and it is difficult to attract fitness people who are usually busy with work and life to come to high-frequency consumption. As a result, the high maintenance costs incurred by large stores are almost impossible to fill, and if Keep does not change this, Keepland will most likely fail before it goes public.
Now it seems that Keep recognizes the mistakes it made earlier, and the preferred gym is the remedy it has made. On the one hand, this model does not have the disadvantages of pure self-operated expansion, through partners, Keepland can quickly project its influence to major third- and fourth-tier cities, which can alleviate its shortcomings of "not practical enough"; on the other hand, the cooperation model has lower cost requirements, and is also conducive to Keep to develop and promote unified standards, which in turn plays a positive effect on the development of the industry.
Ideally, this is true, but Keep still has to face many tests to achieve this career to the extreme.
Image from Keepland Publicity
300 billion gym cake, how much can Keep nibble?
In recent years, the momentum of vigorous development of the domestic gym market is obvious to all, and the rapid growth of the penetration rate of paid fitness is the best proof. According to the statistical report released by Ai Media Consulting and Zhiyan Consulting, as of 2020, the penetration rate of the domestic paid fitness population has reached 4.9%, and in 2015, this figure was only 0.5%; on the other hand, the market size of China's fitness industry also increased from 272.2 billion yuan in 2018 to 336.2 billion yuan in 2020.
The rapid growth of the market reflects the huge demand for fitness from domestic consumers, but the traditional gym model prevailing in China is actually difficult to match the high consumer demand.
In the traditional model, the gym uses the annual pass and the prepayment of the personal training class project as the main means of profit, but before the expiration of the service period of the annual pass or course, the gym is in a state of high expenditure and no income almost every day, and only the renewal of old customers or the inflow of new customers can allow the gym to maintain cash flow. The final story is exactly the same as the online education industry – the industry that was originally benchmarked by the quality of services and courses has gradually sunk in the whirlpool of cash flow and customer acquisition, and eventually twisted into a pure sales industry.
This is obviously not a good thing, both for the industry and consumers. With the growth of the real estate industry driving rent, water and electricity and other costs are rising, gyms have to introduce more preferential strategies to attract new customers to come to the card, in order to maintain their own cash flow stability, while the user experience of core content such as personal training courses has been left aside; in this case, consumers have to be bothered by card sales every time they work out, and they cannot enjoy excellent service, over time, the renewal rate of the gym will inevitably show a downward trend, and the cash flow fracture has become the sword of Damocles on the boss's head.
In the face of the dilemma, most of the large chain gyms have chosen to resist hard, but occasionally there are players who cannot bear the pressure to raise their hands and surrender, such as Hosa Fitness, an old gym that originated in the 1990s and fell into a storm of store closures, wage arrears, complaints and other storms in 2019, and finally ended with the chairman being listed in the dishonest list and the fitness venue being taken over by other institutions.
While traditional gyms are faltering in the wind and rain, new gyms led by Leke and Super Orangutan are gradually rising, surpassing the former in terms of sound volume with one-to-many, less cost and more efficient group classes. This is certainly due to the national fitness boom during the epidemic, but the assistance of capital is also a key that cannot be ignored. In May last year, Super Orangutan completed hundreds of millions of yuan of Series E financing, and Leke also received a round of investment from the 58 Industry Fund in August last year.
Image from the Official Website of Super Orangutan
Like Luck and Super Orangutan, Keepland is one of the new brands, but its delay due to strategic mistakes has made it a trailer on the track. At present, keepland's strategy of empowering traditional gyms is actually not new, and it has previously won a large number of "partners" by virtue of one-stop empowerment services from design and decoration, recruitment and training to course introduction and data analysis, and has opened more than 600 stores in the past seven years. Can Keep show a stronger brand, support and operational ability than Leke? How many partners will it eventually grab? I'm afraid only time will tell us the answer.
Confusion and exploration on the eve of listing
Of course, no matter how many difficulties and obstacles lie ahead, Keep must continue the offline business and carry it forward. The reason is not hard to imagine - the space left for its online expansion is increasingly being eroded.
The first problem Keep faces is user retention. Although it has achieved success in the early years by targeting the sports small white group and creating social elements, sports, in the final analysis, is not a thing that can make consumers persist for a long time, which also means that the user retention of sports and fitness software such as Keep is much more difficult than short videos or social software. What is even worse is that Keep is mainly "frigid" in terms of content and App design, and fitness tutorials are biased towards instrumentalization, lack of fun and entertainment, and it is difficult to attract users to adhere to punching card fitness for a long time.
Keep, on the other hand, also needs to face competition from the outside. In recent years, hardware manufacturers including Xiaomi and Huawei, as well as UGC video platforms such as Douyin and B Station, have caused a great impact on Keep. The former has the advantage of hardware onboarding scenes, which can be described as a breeze to capture users; the latter has a large number of active fitness creators, who not only do not charge for their output, but also have better entertainment and interactivity. Most importantly, these platforms have a high level of awareness among the general user group, and Keep's content system does not have much advantage compared to it.
Perhaps in order to go public to help run, in recent years Keep has begun to make two preparations, planning to make up for its own shortcomings and find a second growth point at the same time. On the one hand, in order to meet the commercialization needs of brands and reduce operating costs, Keep has begun to increase the price of paid content on the platform in recent years, and has also added a variety of third-party self-made content to free content. In addition, the advertising content on the platform has also increased significantly compared with a few years ago, and has even been complained about by some old users.
Image from Canva Paintable
On the other hand, Keep has also begun to learn from Pelonton, a U.S.-listed company that also focuses on smart fitness, and plans to open up a world in the field of sports consumer goods. According to the data released by Liu Dong, vice president of Keep, keep's consumer goods GMV in 2020 has reached a scale of 1 billion yuan, and the offline consumer goods business has also achieved nearly 300% revenue growth in 2019. Liu Dong believes that relying on consumer goods and online services can completely offset all the costs of Keep.
At present, in addition to the traditional sports peripheral goods such as women's clothing, men's clothing, indoor fitness, outdoor running, yoga meditation, and sports protective gear, the Keep mall has also added new categories such as sports bracelets, health foods, and home intelligence. In terms of product richness, Keep is not inferior to pelonton, and the problem it will solve in the future may only be how to launch its own "Pelonton bicycle" - if there is a similar hit, its profitability is bound to be greatly improved.
In any case, the influx of new opponents and the growing demand of the consumer market are steadily expanding the overall size of the Internet fitness market, so that Keep does not have to spend a lot of effort to educate new users, while having more room to maneuver. In this small world of gradual growth, can Keep play to his advantages as a leader and continue to maintain the momentum of his early years? When it faces the capital market, all this is self-evident.