How does a company recover from cutting its main artery? East Buy took a full year to answer this question.

The company's last peak was frozen before the "small essay incident" at the end of 2023. In the subsequent months, East Buy's situation deteriorated and hit rock bottom when Dong Yuhui left. Watching the star livestreamer depart, Luo Yonghao routinely criticized his former leader: "If they can still send another super livestreamer to East Buy now, the only explanation is that God has some leverage over Teacher Tie."

Facts proved that God had no leverage, and there was no substitute for the super livestreamer. In the first half of fiscal 2025 (six months ended November 30, 2024), East Buy recorded a net loss of nearly 100 million yuan. In the previous year when Dong Yuhui was still with the company, East Buy achieved a net profit of 160 million yuan.

However, in the overlooked second half of the fiscal year, East Buy quietly crafted a comeback story.

According to Huaxi Securities calculations, East Buy's profit margins over the past four quarters were -8%, -1%, 3%, and 7% respectively. In the second half of fiscal 2025, East Buy gradually adapted to the pain of losing Dong Yuhui, with net profit returning to positive at 44.71 million yuan.

More dramatic than the performance was the stock price movement. On August 19 this year, just before the annual report release, the company's stock experienced a wild swing from a 20% surge to a 20% plunge in a single day.

If not for the sudden rumor about the CEO being investigated, East Buy's stock price might have seized the opportunity to return to pre-"small essay incident" levels.

While cutting the main artery was certainly dramatic, what's more intriguing is how East Buy managed to stop the bleeding and recover in just one year.

**Cutting the Main Artery**

Last July, Dong Yuhui's sudden departure triggered a major earthquake at East Buy, with the stock price plunging 20% in one day and revenue shrinking by 2 billion yuan over the year.

The destructive power of super livestreamers affects both sides, exposing the vulnerability of a people-dependent model. From Wang Yibo's impact on Lehua in the past to Dong Yuhui's effect on East Buy more recently, the industry joke about their value keeps rising—sometimes marriage law indeed works better than contract law.

The departure of the top performer directly created two major holes in East Buy:

First was the 140 million yuan "breakup fee." This amount corresponded to all remaining profits from "Walking with Hui," directly causing administrative expenses to surge 180% in the financial report.

Second was the continued impact on company operations. In the previous fiscal year, East Buy's GMV, revenue, and net profit declined by 40%, 32.7%, and 97.5% year-on-year respectively. The cost of losing the top performer was so devastating that company accountants had to perform additional calculations to "exclude the impact of divested subsidiaries."

East Buy's main business consists of livestream e-commerce and self-operated products, earning commissions and margins respectively, both largely premised on Dong Yuhui's popularity.

After his departure, East Buy's order volume on Douyin nearly halved.

Conversely, the independently established "Walking with Hui" quickly surpassed its former employer in Douyin followers. According to New Douyin data, "Walking with Hui" now achieves average sales of 25-50 million yuan per session, basically 20 times more than East Buy.

However, East Buy actually had two hidden time bombs: dependence on Dong Yuhui was the one that exploded, while dependence on Douyin remains the other still lurking. Therefore, over the past year, East Buy has been intensively doing two things:

(1) Expanding self-operated products to retain more profit margins in the value chain, resulting in a 50% increase in self-operated product SKUs within one year.

In June this year, riding on Huang Zitao's entry into the sanitary pad industry, East Buy launched its own sanitary pad products, selling 180,000 units in two days, followed by a second product the next month, earning both sales and attention. The company's stock price rose 12 points the day before product launch.

(2) Developing sales channels, stopping just short of explicitly declaring "de-Douyin-ization."

During this period, East Buy ventured into Xiaohongshu and Pinduoduo, conducted livestreams on its own APP, managed content communities, and announced plans to spend 100 million yuan promoting memberships, making APP operations the primary task for 2025.

Right after Dong Yuhui left East Buy, self-operated product retail counters were set up in New Oriental buildings, and small stores are being piloted at teaching locations, not necessarily for sales, but to promote memberships to passing parents.

From the results, East Buy's various efforts weren't in vain. In the second half of fiscal 2025 (December 1, 2024 - May 31, 2025), East Buy's continuing operations turned profitable, and excluding contributions from Dong Yuhui's first two months, GMV even increased by 300 million yuan sequentially.

The company's stock price also rose accordingly. In August this year, East Buy's market value once reached a peak of 40 billion yuan, equivalent to one Yonghui Superstores, two RT-Mart stores, and more than thirty "Make Friends" companies.

However, the capital market's favorable attitude wasn't entirely due to the lightweight recovery in performance. More crucially, East Buy had a blessing in disguise, switching to a more valuable track and telling the story that Yu Minhong most wanted to tell.

**From Soft Landing to Hard Landing**

At the end of 2021, during the winter of the education and training industry, East Buy was hastily launched with Yu Minhong personally livestreaming, but only achieved 5 million yuan in GMV. On the same platform, his long-time rival Luo Yonghao's debut performance was 110 million yuan.

Half a year later during the 618 shopping festival, against the backdrop of major livestreamers' collective absence, Dong Yuhui's bilingual livestreaming unexpectedly made East Buy's livestream room popular, propelling him to super-tier status while rescuing New Oriental's stock price from a crash from 199 yuan to 8 yuan.

However, after the successful transformation, the first to pour cold water was Yu Minhong himself. He raised two questions on different occasions: first, business models built on external platforms have strong vulnerability; second, East Buy would not produce another major livestreamer.

Although Dong Yuhui's breakthrough recovered performance and stock price, East Buy's transformation plan deviated slightly. It originally wanted to tell a retail story about a domestic Sam's Club but was inadvertently classified as an MCN agency, and one dependent on super-tier talent at that.

When Ruhan bravely entered the US stock market, the capital market had already shunned MCN business models that dance with risk. Even during the honeymoon period between East Buy and Dong Yuhui, the company's stock price fluctuated dramatically due to his statements multiple times.

Watching Dong Yuhui single-handedly influence most of the company's market value, East Buy's desire to benchmark against Sam's Club became increasingly strong. Fortunately, over the past few years, it has gradually built two basic thresholds by imitating the Sam's Club model.

First is the user entry threshold. Sam's Club annual membership starts at 260 yuan with a renewal rate exceeding 80%, while the premium version costs 680 yuan annually with a renewal rate as high as 92%.

In 2023, East Buy similarly launched a 199 yuan membership card. After nearly two years of effort, paid membership reached 264,200 people, with a first-disclosed renewal rate of only 40%-50%.

Second is the product entry threshold. Sam's Club follows the principle of wide SPU, narrow SKU—many categories but few options within each category. While traditional supermarkets have tens of thousands of SKUs, Sam's Club maintains only 4,000 SKUs, specifically including 40% fresh food, 30% dry goods, and 30% non-food items.

The direct benefit of streamlined SKUs is demand aggregation and volume-based pricing. For example, Sam's Club signs large procurement agreements with wineries or directly acquires them. When the same vintage whisky costs over 1,000 yuan in e-commerce channels, Sam's Club can price it around 500 yuan.

With strong channel bargaining power, there's naturally more confidence in channel customization and private brands. As early as 2022, before East Buy's APP and membership system were launched, self-operated products already contributed over half of livestream sales.

Currently, East Buy has over 700 self-operated SPUs, with self-operated product sales ratios comparable to Sam's Club. Some popular products closely resemble Sam's Club offerings, and suppliers who have worked with Sam's Club have become East Buy's preferred partners.

A small essay-triggered butterfly effect forced East Buy to undergo a complete surgical separation, but from another perspective, losing the major livestreamer was precisely the beginning of East Buy consolidating its business model.

The day after separating from "Walking with Hui," Yu Minhong announced at the shareholders' meeting that the company would explore online-offline integration models leveraging New Oriental's approximately 800 teaching locations, creating East Buy membership experience stores.

However, bidding farewell to the dramatic ups and downs of its first half-life and adopting a new identity, East Buy faces new questions: if MCN isn't valuable, how much can a Chinese Sam's Club be worth?

**The Value of Sam's Club Apprentice**

Over the past few years, China's retail industry has learned a hard truth through various struggles: learning from Sam's Club is easy, becoming Sam's Club is difficult.

Freshippo X membership stores began closing successively from April this year; domestic warehouse membership store Fudi pivoted to "organic retail" new formats, and membership store businesses upgraded by traditional supermarkets like Carrefour, Yonghui, and RT-Mart mostly failed to make waves.

Sam's Club's product selection structure and explosive single products have been repeatedly studied, but not everyone has Sam's Club's dominance when facing brands and suppliers.

At Sam's Club, konjac snacks must add porcini mushrooms, Qiaqia must rename to Chacheer, and Liuliumei and Yanjinpuzi overnight upgraded their heritage, elevating raspberries and quail eggs to "Royal Plums" and "Egg Royalty." Orion had to reduce sugar by 80% just to earn an entry ticket, only to be expelled by defensive members for "insufficient tone."

Even weather-dependent fresh categories must undergo military training upon arrival. Durian flesh yield must exceed 40%, eel fat is strictly controlled between 15%-18%, apple diameter error cannot exceed 5mm, and even carrot curvature has requirements.

Swiss rolls selling 1 billion yuan annually became sourcing for specialty coffee shops. After domestic competitors paid tribute in circles, they despairingly discovered that achieving equivalent quality and profit would require 30% price increases.

This high quality at low prices based on vertical supply chain integration capability is the most difficult part of Sam's Club to imitate.

In 2023, Freshippo's aggressive transformation with its "753 pricing system" (KA, self-operated, and near-expiry products priced at 70%, 50%, and 30% of market prices respectively) forced Wang Xiaolu to lead the exodus. Hou Yi himself retired before achieving success, later critiquing peers a year later: "Future competition is supply chain competition, but China's retail industry hasn't even mastered domestic sourcing yet."

The halfway-house East Buy is also within shooting range.

Complaints about moldy peaches and foreign objects in ham sausages continue, and mistaking farmed shrimp for 100% wild Ecuadorian white shrimp was quite an oversight.

The "private brand" of OEM manufacturing even allowed peer Xinba to seize the moral high ground, delivering face-to-face criticism about 6-yuan corn and 70% profit margin sausages.

But for East Buy, the biggest difficulty in achieving "Chinese Sam's Club" lies not in Sam's Club, but in China.

Supermarket retail is a business that lives on scale. The top three supermarket brands in the US collectively occupy 80% market share, while China's top three combined account for less than 10%.

Vast and dispersed regional demand combined with extremely rich product supply has created China's retail industry's special ecology of "big market, small companies," trapping scale-dependent retailers in scale-up difficulties.

Yonghui Superstores, which went the furthest as the "first fresh food stock," struggled for thirty years only to reach a dead end with over 9 billion yuan losses in four years and 227 store closures in six months under siege from e-commerce and segmented formats. Despite adjustment and renovation trends, its 50 billion yuan market value is less than half its peak.

Compared to Walmart and Costco, Chinese retail companies generally have lower valuations. Everyone knows how tough this industry is. Most of East Buy's 40 billion yuan valuation consists of encouragement points for transformation expectations.

To summarize East Buy's situation in one sentence: choosing difficult mode, navigating hell track.

With Yonghui struggling despite having over 100 million registered users and over 10 million monthly active online users, East Buy, with only 6 million registered users and revenue one-fifteenth of the former, can at best hope for another version of small but beautiful.

But the most important thing about coming out to play is actually coming out. The education company that fell to rock bottom and the livestreaming agency embroiled in controversy have finally found a way to survive a little longer.