Keep, China’s largest fitness app, bet big during the pandemic. Will it pay off?

Open up Keep, China’s largest fitness app, and you might confuse it for a social media platform, or even an ecommerce site. Sure, you can record exercises via small, easily overlooked buttons at the top of the app’s landing page, but you can also select one of thousands of fitness classes advertised amid an endless scroll of toned abs and flexing buttocks. Or enter one of Keep’s online competitions to win a medal decorated with Hello Kitty. After that, post the results on the app’s “community” section. On the next tab, buy Keep-branded fitness products — yoga mats, treadmills, sports bras. Finally, view your fitness stats, ask Keep to come up with a personalized nutrition plan, and supplement it with more Keep products — wholemeal “European” bread, anyone?

COVID crushed many businesses in China, but for Keep, it was a boon. Founded in 2014 by Wáng Níng 王宁, a millennial who claims he once lost 55 pounds in eight months after a breakup, Keep saw its monthly active users (MAUs) rocket to over 36 million and revenue surge to 2.2 billion yuan ($306 million) during the pandemic.

“Traditional gyms can’t understand what us simple fatties need to improve our physiques…[and] traditional fitness gave me 10,000 reasons why I couldn’t succeed,” Wang told Tencent Technology in 2018, citing high costs, inconvenient locations, and boredom as the major problems that his company aimed to solve. Keep brings personalized workout plans, workout classes, exercise products, and other social fitness features to a growing cohort of young, health-conscious urbanites. “We hope that in the future, when someone works out, all they have to do is ‘Keep’ and that’s enough,” Wang added.

On July 11, Keep became the first Chinese fitness app to go public when it IPOed in Hong Kong. But the result may have been a splash of cold water to Wang and investors: It raised HK$300 million ($38.3 million), falling $500 million short of a $2.4 billion valuation from its previous funding round in 2021.

The COVID boom times are clearly over. User growth is starting to slow, with the reopening of gyms and the cooling of a once-viral craze for collectable Keep medals, while some users are still reluctant to pay for Keep’s menagerie of content and products. Keep bet big on an expensive marketing campaign to propel itself to the forefront of China’s digital fitness revolution during the pandemic — now it’s trying to innovate again to stay there.

Keeping up

Keep succeeded during the pandemic, gaining 14.6 million users (more than the population of Tunisia) from 2019 to 2022 and splashing nearly 1.8 billion yuan ($250 million) on marketing in the process. It wasn’t exactly efficient, though, spending an average of 319 yuan ($44) per new user it gained. Bilbili, in comparison, spent 4.9 billion yuan ($680 million) on marketing in 2022 and gained 33 million users at around 148 yuan each ($21).

The company wants, it says, to grow its base of users and convert them to paid members who spend around 19 yuan ($2.60) a month to access personalized fitness plans, exclusive classes, and other perks. Whether it can successfully do this will be key to its survival. “Most people with active habits may prefer going to the gym or exercising outdoors instead of training individually at home,” says Hu Yuwan, the vice president at Daxue Consulting, a marketing consultancy firm.

Keep has made some progress to maintain the millions of new users it attracted during the pandemic and get them to spend money on the app: It converted 10% of users to paid subscribers in 2022, up from 6.4% in 2020. But Keep’s monthly user retention rate peaked in 2020, and has since fallen to levels lower than before the pandemic, while only around 1 in 100 users actually buy something on the app each month. Moreover, an average user only exercises using the app once a week.

“There are many similar or alternative products and services, and there are many fitness KOLs on short-video platforms that provide free workouts,” explained The Paper in an article in July. “[Keep] is replaceable.” Pop star Liú Gēnghóng 刘耕宏, for example, has gained audiences even larger than Keep’s 36 million monthly active users for some of his free workout sessions on Douyin.

“Its competition isn’t just similar [fitness] apps…it’s competing with every company that is eyeing fitness people’s wallets and attention, including fitness influencers across Bibili, Xiaohongshu, and YouTube, offline gyms and fitness clubs, and affordable sports goods retailers like Decathlon,” says Yaling Jiang, author of Following the Yuan, a newsletter about Chinese consumer trends.

Keep has some things going for it. Despite competition from dedicated fitness gear brands, Keep is China’s biggest seller of yoga mats and smart exercise bikes, and raked in over 1.1 billion yuan ($153 million) in sales of its self-branded fitness products in 2022. As Chaping, a technology news WeChat public account, put it in an article in September last year, Keep is “an ecommerce platform wearing sports clothing.”

A full 51% of Keep’s revenue in 2022 came from sales of its own products (more than 40% came from subscriptions and paid online content, while the rest was advertising revenue), which includes yoga mats, smart watches, and treadmills. But its gross profit margins are far lower than other domestic sports brands like Li Ning and Anta (and fell from 21% to under 15% from 2019 to 2022). Still, the company argues in its IPO prospectus that its products form part of a “comprehensive fitness solution that covers users’ entire fitness life cycle,” through which they take classes, buy smart fitness devices, and supplement their exercise routine with food, apparel, and other gear.

It begs the question: Is the company too ambitious for its own good? What has worked for it, and why might it not in the future?

Top of the medal table — for a little bit

Keep struck gold last year when a viral craze emerged for the platform’s collectable medals. Users pay an upfront entry fee, typically between 30 and 80 yuan ($4 to $11), and then must record a run of a certain distance (five kilometers, for example) to win a cute decorated medal. Millions have signed up for these events. One competition in 2021 that awarded a medal decorated with Cinnamoroll, a white puppy character created by Sanrio (also the inventors of Hello Kitty), gained 200,000 sign-ups within 10 minutes of going live. The five most popular online races Keep held in 2022 had a combined 1.5 million people register, according to Yi Magazine — and that amounted to a lot of cash.

“Showing off a Keep medal online proves you’ve exercised, gets you online traffic, and shows you’re on trend,” Yunying Dashu, the account of a marketing blogger on WeChat, wrote of the phenomenon in February. A market even emerged for “substitute runners” whom lazy users could pay to run for them so they could get a medal without exercising.

In its Hong Kong listing prospectus, Keep claimed that revenue growth for the first quarter of 2023 was “mainly attributable to…virtual sports events.” In other words, the medals paid off.

But the craze is over. People are selling their medals for discount prices on secondhand ecommerce platforms, while there have only been 556 posts about the medals on the popular social media platform Xiaohongshu in the last 30 days at the time of writing (the hottest trending topics typically have hundreds of thousands of related posts). In contrast, when the medal craze took off in May 2022, one user gained over 120,000 “likes” for a post of her collection, with the caption “Showing off the medals my boyfriend ran to get me.” There have been over 100,000 posts with related hashtags overall on Xiaohongshu, while videos under the hashtag “Keep medal unboxing” have been viewed over 10 million times on Douyin.

Some young women who signed up for these online events reportedly had a substitute (often their boyfriends) run the distance for them, which raised questions over whether users might not be committed to the app. The medals helped Keep grow, but also turned it into a channel for collecting goodies to show off on other platforms like Xiaohongshu. “Keep has not yet realized an ‘internal loop’ for the competitions,” technology media outlet 36Kr explained in July. “Keep provides the tools, the content, the signing-up platform, but a large amount of user discussion and social behavior has overflowed to other platforms.”

“If users care more about the medal than the sport…won’t bigger platforms for young users like Xiaohongshu and Bilibili easily defeat Keep?” asked sports news outlet Titan Sports in March.

Targeting young, female fitness newbies with the medals may also risk alienating more experienced fitness enthusiasts uninterested in what they view as gimmicks. “[In the past,] everyone cared about their results, and would compete against themselves. Now it’s become a game,” Xiaoming, a former Keep enthusiast who regularly joined online races of 10 kilometers or more, told Titan Sports. “Keep will soon be taken over by ‘elementary school kids,’” he said, using an insult common in online gaming to express disdain at new or substandard players. Keeping both committed fitness fanatics and trend-chasing newbies on the app may prove impossible for Keep.

The road ahead: Going offline?

Since many of Keep’s users are young, white-collar women who are fitness beginners — in contrast to the apps Codoon and Joyrun, which have mostly male users who are already committed fitness enthusiasts — Keep must offer more than pure exercise content and tracking. But apart from the medals, Keep “hasn’t created any fitness trends,” an article in online media outlet Truman Story argued in July, referencing other recent viral sports in China like Ultimate Frisbee and pickleball. “New sport buzzwords like paddle boarding, surfing, and frisbee all came from Xiaohongshu.”

Now Keep is on the hunt for the next fitness trend in China by recruiting popular influencers to produce content for the platform. From 2021 to 2022, the number of fitness influencers and third-party content providers contracted to Keep doubled from 321 to 642. Over 35 million people have watched the 10-minute “Beginners’ slim stomach” class by Pamela Reif, one of the most popular fitness influencers on the platform. China’s online fitness industry has been a feast for influencers, with the number of sport and workout videos on Douyin increasing 134% in 2021. Keep is trying to latch on to the trend.

Some influencers, however, have complained that they struggle to make money from Keep’s tight-fisted users. One anonymous fitness influencer told Truman Story that they had twice as many fans on Keep as on Bilibili but only managed to earn one-fifth of the income through selling paid classes. Even Reif mysteriously disappeared from Keep for nearly six months from November 2022, while she continued to produce content on Xiaohongshu, Bilibili, and other platforms.

“Consumers have grown more keen on ‘in-real-life’ activities,” says Jiang. “[Keep’s] target users are now faced with abundant choices that are more fun and engaging than their newbie classes and beginner equipment.”

But while Keep shut down many of its own gyms, branded Keepland, during the pandemic (just seven survived in Beijing), it has since renewed some focus on its offline business. Earlier this year, the company announced it intended to increase the number of gyms it collaborates with, by holding classes or selling products in them, for example, from 100 to 150 in Beijing, and from five to 30 in Guangzhou.

Meanwhile, Keep still has a growing fitness market to tap into. According to a report by China Insights Consultancy, the country’s online fitness industry could grow from 370 billion yuan ($51 billion) in 2021 to nearly 900 billion yuan ($125 billion) by 2026. China’s per capita spending on fitness, meanwhile, is just one-sixth of the U.S. figure.

Jiang believes there is especially space for Keep to expand outside of China’s biggest metropolises. “Beijing and other first-tier cities…are highly saturated [with gyms]. They should really go below these cities, like Starbucks is,” she says. Hu, on the other hand, suggests augmented and virtual reality could be new rapid growth areas for Keep.

Keep’s share price has been relatively flat since it floated in July, perhaps reflecting both the challenges and growth opportunities the company faces. But the company’s (unaudited) revenue for the first quarter of 2023 was still up 7.2% year-on-year, despite the rapid spread of COVID around China at the beginning of the year preventing many people from exercising. The rapid growth of the pandemic years may be over, but for Keep, the race to profitability is a marathon, not a sprint.