Photo source: visual China
Reporter Ke Xiaobin editor Wen Shuqi
Didi once again offered a killer mace and launched a sub brand huaxiaozhu taxi (hereinafter referred to as “huaxiaozhu”) to seek new increment through subsidies.
Before the official announcement, Hua Xiaozhu was praised by the media as “online car Hailing version of pinduoduo”. It mainly focused on the lowest price of taxi hailing in the whole network, and conquered the sinking market by making great efforts to subsidize both drivers and passengers. After nearly half a year’s internal test, Didi officially launched huaxiaozhu taxi service at the end of July this year, saying that huaxiaozhu is positioned as a young user market, aiming to create affordable travel.
Before that, Didi built a fire barrier through Huazhu and introduced the non-conforming transport capacity into Huazhu. In response, Didi said that Hua Xiaozhu drivers are all Didi’s compliant drivers. However, the launch of huaxiaozhu has not been smooth. Since the middle of July, huaxiaozhu has been stopped and interviewed by Tianjin, Shenzhen, Qingdao, Hefei, Beijing and other governments.
A person close to didi told the interface news reporter that after being interviewed by many local governments, Hua Xiaozhu’s direction has undergone a major change. After internal testing in the third and fourth tier cities, Hua Xiaozhu announced that it had entered Beijing, Shenzhen and other first tier cities. “Before that, Didi’s ideal state was to completely draw a line with Hua piggy.”
“In fact, today’s little pig is more like an independent app of express.” The appellant said.
In spite of this, the subsidy for huaxiaozhu is still continuing. In all parts of the country, a large number of original didi partners have joined the field promotion force of huaxiaozhu. For each successful recommendation of a passenger to download Huazhu, they can get nearly 30 yuan of land promotion fee. Among them, drivers can get 2 yuan, rental companies get 28 yuan – didi is still the best way to capture the market through subsidies.
With large subsidies, independent sub brands, independent apps and small programs, huaxiaozhu is the trump brand product that didi focuses on promoting at present. When the growth of online car Hailing is slowing down and touching the ceiling, there is no doubt that Hua Xiaozhu undertakes the wild hope of fulfilling the “0188” goal proposed by didi CEO Cheng Wei. But is huaxiaozhu’s strategic significance for didi only to seek increment?
In fact, it is not. After eight years of establishment, Didi, with an overall financing amount of more than 20 billion US dollars, has come to the critical juncture of listing. Many people close to didi told interface news that since the beginning of this year, Didi has split up several independent sub brands in order to build a fire wall and maintain the possibility of independent financing for the sub brands, so as to raise the valuation of Didi.
“Have you ever used a little pig? It’s cheap. You can try it. ”
Recently, in Didi, drivers and passengers will recommend Huazhu. However, for drivers, the recommendation of Huazhu is more to get 2 yuan for each successful download of an app. However, a number of drivers interviewed by interface news reporters said that at present, only when they don’t have a list during the peak period of travel, will they pick up orders online. “Buy it now price, too low, not cost-effective, although now every successful pick-up of a single pig, you can get a reward of 3 yuan.”
When didi heavily subsidized the little pigs, the drivers and passengers could really enjoy a bigger bonus.
Two days ago, interface news reporters registered and used huaxiaozhu in Wuhan. As a new user, huaxiaozhu directly gave a red envelope of 11 yuan. During the peak period, for the same five kilometer journey, the express train costs about 20 yuan, while the little pig only needs 16 yuan, and then uses the new red envelope of 11 yuan. The last one only costs 5 yuan.
Through high subsidies for drivers, passengers and both ends, huapiggy has indeed developed rapidly.
“At the beginning of August, huaxiaozhu landed in Nanjing and organized an offline rental company to push. If the driver was successfully persuaded to post the two-dimensional code of huaxiaozhu in the car, he could get 25 yuan of material cost. With this QR code, every time the download volume increased, the driver could get 2 yuan of land promotion fee, and the company of the driver could get 3 yuan.” A boss of didi offline leasing company in Nanjing said that in mid August, the Nanjing government began to investigate and punish Huazhu, and the business of land promotion was suspended. In the past 10 days, he had successfully posted about 500 pieces of QR code of the pig. “At present, in Nanjing, there are about 2000 cars in which the QR code of Huazhu is posted.”.
In addition, according to the above-mentioned people, in the suburbs of Nanjing, there are a large number of original didi express drivers who spend all day on the short journey of blooming piglets. “At present, each driver can get an extra 5 yuan (3 yuan for receiving the single prize and 2 yuan for land pushing fee). In this way, it is more cost-effective to run short distance.”
They are just one of them, and didi has built a strong ground pushing team relying on its original offline leasing company. According to interface news reporters, although there are differences in subsidies across the country, there is little fluctuation. Most leasing companies such as Kunming, Xiamen, Nanjing and Xi’an have joined the local promotion team.
However, these leasing companies also have their own concerns. At present, didi and their cooperation mode is not clear, and they still play an offline role. “Once the pig is measured, it is bound to impact the single quantity of express drivers, which will directly affect their share of profits by relying on express trains.”. But they have no choice. Didi focuses on supporting Huazhu. Once the express business fails, they may miss Huazhu.
“I’m afraid I’ll miss it. I’ll make some money.” This is their common idea. However, it is conceivable that as a special operation means during the cold start-up period, the subsidy will not last for long.
As early as 2017, Li Lun, partner of panda capital, publicly said that Didi’s monopoly obtained by throwing money is easy to attack and difficult to defend. In this market without bilateral network effect, subsidies can obtain a certain market share in a short period of time, but in the long run, it is not of great significance. The most direct example is that after didi gained the top position, the traditional automobile enterprises represented by Gaode and Cao Cao still entered the market and eroded Didi’s market share.
Although the large-scale subsidy will bring financial pressure to Didi, and it has no long-term value, it is the price that didi must pay to seek increment when the growth of online car Hailing slows down.
On April 28 this year, China Internet Network Information Center released the 45th statistical report on the development of China’s Internet (hereinafter referred to as the report). According to the report, after 2018, the growth of online car Hailing user scale and user utilization rate in China has slowed down. Among them, the number of users increased by only 0.3% in June 2019 and December 2018, while that in December 2018 was 2.5% compared with the same period in 2017.
Correspondingly, in April this year, Cheng Wei announced the strategic objectives for the next three years: to take security as the cornerstone of development, aim to achieve 100 million daily global services within three years; 8% domestic travel penetration; and more than 800 million global service users (referred to as “0188”).
Under this goal, since this year, Didi has launched the same city freight, errand, community group buying and other businesses, but only Huazhu has been subsidized with such great efforts, which also means that in order to complete Cheng Wei’s “0188” wild hope, Hua Xiaozhu plays an important role.
“Online car version pinduoduo” and “sinking the market” are the labels put on by the outside world when Hua piggy is still in the internal test.
But later, Hua Xiaozhu landed directly in Nanjing, Shenzhen, Beijing and other first tier cities. It may mean that the pig market is not sinking at this time.
An informed person close to didi disclosed to the interface news reporter that when Hua piggy was incubated internally, the original plan was to sink the market, attract new incremental drivers through low prices, and there are indeed many private car owners joining in. “Didi’s ideal state is to completely draw a line with Hua Xiaozhu, because the driver variables of sinking market are too large.”. However, after being interviewed by many local governments, Hua Xiaozhu’s direction has undergone a major change and has entered Beijing, Shenzhen and other first tier cities.
According to CNNIC data, by March 2020, the number of online car Hailing users in China has reached 362 million. About 40% of the first tier cities have the highest penetration rate of online car hailing, about 20% of the second tier cities, and even lower in the third and fourth tier cities. But is the so-called sinking market really a good Internet business?
It can be referred to that as early as early as the beginning of 2019, Hailuo travel, which successfully broke out of the rural area, arranged online car Hailing. However, unlike bicycles, when entering the online car Hailing service, Hailuo travel did not start from the sinking market. At that time, Han Mei, its co-founder, said in an interview with interface news reporters that the sinking market of online car Hailing was not a good business, and the density of users’ travel was not enough, which meant that this was not a high-frequency scene.
“There are two main types of travel demand in the travel scenarios of the fourth and fifth tier cities, namely, intra city and intercity. In urban travel, because the city is small and there are many alternative products, the travel demand within 5 km can be basically replaced by bicycles and motorcycles. ” An online car Hailing practitioner said.
At the same time, in the scenario of intercity travel, there is a big difference between the operation strategy and online car Hailing.
A former employee of didi said that Didi’s intercity business has always been very common. In terms of intercity business, in addition to passenger buses, it also needs to compete directly with the local “fleet” with strong foundation. At the same time, the operation mode of intercity business and online car Hailing is not the same.
At present, more than 100 fixed intercity routes have been launched, including 16 in Hubei Province. “Each route has about 10-60 vehicles, and more than 3000 drivers provide intercity travel services. With the county as the node, there are a large number of agents for Fengyun travel in the county with fixed routes, which are responsible for the recruitment and management of drivers in the local county Du Lingfang said. Du Lingfang, CEO of Fengyun travel, said in an interview with an interface news reporter that they adopted the point-to-point door-to-door service for drivers.
“In the sinking market, due to the lack of demand density, users with intercity travel demand generally make an appointment three or five hours in advance, and then go through the background to match the driver.” Du said most of their demands are not immediate travel, and there is not so much sense of urgency in terms of time.
Li Jinlong, co-founder of Dida travel, believes that compared with online car hailing, appointment travel is not a mass market.
Obviously, it is not the purpose of spending such a large amount of money to do a market that highly depends on offline operation ability and is relatively small.
“In fact, today’s little pig is more like an independent app of express.” One of the people close to didi said.
He judged that from the operation point of view, Didi express will rise in price next, leaving enough room for growth for Huazhu. In addition, in the future, Didi express may merge with huaxiaozhu to become an independent sub brand of express. In his opinion, huaxiaozhu is the splitting of didi express.
In addition to huaxiaozhu, Didi has launched a number of sub brands, including LiMao special car, Qingju bicycle, Kuai new rental, vegetable carpool and orange heart optimization.
The above people close to didi believe that the main purpose of splitting the original business is to reduce the risk of Didi’s parent company, while maintaining the possibility of independent financing of sub brands, so as to maximize the valuation of Didi.
Eight years after its establishment, Didi, with a total financing amount of more than 20 billion US dollars, has reached the critical juncture of listing. After the windmill event, Didi’s valuation has begun to shrink. After completing a new round of financing in December 2017, Didi’s valuation reached 56 billion US dollars. In May 2019, Uber was listed. As a 15.4% shareholder of Didi, the prospectus disclosed that didi was valued at $51.6 billion at that time. In July of the same year, Shanghai United Property Exchange announced that 137500 shares of didi travel were listed for transfer, and the transfer price was only calculated at US $47.544 billion.
This means that after getting out of the shadow of the free ride incident, it is necessary to raise Didi’s valuation.
One investor agreed with the above views, but he also said that, like many applications with high-speed versions, the introduction of sub brands may improve the constraints of the original big product structure in order to seek change when the home page is difficult to grow or even decline.
In June this year, Cheng Wei said inside the company that the peak daily order of online car Hailing service exceeded 30 million, and the data was the same as that of the same period last year. Two months later, Didi announced that as of August 25, Didi’s global daily orders exceeded 50 million for the first time, covering all business lines such as online car hailing, taxis, free riding, bicycles and Valet driving.
This is good news for didi for a long time. Around the strategic goal of “0188” put forward by Cheng Wei, since the beginning of this year, Didi has been constantly trying new business and expanding its boundary in order to gain increment. In order to pull up the valuation, data and increment are the key indicators on Didi’s listing.
And the little pig may be just another new story about the capital market.