Didi "officially announced" huge losses - is it a misfortune or is it really difficult? | teks rungkad, bursa taruhan argentina vs prancis, mrfixitstips football today

Development will cover up all problems until the running pace stops.

On February 15, Didi CEO Cheng Wei stated that the company will prepare for the winter and will "shut down and transfer" non-main businesses, and reduce employees with overlapping positions and substandard performance caused by business restructuring. The overall layoff rate will account for 15% of all employees, which will involve about 2,000 people. In addition, Didi, which has been losing money since its establishment in 2012, still suffered losses in 2018, with a total annual loss of 10.9 billion yuan, of which more than 11.3 billion yuan was subsidized to drivers.

After acquiring Uber China, Didi became the dominant player in the online ride-hailing market, with a market share of nearly 90%; Didi is the unlisted company with the largest amount of financing in the world, and has always been "not short of money"; Didi charges a take rate of about 20% for each transaction, which is often the target of complaints and even bombardment by online ride-hailing drivers... Why did Didi, which feels like "you can make money just lying down", suffer such huge losses? Drivers complain that they are not making money and the platform is suffering huge losses. What is the problem with online ride-hailing? Is there a viable business model?

Established 7 years ago, financing 20 times,

Financing amount 20 billion US dollars

Unlike other companies, which are often forced to admit their predicament after being exposed, or only use words such as "optimization, adjustment, and last elimination" when laying off employees, Didi took the initiative to "officially announce" the news of huge losses and layoffs, and the numbers are still so huge. "The landlords have no more food left?" "Are the rich people starting to cry for poverty?" There was an uproar on social media, with some people sighing and others puzzled.

After the Didi ride-hailing incident in August last year, Cheng Wei also disclosed Didi's financial data to the outside world. He said that Didi had not achieved profitability in the six years since its establishment. In the first half of 2018 alone, the company's overall net loss exceeded 4 billion yuan. The average take rate (take rate) of GMV (total transaction volume) corresponding to Didi's travel business is about 16%, but most of it is returned to drivers and passengers as subsidies and red envelopes. The company's overall corresponding GMV gross profit margin is only 1.6%. He also revealed that in the first half of 2018 alone, the total subsidy return amount, including driver peak period subsidies, order and service incentives, passenger discounts, etc., exceeded 11.7 billion yuan.

In 2017, Didi also disclosed the total subsidy amount, which was as high as 18.1 billion yuan (including driver and passenger terminals). However, some data widely quoted by the media and never confirmed or refuted by Didi officials show that Didi’s annual loss in 2017 was only 2.5 billion yuan.

A Didi insider told a reporter from China Economic Weekly: "Although the company has suffered huge losses, its cash flow should be no problem now. Even if some employees will face layoffs, the compensation package provided by the company is still relatively generous. It is impossible to say that Didi will become the next ofo."

According to statistics from Tianyancha, Didi has completed 20 rounds of financing since its establishment in 2012, with a total amount of more than 20 billion U.S. dollars. It is the largest unlisted company in the world in terms of financing. Didi's valuation was once as high as 80 billion US dollars, and it was also the fastest independent company to reach this level.Horned Beast Company.

But this unicorn is also very expensive. Since Didi is not yet a listed company, all financial data does not need to be disclosed. However, according to Didi’s public statistics, Didi’s cumulative losses in the past six years have reached nearly 39 billion yuan.

But the above-mentioned person also said: "Before 2018, profit and cost were indeed not important assessment indicators in Didi. Market share, daily orders, number of users, number of drivers...these were the focus. But starting in 2018, the company hopes to achieve overall profitability by the end of the year, at least achieving 'micro-profit', so it has also put forward such requirements for each business line."

In fact, this change is not surprising, because there were market rumors at that time that Didi would achieve an IPO in the second half of 2019. But later, due to well-known reasons, Didi failed to catch up with this wave of listings. The safety issues behind the "Hitchhiking Incident" caused Didi to stop its 6-year run.

A yearly subsidy of 11.3 billion yuan,

Did the driver feel it?

Subsidies are like a revolving door that makes Didi successful and drains Didi dry. The subsidy strategy allowed Didi to kill almost all its competitors and emerge from the pile of corpses to become the Didi it is today; but now, subsidies seem to be draining Didi itself.

Along with Didi’s total loss of 10.9 billion yuan in 2018, there is another data: Didi subsidized drivers in 2018 by more than 11.3 billion yuan, which makes it easy for people to think that there is a causal relationship between the two figures. But are the huge losses due to subsidies for drivers?

Chen Yongwei, a researcher at Peking University’s Market and Network Economics Research Center, analyzed in China Economic Weekly that Didi’s losses should mainly come from compliance costs in order to win user trust and adapt to stronger supervision.

Chen Yongwei believes that Didi’s continued losses are mainly due to two reasons. "First, it is determined by Didi's own strategy. Its strategy is to first occupy the market and then use the scale effect to digest the market. Didi's main business is based on increasing returns to scale, which also determines Didi's model of occupying the market first. Second, last year's emergencies triggered tightened supervision, which put Didi under unprecedented regulatory pressure. The compliance costs are huge, such as requiring driver's household registration, vehicle wheelbase size, etc." He said.

The reporter interviewed several Didi drivers, and they all said that they did not feel that Didi’s subsidies to drivers suddenly increased last year. An "old driver" of Didi told reporters that the amount of subsidies that different drivers can receive may vary greatly. Because it is not easy to obtain a relatively high subsidy income. For example, you need to be online for a long time, at least 10 hours, which means you must be a full-time driver, be in good health and not afraid of hard work; another example is to take more orders during peak hours and accept more orders from Didi. "Many of these jobs are not profitable at all. Without subsidies, no one will take them." He said.

On the passenger side, many people feel that Didi’s fares are getting more and more expensive, but it is getting more and more difficult to call a taxi. The reporter compared the prices of the largest online ride-hailing companies in the market. Taking Beijing as an example, for the same time period and destination, and the same class of car models, Didi Express has the lowest price, followed by taxi prices, but the gap between the two is not big. The relatively highest price is the Yida Yida model. For high-end models,Didi Licheng Private Car is also the lowest, followed by Shenzhou Private Car, and Shouqi Car Hailing's price is higher. The price of these high-end models is about 50% higher than that of ordinary models.

In terms of customer competition, competition among online ride-hailing platforms is nothing more than two things: price and the ability to hail a ride. The biggest problem that online ride-hailing platforms have to overcome is the difference in demand during peak and valley periods and the supply contradiction caused by urban tidal effects. Therefore, logically, online ride-hailing platforms do need to rely on subsidies to adjust transportation capacity, encourage more part-time drivers to supplement transportation capacity during peak hours, and encourage drivers to counter the tide to increase transportation capacity supply in popular areas.

According to a survey by the Institute of Policy and Economics of the China Academy of Information and Communications Technology, as of July 2018, the number of compliant online ride-hailing vehicles nationwide was approximately 170,000, accounting for only 0.54% of the total, while the number of compliant drivers was approximately 340,000, accounting for only 1.1% of the total number of drivers.

According to Didi, with the implementation and implementation of new policies for online ride-hailing in various regions becoming more and more strict, the problem of insufficient transportation capacity is becoming increasingly serious. After Hitchhiking went offline, the number of part-time online ride-hailing drivers also dropped significantly. Therefore, Didi continues to provide subsidies in order to attract more "compliant" drivers to join and adjust transportation capacity during operations.

The possibility of Didi acquiring ofo is even smaller

In addition to layoffs, Didi's announcement that it would "shut down and transfer" non-core businesses also attracted widespread attention. As for which businesses are Didi's "non-core businesses", Didi officials had not responded as of press time.

A former Didi executive analyzed to "China Economic Weekly" that for Didi's "non-main business", many people will first think of "innovative businesses" such as food delivery, wine travel, and ticketing. This may indeed be the focus of this adjustment, but it should not end there, because these businesses are not enough to involve 2,000 people.

According to the reporter’s understanding, Didi made a structural adjustment at the end of 2018. After the adjustment, Didi's main business was divided into several major sectors: online ride-hailing platform company (express car, special car, luxury car division), car owner service company (Xiaoju Car Services Company, Automotive Asset Management Center), inclusive travel and service business group (bicycles, motorcycles, buses, driving services, enterprise-level business), taxi business unit, strategic business unit (strategy department, international business department, financial business department), etc.

The above-mentioned executives believe that the business of Puhui's travel and service business group may also be focused on adjustments, and "the possibility of Didi acquiring ofo again is even smaller." International business and financial business will have little impact. "The online ride-hailing business is greatly affected by the policy environment. Internationalization means setting up a few more backups for Didi. If one side fails, the other will turn on. Didi already has complete and complete online ride-hailing technology and operational solutions. It is not difficult to replicate in various countries." He said.

In fact, Didi has expanded its business to Southeast Asia, Eastern Europe, Africa, Brazil, Japan, the United States, Mexico, and Australia through acquisitions and investments in local travel platforms... Cheng Wei also revealed that safety technology, products, offline driver management, and internationalization are Didi's key areas in the future.

Chen Yongwei’s view is that Didi has indeed been involved in many industries that do not have economies of scale. If there had not been a ride-hailing crisis, it might not have had much impact on Didi. However, under strict supervision, the cost of safety complianceAfter a huge increase, Didi’s ride-hailing business simply disappeared, which also brought business losses.

Online ride-hailing also has a profitable business model

Didi, a super unicorn that has actually reached the scale of a giant, has yet to find a clear profit model.

Didi’s idea is to gather a large number of users through the platform, and then earn profits by creating a “travel ecosystem” and providing value-added services. Just like Taobao and WeChat, users can use them for free, but they can also make a lot of money. As a result, Didi has made many attempts: advertising, e-commerce, games, selling insurance, selling wealth management, and doing finance... But this road, at least for now, has not been successful.

But this did not affect the enthusiasm of the new players. In addition to veteran players such as UCAR, Yidao, and Shouqi Ride-hailing, Meituan, AutoNavi, Ctrip, Tongcheng, Dida, Harrow, etc. have all begun to join the online ride-hailing melee since 2018, hoping to take a bite of Didi’s territory.

In addition, OEMs such as SAIC, Geely, and Volkswagen have entered the online ride-hailing market. BMW has also become the first multinational brand to obtain an online ride-hailing license in China. Although it is not clear where the track will lead to, the track is still crowded.

Although Didi is having a hard time, and Yidao is in a complete disgrace, there are also players in the industry who are doing well. For example, UCAR, although it has been losing money before, by 2017, UCAR's losses had narrowed significantly by 92.7%, only losing 260 million yuan. As for its operations in 2018, as of the first three quarters of that year, UCAR's revenue reached 4.92 billion yuan and its total profit was 280 million yuan, an increase of 149% over the same period last year. It has achieved continuous profitability for four quarters.

“This actually shows that there is no problem with online ride-hailing itself, and there is a business model that can work. However, the development of the industry still needs policy support.” Chen Yongwei said.

[Source: People's Daily Online]