Growth, continuity, and risk, three dimensions look at BOSS’s direct employment
Editor’s note: This article is from the WeChat public account “Outside, Outside and Inside” (ID: excel-ers), Authors: Chen Cheng, Yao Sha, Hu Tinglang, Editor: Mu Mu, Fu Xiaoling.
Recently, BOSS directly hired and submitted a prospectus. What is the prospect of the specific industry? How do companies compete? This article attempts to conduct a comprehensive analysis. If there is any omission, please correct me.
Small and micro enterprises are difficult to recruit, which is already a common problem in the industry.
Data from the Chinese Academy of Social Sciences show that more than 53% of small and micro enterprises have year-round recruitment needs, 79% of small and micro enterprises have phased recruitment needs, but only 11.7% of small and micro enterprises can meet their recruitment needs.
On the other hand, Internet recruitment has been in the sight of the public for 20 years. Hundreds of recruitment platforms have been developed, large and small-51job.com, Zhaolian Recruitment, 58.com Recruitment, which has grown from web recruitment. ; LinkedIn, a new type of recruitment website focusing on interests and contacts; vertical recruitment websites Lagou.com and Liepin.com; and direct recruitment of BOSS based on direct boss chat, which is intelligently matched.
But according to iiMedia Consulting, the current domestic online recruitment market has just exceeded the 10 billion mark, which is really not a big market.
On May 22, BOSS, who is a newcomer in the Internet recruitment industry, submitted an IPO application and plans to be listed on NASDAQ. With the veteran Zhilian and 58.com going public and delisting one after another, and 51job is also on the verge of privatization, what new story does BOSS direct hire want to tell? Next, can it break the industry ceiling?
This article will analyze this from three perspectives of growth, sustainability and risk.
Solve the core contradiction: the efficiency of person-post matching
Finding a job is the most important thing for people’s livelihood, but for both recruiters, the experience is always unpleasant-it is difficult for individuals to find a job, and it is difficult for companies to recruit.
It is difficult for companies to use traditional online and offline recruitment channels, and the efficiency of job matching is low; job-seeking users are difficult, personal abilities and job requirements are difficult to match, the efficiency of overseas investment is low, the recruitment process is long, and the recruiter’s feedback is slow Wait.
Looking at it this way, the problem of job matching efficiency is the core contradiction of the recruitment industry, and the 20-year development of Internet recruitment has revolved around this.
58.com absorbs a large amount of job search information; LinkedIn builds a deeper understanding between recruiters through personal connections; Lagou.com defines target users in the Internet industry on the platform positioning, refines recruitment positions, etc.The layout is done to improve the matching efficiency.
Boss direct recruitment is of course no exception-use “mobile + smart matching + direct chat” to lock in efficiency.
The so-called direct chat mode is that the recruiters can communicate directly on the recruitment platform after confirming the other’s wishes; precise recommendation is the use of smart matching methods to achieve precise recommendation, fast screening, and targeted matching between job applicants and recruiters.
Generally speaking, for such a method to really work, it depends very much on the accuracy of matching, and heavy investment is indispensable. As shown in the figure below, the investment in direct employment of BOSS is much higher than that of its peers.
Effectively, according to some HR feedback (incomplete) statistics, the response rate of BOSS direct-hiring chat is between 40%-60%, and other platforms that provide direct chat function have a response rate of 1/8- 1/6.
Increased investment in technology, continued to optimize the recommendation effect, and the platform’s exploration in user growth and business realization has been accelerating.
The marketing data directly hired by BOSS also reflects its strong investment in user growth. The financial report shows that BOSS’s direct hire sales accounted for nearly 70%, which is similar to the situation in the rapid development stage of Liepin in 15-16 years.
With the marketing and promotion in place, the average MAU of BOSS’s direct employment in 2020 is 19.98 million, an increase of 73.2% year-on-year. At the same time, QM data shows that in the past year, the year-on-year growth rate of the platform’s monthly activity has always been the industry leader.
Behind the dazzling data performance is the release of the needs of the white-collar job-seekers.
Disassembling the user structure of BOSS’s C-end direct employment shows that currently 55% of users are white-collar and gold-collar (mainly white-collar), which is the main driving factor for the user scale.
Data shows that the number of white-collar workers in 2020 will reach 179 million, and BOSS’s current penetration rate of the white-collar market is only 26.4%, and there is still a lot of room for growth.
When users have accumulated to a certain level, commercial realization is naturally on the agenda. From the prospectus data, BOSS direct employment is still in the early stages of commercialization.
Most of the income of recruitment websites comes from the fees charged to B-end business owners, such as the need to purchase services for posting jobs. Currently, Zhilian and 51job.com will use annual fee packages for sales.
BOSS’s direct recruitment method is similar, except that compared with peers, it has more free functions and more flexible charging methods. For example, the platform can currently publish unlimited positions for free; while there is an annual fee package, it also provides a single payment.
The relatively flexible charging method, although it is very friendly to B-end companies, can reduce their recruitment costs, but may slow down the ARPU of platform paying users to a certain extent Growth.
According to preliminary calculations, the average ARPPU value of BOSS direct employment in 2020 is only 864.2 yuan, which is lower than the level of other platforms.
However, at present, BOSS’s direct employment has not yet reached the stage where it needs to increase prices to ensure growth——
The prospectus shows that in 2020, the number of verified companies directly hired by BOSS will reach 11.4 million, a year-on-year increase of 76.6%; among them, the number of paying companies will be 2.23 million, a year-on-year growth rate of 80.1%; in 2021Q1, the number of BOSS directly hired customers will increase year-on-year The growth rate has reached 120%. Even so, judging from the broader market, more than half of the companies are now free to use BOSS direct employment.
It can be seen that user increment is still the main driver of revenue.
In contrast, the current 51job and Liepin’s revenue growth has gone through the incremental-driven stage and turned to be driven by price increases.
In addition, although commercialization is still in its early stages, from the data point of view, there is still a lot of room for growth.
Deferred income represents the advance receipts that will surely become income in the future, and can reflect the business development of a company to a certain extent. Data from the prospectus shows that BOSS’s direct-employment deferred revenue in 2020 increased by 95.2% year-on-year, much higher than other companies in the industry.
In terms of growth, under the business model of “mobile + smart matching + direct chat”, BOSS direct recruitment is in a stage of proactive new rapid growth, with user growth, The realization efficiency has considerable potential, and the certainty can be expected. Of course, to analyze the expected value of an enterprise, one should not only look at its current performance, but also whether its model is sustainable.
Under the “two-sided network effect”, the marginal cost is decreasing
In fact, the commercial value of the recruitment platform must be because it is a service business, not an advertising business.
Since it is a service business, the key to analyzing whether the recruitment platform model has long-term sustainability depends on whether it can create value for customers and thus retain customers.
From the perspective of user experience, with the BOSS direct employment and direct chat function, the interaction and contact between job seekers and employers increase, communication becomes more efficient, and the frequency of use increases accordingly.
According to the prospectus, in the 2021Q1 quarter, the platform will generate 2.4 billion chat messages every month on average.
At the same time, according to the actual survey on the outside and inside, BOSS directly hires all enterprise users in the whole domain, and you can even find waiter recruitment on it. In this way, when job seekers change their job intentions across banks, they can switch within the platform.
For example, someone who originally wanted to do e-commerce-related work may easily find it on Lagou.com, a vertical recruitment website for the Internet industry. But then he wanted to do offline sales again, and Lagou.com was unable to provide relevant positions. The job seeker might turn to other recruitment platforms.
In this case, a platform that can cover the entire industry and provide job offers is of greater value to users and will be the first to attract users.
For a two-sided market platform, more users will promote the supply of more products (posts). Under such a cycle, the platform will form a “two-sided network effect”, which will quickly drive user growth. For example, Taobao and Meituan have used this effect to amass a huge amount of traffic.
This means that the enterprise can achieve cross-function functionsDirect recruitment of BOSS, which meets the needs of different and cross-regional recruitment, and provides users with more job options. Compared with Lagou.com, which is limited to the Internet industry, it is easier to form a “bilateral network effect”. “.
This is indeed cross-confirmed at the level of business data.
As shown in the figure below, in terms of the user growth of each recruitment platform, since 2020, the growth rate of the number of registered individual users directly hired by BOSS and the growth rate of the number of registered companies have been above 60%, which is higher than other players in the industry .
Note: 51job did not disclose the number of registered companies, and replaced the description with the number of paying employers YoY.
Driven by the strong “bilateral network effect”, the user base has increased, and the scale effect is manifested, which often drives the continuous decline of the platform’s marginal cost.
Take the large sales expenses and R&D expenses of the platform as an example. From 2020 to 2021Q1, the sales expenses and R&D expenses of each corporate customer and each user directly hired by BOSS will be reduced to a certain extent.
Cost expenses are reduced, user base is increased, and the “one drop and one rise” gap is an increase in profits.
Some people may question that since all recruitment platforms are bilateral markets, if other platforms add similar functions, wouldn’t it be easy to break the existing advantages of direct recruitment by BOSS?
But we believe that, for the time being, BOSS’s “two-sided network effect” is difficult to subvert. The reason is: the interest-based intelligent matching model is essentially different from the traditional search-based recruitment model.
On traditional recruitment websites, job seekers must first upload their resumes to the online recruitment platform, and then recruiters can select candidates for recruitment from a large amount of information and download the resume before they can contact the job seeker.
The process of downloading a large number of resumes and one-way communication is cumbersome and inefficient. Probably from the job applicant’s submission of resumes to the communication between the two partiesTo determine the interview, it will take 3-5 days.
In addition, the traditional search model is prone to uneven traffic, and platform traffic will be heavily biased towards large enterprises and senior job seekers, and the exposure rate of small and medium enterprises and general job seekers is seriously insufficient.
The intelligent matching method of job posting and job seeker push based on matching degree is to recommend job seekers to companies with consistent job recruitment needs, such as companies that only recruit editors, and push job seekers applying for editorial posts.
Afterwards, the boss or department head will have a direct conversation with the job applicant, because the boss and the supervisor have a better understanding of the technical and soft needs of the job than HR.
According to the prospectus for direct recruitment by BOSS: As of March 31, 2021, 66% of verified enterprise users on the platform are not professional recruiters (HR).
The whole process is down, the intermediate links are concentrated and the recruitment efficiency is improved, and the traffic distribution problem is also solved.
Seeing the potential of direct hiring, 51job.com, Zhaopin Recruitment, Hunting and other platforms have indeed added direct chat functions in the later stages, but the effects are uneven.
For example, in 51Job’s online communication, many common functions are missing, and only text communication and interview notices can be sent.
In terms of communication efficiency, it is known that users “one by one” conducted a survey of “Communicate with 100 people separately and count the message response rate within 3 days”: only BOSS direct The response rate of Lianhe and Zhilian Recruitment exceeded 50% on the same day; Liepin and 51job Wuyou had a lower response rate on the same day, and there was no significant increase in the following two days.
From a comprehensive point of view, based on the intelligent matching model, “painting tigers and skins is difficult to paint bones”, and the “bilateral network effect” directly hired by BOSS is difficult to be imitated and subverted within a certain period of time, and the growth is sustainable.
However, having industry competitiveness does not mean that you can “sit back and relax”. After all, when macro policies are applied to the industry indiscriminately, it doesn’t matter whether your development potential is good or not, and sometimes the growth of the company is disrupted, often from within.
Limited by the risk of SME user structure
In 2008, the financial turmoil swept throughball. In the face of the crisis of the century, many companies not only lay off employees, but also cut down a lot of recruitment budgets. The original recruitment website ChinaHR.com was affected by this and fell into decline. The impact of the macro economy on the recruitment industry is evident.
Last year, the black swan epidemic caused a more serious blow to the macro economy. According to the “Tianyan Check”, more than 460,000 companies will close in 2020Q1, and more than one-third of them are small and micro enterprises.
This is because small and medium-sized enterprises can hardly withstand the direct impact of the macro economy because of their weak size and financial strength, and their poor ability to resist risks.
Among BOSS direct-employed corporate users, SMEs with less than 100 employees account for 82.6%. Faced with this economic situation, their performance will be affected first.
But contrary to expectations, BOSS’s direct employment revenue in 2020 will grow by 94.7% year-on-year. This is mainly due to its current high-speed growth stage, which offsets the negative impact of the epidemic-in 2021Q1 when the epidemic has improved, its revenue has recovered, with a year-on-year growth rate of 179%.
Aside from the influence of development stage factors, from the perspective of common sense, the enterprise-end structure with SMEs as the core is still relatively risky in the face of the macro environment .
Perhaps aware of this, BOSS has a further extension in the corporate structure of direct employment, cooperating with more large companies.
According to the prospectus: To provide services for the 2020 Fortune 500 companies in China.
In this way, it also provides space for the platform to expand the gold-collar user group. Because the gold-collar circle usually finds jobs through acquaintances or headhunters, even if it is publicly applied, they go to the vertical platform to hunt for and submit resumes, and the BOSS directly hires The competitive advantage in this area is not obvious.
The prospectus shows that BOSS direct employment will further increase the platform’s influence in different user groups, especially blue-collar users.
But if you want to penetrate into blue-collar groups, you will not only face vertical competition with mature blue-collar people such as 58.com, but you may also have to bear the problem of high customer acquisition costs: the ARPPU of blue-collar corporate customers is generally low.
In addition to being susceptible to macroeconomic impacts, we have noticed that a structure dominated by small and medium-sized enterprises also has certain difficulties in platform ecological governance.
Small and medium-sized enterprises are relatively loose in terms of management standardization and personnel quality.Let BOSS directly hire a certain amount of macroeconomic and ecological governance risks. In the future, if you want to break through the ceiling of the industry, it depends on how BOSS direct employment can maximize its strengths and avoid weaknesses, and open up new growth space for human resources services.