This article is from the WeChat public account: Internet Insider (ID: quanneishi) , author: pig nine commandments, from the cover: Oriental IC
On December 8th, rumors of a merger between Meituan and Didi began to appear in the market, which was subsequently confirmed to be fake news.
In the past two years, Didi has indeed had some challenges, especially in terms of user growth.
According to data from Talk Aata, in the third quarter of this year, the daily activity of China’s online ride-hailing applications decreased by 6.3% year-on-year, and it has declined for five consecutive quarters. As the country’s largest ride-hailing company, Didi’s passenger and driver app usage has fallen by 5% and 23% in the past 12 months, respectively.
In the face of the decrease in the number of active users and drivers, especially the decline in capacity caused by the latter, Didi’s profitability has become a bit more difficult, which has led to a lot of recent voices to see Didi. But has Didi really reached the point where it needs to commit to the US Mission? Not necessarily.
I, Didi Didi
Since 2014, the entire ride-hailing industry has ushered in a big explosion. In the ride-hailing competition, Didi merged Kuaidi and Uber to complete the initial unification of the ride-hailing market.
According to previous business rules, Didi, the unified market, should soon be profitable, but what was unexpected was that Didi had not yet started to make money, and the entire industry had begun to ebb.
The direct cause of the industry’s ebb is the decline in platform subsidies.
As the overlord of domestic ride-hailing cars, Didi basically no longer subsidizes passengers, and the driver’s subsidy is gradually decreasing. But after the platform subsidies decreased, Didi found that users and drivers ushered in a decline at the same time.
For ordinary users, the prices of taxis and taxis have almost stayed the same, and online taxis no longer have price advantages, leading to the loss of some users.
For drivers, the decline in platform subsidies has made Didi no longer dominate revenue compared to taxis, and taxi drivers who inflowed to Didi in a large scale began to return.
However, in the face of huge loss pressure, Didi’s previous model of relying on money to maintain user growth has been difficult to sustain.
Since its establishment, Didi has been losing money for seven consecutive years, and its cumulative loss is expected to have exceeded 50 billion yuan, with a loss of 11 billion yuan last year alone. With the intensification of losses and the continuous decline in Uber’s market value, Didi urgently needs to prove its profitability.
Today’s Didi is facing a dilemma. To maintain the weight of users and capacity, it must continue to burn money and subsidies. If it wants to save money and profit, it must face a decline in capacity and users.
Didi, who got his arms back and forth, has begun to doubt its profit model, and even the media predict that Didi will probably never be profitable.
What went wrong with the business closed loop that was once calculated?
Second, there is no moat for the taxi
Didi, which has unified the market for three years, why hasn’t it been profitable? This is actually the ultimate BUG in front of the entire network of taxis, including Uber and Lyft, which cannot be resolved.
This bug is that neither the users nor the drivers of the ride-hailing car have loyalty.
Why are users / drivers of ride-hailing not loyal? Comparing the ride-hailing industry with the food delivery industry, we find that this may be related to the lower escape costs of ride-hailing users.
Takeaway has a natural advantage over meals. People who are accustomed to takeaway often become continuous consumers of takeaway because they can eat what they want without leaving home. The distance from the bedroom to the dining room is the biggest difference between takeaway and dining, and also constitutes the escape cost of the entire industry.
But compared to taxis, there is essentially no irreplaceability. For ordinary users, people who are accustomed to calling on the Internet will often start taxis because the price is too high. For full-time drivers, when the subsidy ebbs, they will open Didi and Kai There is no essential difference in taxis.
The homogeneity of ride-hailing and taxis has resulted in users and drivers only making choices based on price / income, without escaping costs.
Of course, the online taxi industry is not entirely an online version of taxis. For example, ride-hailing and car-sharing are new product forms, and there is a great irreplaceability between them and taxis.
The irreplaceability of ride-sharing and car-sharing makes it more profitable. For example, Shunfengche has been Didi’s most profitable business before going offline, and in 2017 alone contributed 800 million yuan in net profit.
So I do n’t agree with those who say that Didi may never be profitable. At least in the new businesses such as ride-hailing and carpooling, Didi has seen the dawn of profit.
Three, Didi’s profit breakthrough
Although it has lost seven years, Didi is not invisible hope of profit.
In Didi’s current business structure, in fact, some businesses have already achieved profitability long ago, but slow-moving businesses have dragged down fast-moving businesses, resulting in overall losses.
For the sake of convenience and intuitiveness, we divide Didi’s business into three major segments, namely express trains and special cars.