Written by / Finance & Economics Weekly Liu Dongxue Hong Hanqi He Chang
Editor / Chen Fang
In just over four years, the number of employees has been reduced by nearly 70%.
As 2021 drew to a close, another Internet company failed to withstand the pressure and eventually had to lay off employees for the winter.
On December 21, news of two-day layoffs at Mushroom Street was confirmed. Informed sources told the "Finance and Economics" weekly that the layoffs in Mushroom Street are true, and the proportion of this layoff accounts for about 30% of the total number.
Like the news of layoffs from Internet companies such as iQiyi and Kuaishou, the news of this layoff on the veteran e-commerce platform Mushroom Street was also exposed through social platforms. Two days ago, some WeChat groups were circulating the news that the mushroom street research and development department would lay off 80% of the staff. Because the layoffs were so staggering, the news quickly fermented online.
A number of users broke the news on social media that the employees of Mushroom Street's layoffs included old employees, newcomers who had been employed for half a year, and "prospective employees" who had just received offers in the morning. For the specific number, there are currently three versions, some say 80% of the cuts, some say 70% of the cuts, and some say that more than half of the cuts are made, leaving only more than 30 people.
For the specific number of layoffs, the Weekly "Finance and Economics World" verified with Mushroom Street, and did not receive a reply before the press release.
(Photo/Visual China)
In fact, this is not the first time that Mushroom Street has laid off employees, as it has already made a round of layoffs last April, with about 140 employees laid off. At that time, Mushroom Street said in an internal letter that as the company became more and more focused on the e-commerce live broadcast business, some business sectors deviated from the core business due to historical reasons, coupled with the impact of the epidemic on the fashion consumer market, the company's operation faced many challenges, in order to survive and develop, it was necessary to gather resources, open source and throttling.
It is worth noting that combing the mushroom street financial report found that its number of employees has been in a state of contraction in recent years, and the year of listing in 2018 is a watershed.
Mushroom Street's annual report for fiscal year 2017 (its fiscal year deadline is March 31 of each year) shows that it employs 1,311 people and is also a completely large factory. However, in fiscal 2018, the total number of employees was only 1,005, a contraction of 23.3%. In fiscal 2019, there were fewer than 1,000 people, only 927 people. Since then, the total number of employees in Mushroom Street has declined year by year, and the total number of employees in fiscal year 2021 is only 605.
If there has been no large-scale flow of people in Mushroom Street since the end of March this year, according to the proportion of this layoff, Mushroom Street has laid off about 180 people, and the total number of employees has shrunk to more than 400. In other words, in four years and nine months, Mushroom Street has lost nearly 70% of its employees.
However, for the laid-off employees, the layoffs do not mean that it is a bad thing, at least mushroom street has given enough compensation. According to informed sources, although Mushroom Street boss Chen Qi himself is not easy, he is still very righteous and compensates the laid-off employees with a lot of money. "Many of the employees who left understood the decision to lay off Mushroom Street, after all, the company's first priority was to survive."
In the Weibo topic of #Mushroom Street was exploded, some people envied the laid-off employees who received 12 months of salary compensation. In fact, although the proportion of the two rounds of layoffs in Mushroom Street is different, the compensation paid is the same, both are "N+1.5" compensation principles, and they also help them recommend new jobs.
Looking at the entire Internet enterprise, it is difficult to find a second company with such a relaxed atmosphere, no inner volume, no large and small week, and the ideal pension place for Internet workers. Some people joked that the last time they opened Mushroom Street was "a matter of the Kangxi Dynasty", some people didn't realize until they saw the news that Mushroom Street was still alive... What is even more lamentable is that Mushroom Street, known as the "bellwether" of vertical e-commerce, has not even arranged hot searches for such large-scale layoffs.
Lost 4.5 billion in five years
The layoffs of Mushroom Street are closely related to its development in recent years, and after many transformations, it has not yet found a path to support its development.
Founded in 2011, Mushroom Street, which first started by social networking, was founded by Chen Qi, an employee of Taobao No. 51 and who worked at Alibaba for six years, mainly to divert traffic to Taobao station and do "shopping guide e-commerce", but then it was blocked by Ali, and has since embarked on a bumpy road of development.
In 2013, after losing the commission of Taobao, "God of Wealth", Mushroom Street began the road of transformation. Along the way, Mushroom Street has tried haitao, community e-commerce and social e-commerce based on WeChat mini programs, without exception, all of which are shallow. An employee of the company once said that the company's lack of firmness in strategic transformation has led to the entire company being in the same place, and the organizational structure shock brought about by business adjustment has caused a large amount of brain drain and further hindered the company's development.
After tossing and turning for several years, Mushroom Street finally locked in the live e-commerce business in 2016. But a few years later, Taobao Live created 500 billion GMV in fiscal 2021, and the GMV of Douyin E-commerce exceeded 500 billion yuan in 2020, and the mushroom street that took the lead in launching the live e-commerce business was eclipsed, and it was considered that it has not been recognized by the market and has not become the savior of mushroom street.
Over the past five years, Mushroom Street has been in a state of loss, and public data shows that it has accumulated a loss of 4.535 billion yuan in 5 years. Among them, the largest loss in fiscal 2020, a one-time loss of 2.224 billion yuan. If losses can be exchanged for high revenue growth, then burning money is also valuable, but mushroom street revenue growth in the past few years has been quite weak.
According to the financial report data, the revenue of Mushroom Street in fiscal 2021 was 439 million yuan, down 40.27% year-on-year. In the previous year, its revenue had fallen by 22.8%, and it was only 735 million yuan for the whole year.
Without a good growth story, capital is naturally reluctant to pay. As of press time, mushroom street share price is 0.43 US dollars per share, a 97% decrease from the issue price; the total market value of 43.4976 million US dollars, becoming the lowest market value of Tencent's listed e-commerce enterprises.
For the bumpy encounter of Mushroom Street, Cui Lili, executive director of the E-commerce Research Institute of Shanghai University of Finance and Economics, believes that due to the increasing cost of search on the platform at that time, there was a large number of graphic drainage needs to help consumers lock in their favorite goods more quickly. But when Taobao's own traffic pool gradually develops and grows, Mushroom Street loses its place. More importantly, with the rise of short videos and live broadcasts, the reduction of technical thresholds has made it possible for individual merchants to "speak for themselves", and the advantages of Mushroom Street once again cease to exist.
"Internet celebrities and anchors can completely drain from other platforms such as Douyin, why go through Mushroom Street?" Therefore, the necessity of its existence is decreasing, and when it cannot bring value to the upstream and downstream of the relevant chain, it is foreseeable to decline day by day. Cui Lili said.
Peers don't live easily
Outside of Mushroom Street, other e-commerce companies are having a hard time. Since the beginning of this year, layoffs, executives leaving, and capital chain ruptures have been staged in e-commerce companies. These shining names, which once stepped on the cusp of the wind, gradually dimmed.
When Mushroom Street was deeply involved in the "layoffs" storm, another e-commerce company in Hangzhou, Chenfan E-commerce Company, had a hard time, this company was opened by the network anchor Sydney, on November 22, she was fined more than 90 million yuan for tax evasion, and then her account disappeared on multiple platforms, all 7 companies associated with it were cancelled, and it was exposed that she no longer bought insurance for employees and paid social security. Before the accident, Chenfan had more than 1,000 employees.
Coincidentally, Yunji, which was also born in Hangzhou, although it bears the aura of "China's first social e-commerce stock", is also experiencing life and death at present.
In September this year, Yunji issued an announcement that the company received a notice from NASDAQ staff on September 27 that it did not meet the minimum listing requirements of Nasdaq because the company's closing price for 30 consecutive working days was less than $1.
In 2017, social e-commerce is still the outlet of capital chasing, and this year, social e-commerce such as Yunji, Global Catcher, and Beidian have been launched. In 2019, Yunji was listed on the NASDAQ with an IPO price of $11, and the stock price rose as high as $18.2 on the first day of the opening. In May of the same year, Beidian completed a financing of 860 million yuan.
According to public information, Beidian is the largest social e-commerce platform under the Beibei Group, the largest maternal and infant e-commerce company in China, with the operating concept of "everyone can open a store", Beidian to unify procurement, delivery and service, and the merchant only needs to be responsible for the operation.
In August this year, a debt collection incident broke out in Beidian. On the black cat complaint platform, there are more than 5,000 complaints such as "beidian payment cannot be withdrawn", "beidian does not refund the deposit", and "beidian is suspected of running away". These complaining merchants believe that Beidian uses the merchant's payment for other purposes to alleviate the problem of insufficient capital reserves of the enterprise. In fact, the financing in May 2019 is also the last round of financing of Beibei Group, which belongs to Beidian, so far.
Also on the verge of delisting is the popular temple vault. In 2017, the luxury e-commerce company Siku went public in the United States and became the first share of luxury e-commerce in China.
Since the beginning of this year, the news about Sekoo's arrears of suppliers and arrears of employee wages has been reported from time to time, becoming a "regular customer" of the complaint website. In August this year, Secoo was fined 800,000 yuan by the regulatory authorities for suspected false publicity of the platform's self-operated goods.
Although luxury consumption in the domestic market has risen steadily, Secoo has not enjoyed dividends. According to Secoo's financial report for the third quarter of 2020, Secoo's total revenue in the third quarter was 1.37 billion yuan, down 32.8% year-on-year from 2.04 billion yuan in the same period of the previous year.
In May this year, NASDAQ also issued a non-compliance notice letter to Secoo for "failing to submit its annual financial report for the year ended December 31, 2020 in a timely manner."
Similar to the situation of Mushroom Street, since hitting the highest point of $15.48 in 2018, Secoo's stock price has fallen all the way, and its total market value has been less than $30 million based on the closing price on December 22, Beijing time. According to its belated 2020 financial report, the company's total revenue for the whole year fell by 12% year-on-year to 6.02 billion yuan, and from profit to loss, the growth rate of the number of monthly active users continued to slow down.
Others completely fell in the cold winter, the loss of 1.6 billion yuan of social e-commerce upstart Taoji eventually bankruptcy liquidation; the same city life failed to survive the cold winter, choose bankruptcy; the carrot completely stopped shipping...
Why did the vertical e-commerce platform come to this point?
The stock price collapsed and the performance drifted to zero. To some extent, this is the most real portrayal of the vertical e-commerce platform represented by Mushroom Street, in this queue of painstaking support, there are the main luxury shopping services of the temple library and the focus on social e-commerce gathering, once there were also shell stores. But they did not wait for spring, but without exception wandered in the cold winter.
Looking back at the past decade, the huge space of the domestic consumer market has greatly promoted the evolution of the e-commerce track, and has also created Alibaba, JD.com, and Pinduoduo, three star giants with different emphases. There are some who are proud and more frustrated, especially vertical e-commerce platforms that focus on a certain field. For most of them, going public is both a highlight moment and the beginning of a difficult situation.
As early as 2012, Liu Qiangdong predicted that there are only two models for future e-commerce companies to survive, one is platform-based, and the other is a personalized and branded vertical website. Other standardized verticals "sell or die" because the products they sell are lowly reused, but the cost of acquisition is extremely high for consumers. Now it seems that a word has become a slur.
Li Chengdong, an e-commerce expert and founder of Dolphin Society, told Caijing Tianxia Weekly that live e-commerce is still a traffic model after all, and the impact of traffic is very large, even if it is Taobao live broadcast, it is not easy to rely on Taobao and develop completely independently, which is obviously more difficult for a vertical e-commerce platform such as Mushroom Street.
Moreover, compared with the comprehensive e-commerce platform, each bad review is a more fatal blow to the vertical e-commerce platform. A user who once placed an order on Mushroom Street said frankly: "If a platform focuses on a fixed category, but there are many bad reviews of stores in this category, then it is easy for me to doubt the professionalism of the store and even the entire platform." ”
On the black cat complaint platform, there are 755 complaints related to Mushroom Street, involving product quality, after-sales service and false publicity. In Cui Lili's view, doing vertical e-commerce platforms, professionalism is the foundation of the foothold, and once there is a deviation from it and confirmed evaluation, it is bound to affect the foundation of consumer trust. Behind the trust, there is user stickiness, GMV, and the possibility of revenue and profitability.
Of course, the dissatisfaction of vertical e-commerce platforms in the past one or two years is not unrelated to the rational consumer demand of consumers in the entire economic environment. On the other hand, mainstream consumers are growing, and their consumption habits are also interacting with market changes.
Li Chengdong believes that vertical e-commerce platforms are difficult to compete with large-scale comprehensive e-commerce platforms in terms of traffic, and at the same time, the former's operational growth still requires large investment. He judged: "If you can't 'continue to live', it is difficult to have a future, and it is estimated that more and more companies will fail in the future." ”
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