Didi is back on the shelves after more than a year, and the old drivers face new challenges

Re-launched, dripping rejuvenation?

Manual labor/beast sister

Hand editing / Kaku Uncle

Produced / Unicorn Excavator

After more than a year, Didi finally re-launched and resumed new user registration.

At 3 p.m. on January 16, Didi issued an announcement: Over the past year, our company has seriously cooperated with the national network security review, taken the security problems found in the review seriously, and carried out comprehensive rectification. With the consent of the Cybersecurity Review Office, new user registration of "Didi Chuxing" will be resumed from now on. In the future, the company will take effective measures to effectively ensure the security of platform facilities and the security of big data, and maintain national network security.

Since encountering supervision in July 2021, Didi has experienced stagnation of new users, delisting, and huge fines... Since then, it has been waiting for approval from the relevant authorities to resume registration and download of 25 new users of the app in the country.

Analysts pointed out that the cyberspace administration imposed a fine of 8.026 billion yuan on Didi Global Co., Ltd. in July last year, and the re-listing of Didi's app means that the regulatory authorities' rectification of the past two years has been completed.

On December 21, 2022, the National Assembly pointed out that it is necessary to adhere to the "two unwavering" and support private enterprises to boost confidence and better development. Support the healthy and sustainable development of the platform economy. Didi's announcement of the lifting of the ban before the Spring Festival will undoubtedly have a positive effect on boosting the confidence of the platform economy and helping technology companies to recover consumption.

Of course, for Didi, after more than 1 year of "confinement", old drivers also have to face new challenges.

01

The APP is on the shelf, dripping back to the soul

Over the past year or so, Didi has become much more low-key, focusing on serving existing users.

In fact, it is not difficult to understand that in July 2021, the regulatory authorities announced the removal of 25 Didi's apps, and existing users can still use Didi APP and mini programs normally, mainly affecting new user groups.

From the prospectus submitted by Didi that year, it can be seen that Didi's global annual active users reached 493 million at that time, and serving this part of existing customers well is also the basis for Didi to maintain a relatively stable operating state under the condition of limited new business.

Of course, the impact of the takedown is also obvious, as can be seen from Didi's financial report data.

On December 30, 2021, Didi's first financial report after listing (including the second and third quarter financial reports) disclosed that Didi's total revenue fell from 48.212 billion yuan in the second quarter of 2021 to 42.675 billion yuan in the third quarter, down 11.48% from the previous quarter.

On April 16, 2022, Didi released its fourth quarter and full year 2021 financial results, which was also Didi's last quarterly financial report before the shareholder vote announced its "delisting" decision. During the quarter, Didi's total revenue was 40.777 billion yuan, down 12.68% from 46.699 billion yuan in the same period of the previous year; At the same time, compared with 42.675 billion yuan in the previous quarter, it also decreased by 4.45% from the previous quarter.

The profitability side is also not optimistic. The profit in the first quarter of 2021 reached 5.483 billion yuan, but in the second and third quarters, it suffered huge losses of 24.271 billion yuan (net loss of 70 million yuan in the same period of the previous year) and 30.375 billion yuan (net profit of 670 million yuan in the same period of the previous year). Fortunately, in the fourth quarter, Didi's loss fell sharply to 383 million yuan, 94.7% narrower than 7.221 billion yuan in the same period last year.

For the continuous expansion of Didi's loss, industry insiders believe that it mainly focuses on two aspects.

On the one hand, at that time, the fair value change of Didi's investment in its community e-commerce "Orange Heart" project, the company also recognized a net investment loss of 20.8 billion yuan in the third quarter;

On the other hand, naturally it is impossible to escape the operational impact caused by the removal of the main APP, especially during this period, the "burning money" between peers to grab the market, which makes the industry competition suddenly intensify, which has caused a certain diversion of Didi's business.

From the perspective of market sentiment, the driver side and the user side still show a stronger favorable impression that Didi APP will return to the major application markets: first, this makes the groups at both ends, especially the new people who have not yet registered, add a choice in the travel experience; Second, it is undeniable that as the only unicorn in the field of travel, Didi is more than one leader in driver safety, road condition recognition, and route planning.

A further meaning is that every move of domestic Internet companies is to some extent a reflection of regulatory attitudes, combined with the official affirmation of the value of the platform economy in recent times, and the affirmation of technology companies helping the real economy to pick up, which may mean that the Internet technology industry may usher in a new round of development cycle.

02

When the boss returns, will there be a subsidy war?

In the past few years, the ride-hailing industry can be said to have been Didi's sole family. The highest active users of apps such as Shouqi, Dida, Cao Cao, and T3 are only at the level of tens of millions, while the users of some new entrants are only in the order of hundreds of thousands, which is less than a fraction of Didi.

For other ride-hailing apps on the market, the one-and-a-half-year removal of the Didi Chuxing app is undoubtedly a once-in-a-lifetime market opportunity.

Since travel is a rigid need for life, Didi's removal will inevitably make users with travel needs look for alternative ride-hailing platforms. Gaode, Cao Cao, Meituan, and T3 have all started to compete in the market, and more than 10 large and small ride-hailing platforms have appeared in the market, and they have begun to expand drivers, burn money subsidies, and increase their efforts to seize the market.

But the ideal is plump, the reality is skinny. These marketing expenses that have been spilled into the market do not seem to be as good as expected, bringing any real "benefits" to these ride-hailing platforms.

In the third quarter of 2021, Didi's domestic travel orders were 2.36 billion, down 210 million from 2.57 billion in the second quarter, and an average daily decrease of 2.33 million. In other words, in the 2 or 3 months that other travel players spent money to acquire customers, they only shared Didi's market share of 2.33 million orders every day, while Didi's daily order volume was 25.61 million, an order of magnitude higher.

In the fourth quarter, subsidies for other ride-hailing platforms gradually decreased, and the number of orders taken away also decreased. Didi's domestic travel orders in the fourth quarter were 2.307 billion, down 49 million from the third quarter, with an average of 530,000 per day, while Didi's daily order volume was 25.08 million.

As a new player, Douyin also opened the qualification of platform service providers for transportation services at the end of December last year, and in the transportation entry column, there are subdivision options such as taxi/ride-hailing, hitchhiking/carpooling, and taxi. Service providers such as Meituan Taxi, T3 Travel, and Xiandao Mobility have settled here, but the ride-hailing mini program has not yet appeared in the recommendation position of Douyin.

For the power of old players and the entry of new players, industry insiders believe that it has little impact on the market structure, and it is difficult to shake Didi's position in the short term.

First, after the "cultivation" of online ride-hailing in the past decade, the new users in the market have actually been relatively limited, whether it is burning money to acquire customers or opening up new channels, in fact, it is more or the grabbing of existing users;

Second, on the whole, the user side pays more attention to the price, that is, the preferential strength, to a large extent the loyalty of the platform itself is not high, so if the preferential strength of each platform is roughly the same, but Didi's advantage may still be the largest;

Third, even if it hopes to take this opportunity to climb the platform of the "second oldest" throne in the ride-hailing industry, it is unable to fight a "price war" for a long time, which is destined to be unsustainable from the perspective of the large market.

In order to boost morale, subsidizing users may be the most direct and powerful measure, if so, the market may set off a new round of subsidy "war". As for whether other ride-hailing apps keep up, at present, it may be a "trigger and move the whole body" decision. (End)