Deconstructing Hua Xiaozhu’s operational strategy!

1. What is Flower Pig ?

Hua Xiaozhu is a taxi-hailing platform under Didi. It advocates returning travel to its essence and is committed to creating a new brand of affordable travel. The Huawei App Store has been downloaded 1.12 million times, while Didi Chuxing has been downloaded 2.8 billion times. In comparison, Hua Xiaozhu Taxi still has a lot of room for development.

2. The growth trajectory of Flower Pig

❖In March 2020, pilot projects were launched in Linyi, Shandong and Zunyi, Guizhou;

❖In July 2020, Didi officially announced that Hua Xiaozhu was officially launched;

❖In August 2020, Guo Qilin, the young owner of Deyun, endorsed the brand;

3. Why do you want to be a flower pig?

They are all travel products, why should we make another Hua Xiaozhu and fight against ourselves? I think there may be the following reasons:

• The user growth trend has slowed down: On the one hand, the overall growth trend has slowed down, with the usage rate only increasing by 0.3% compared with June 2019 and December 2018; on the other hand, due to the impact of the epidemic, some cities have stopped online car-hailing, and the user scale has dropped significantly in 2020; data source: cnnic

• New forces are forcing the existing market: On the one hand, AutoNavi, Baidu, Meituan and other platforms have launched taxi aggregation platforms; on the other hand, established car companies, such as FAW, Changan, Dongfeng, Tencent, Alibaba, Suning and others, jointly established "T3 Travel" to fight against Didi, Didi is in crisis;
• There are broad opportunities in the sinking market: Sun Naiyue, a travel industry analyst at iResearch, said that among the users of the three leading platforms, Didi Chuxing, Shouqi Car-hailing, and Cao Cao Travel, the proportion of users in third-tier and lower cities is 16%, 5%, and 5%, respectively. The online car-hailing market still has a lot of room for development in the lower-tier markets;
• Battle for ecological niches: On the one hand, there is Didi in first- and second-tier cities, and Hua Xiaozhu in lower-tier markets. Users can enjoy the services of the big Didi company everywhere, and none of them can leave. On the other hand, it is better to create a small Didi by ourselves than to let a third party grow a Didi in the lower-tier markets.
• In addition, in March this year, Didi launched the 0188 plan: 0 major safety accidents, more than 100 million orders served every day, domestic travel penetration rate exceeding 8%, and global service user MAU exceeding 800 million. According to an open letter, Didi's daily order volume in China was 24 million in 2019, and it could reach about 30 million during peak hours.

According to this strategy, Didi's daily order volume needs to at least double, and the difficulty can be imagined. The sinking market is a very good source of growth. This place that you once looked down upon has grown into Pinduoduo, a company with a market value of hundreds of billions.

4. Hua Xiaozhu’s operational strategy

[Target group] Young user market; also in line with the characteristics of Dalinzi users and fans;

【City Expansion Strategy】The strategy is to surround the city with the countryside, starting from the third-tier cities of Linyi, Shandong and Zunyi, Guizhou, and now expanding to first-tier cities such as Beijing; Hua Xiaozhu not only wants users in the sinking market, but also wants all people outside the 5th ring road;

【Product Positioning】Saving money means saving money;

【slogan】Taking a taxi can be cheaper;

[Business Model] As a platform, we must focus on both the supply side and the demand side.

01 Supply side

[Source of supply] Old drivers bringing in new drivers + self-registration, but currently only open to Didi drivers;

[Main advantages] Compliance platform, orders can be rejected, and dual opening is convenient; unlike other platforms, drivers have more initiative, have 3 opportunities to reject orders every day, can choose orders independently, and support dual opening, which means that drivers are encouraged to accept orders from other platforms while using Flowering Piglet;

[Incentive Strategy] You can make money whether you drive or not. Incentives include cashback for sign-in + inviting drivers + inviting passengers + event rewards;

• Sign-in cashback: Sign in for 5 consecutive days to get 100 yuan in cash;
• Invite a driver: Get a cashback of 10-15 yuan for each driver you invite;
• Invite passengers: Get 3-5 yuan cashback for each passenger you invite;
• Activity rewards: Peak order bonus, all-day order bonus, etc. Complete the task and receive bonus ranging from 10 to 50 yuan;

02. Demand side

[Source of seed users] It is speculated that they are Didi users. Some users completed Didi orders and received a 50% discount coupon and a text message with a link to Hua Xiaozhu.

[Charging model] Different from Didi's dynamic charging model, Hua Xiaozhu adopts a fixed price model. The platform will estimate the mileage, duration, supply and demand and other factors to set a fixed price. Moms no longer have to worry about the driver taking a detour~

[Incentive strategy] Registration cashback + taxi allowance + inviting friends + event rewards;

• Registration rebate: Taking Beijing as an example, 3 coupons will be issued after registration, including 2 40% discount coupons for new customers and 1 20 yuan instant discount coupon; city restrictions: Beijing, Nanjing, Qingdao, Hefei, Chengdu, Taiyuan, Guangzhou, Hangzhou, Zhengzhou;
• Taxi allowance:

1) Daily sign-in: you can receive a random taxi allowance, and you can get an additional bonus week after signing in for 7 days in total;

2) City support: Invite 3 friends to support and you will get a 40% discount coupon;

• Invite friends: For each friend you invite, you will get 18 yuan in cash (3 yuan for friend registration + 5 yuan for friend’s first order + 10 yuan for friend’s second taxi order);
• Activity rewards: From August 17 to August 23, the first 8,888 users every day will receive a 20 yuan discount on their first order. City restrictions: Chengdu, Qingdao, Guangzhou, Beijing, Hangzhou, Nanjing, Zhengzhou, Hefei, Taiyuan;

5. What can we learn from

1. To test whether a product is feasible, the market is the touchstone: you can’t just assume that there is a market in the lower-tier markets. You need to let the market test it. Hua Xiaozhu started the pilot in Linyi and Zunyi.

2. To expand the product, you must first find a large enough pool: the region selection is not a whim. Hua Xiaozhu’s target cities are cities in China with more than 2 million cars. The supply-side pool is large enough and has more room for growth.

3. Quickly acquire users and drivers, subsidies are a good thing: 10 billion subsidies seem to have become the standard for e-commerce, and cheap and affordable is the hard truth. All the money is subsidized to real users and drivers with needs, so it is money well spent. You may not make money from new users, but you can make money from repeat purchases and the long-term LTV of users.

4. Products for sinking markets should not be complicated, but the simplest and most plain version : Unlike Didi, which has various travel modes such as express, private car, and carpooling, and users need to spend time choosing, Hua Xiaozhu has the same logic as Pinduoduo, Taobao Special Edition and other sinking market apps. The products remove complex items and only leave the rigid demand parts. The page is clean and does not require users to think. They just need to enter the destination and submit the order;

5. To acquire users, the social fission effect is quite good: activities such as check-in and social fission are models that have been verified by Pinduoduo and can be improved and used. But you need to be careful about the freeloaders and set order and coupon limits;

The above, whether on the supply side or the demand side, is consistent with Didi’s initial model. Hua Xiaozhu is using subsidies to grab market share and cultivate user habits. Once user habits are formed and the number of drivers is large enough, subsidies are expected to stop. It is a question whether price-sensitive users will still use the products after the subsidies are stopped.

But no matter what, in order to complete the 0188 strategy, achieve more orders, and serve more users, Hua Xiaozhu's strategy of sinking into the market may be correct, and subsidies are indeed a very good means. With more users and more drivers, there may be more stories to tell.

I hope the above will be helpful and inspiring to you.

Author: Yue Mo

Source: Yuemo