Flower Pig’s fission activity method!

In the first half of the year, Hua Xiaozhu came out of nowhere, and discussions and controversies in the market have never stopped.

• Product side: some people think it is cheap and affordable, while others think it is difficult to get a car and the waiting time is too long;
• On the strategic side, there are also different voices. Some people say that Didi wants to replicate a "Pinduoduo" in the travel market, while others say that Didi is anxious about growth and urgently needs to open up new battlefields.

In response to these suspicions, Didi, which rarely appears in front of the media, recently accepted interviews from several media outlets. It probably felt that the time was ripe and wanted the public to get to know Hua Xiaozhu again.

Combining the product and the interview, we can try to analyze what Didi is doing with Hua Xiaozhu.

1. Flower Pig, a bit of trouble

In an interview, Sun Shu, the person in charge of Hua Xiaozhu, said that Hua Xiaozhu's target users are "those who are willing to go through a little more trouble to get a cheaper car."

This "a little trouble" is a service reduction action, which requires users to participate more in the taxi-hailing steps; for example, they need to provide the last four digits of their mobile phone for verification when getting on the car, and if they want to get a cheaper price, they need to forward and share more, and there is no telephone customer service.

This is more troublesome than before and lacks some ultimate services, thereby reducing some operating costs and also lowering the price on the passenger side, which is like the difference between a budget hotel and a star hotel.

Some people say that Hua Xiaozhu is Didi's move to capture the lower-tier markets, but this move is also of great significance to first- and second-tier cities. It is more like a price suppression strategy.

There is a big misunderstanding about Hua Xiaozhu in the outside world. Hua Xiaozhu has encountered pressure from some city regulators because many of Hua Xiaozhu's drivers do not have the relevant qualifications. There are many drivers who cannot register for Didi but can get work on Hua Xiaozhu.

Sun Shu explained this in an interview. Currently, only drivers who are registered and active with Didi can become Hua Xiaozhu drivers. In other words, Didi and Hua Xiaozhu share the same capacity pool, and in terms of safety, they also have the same review system as Didi drivers.

The drivers haven't changed, the cars haven't changed, the services provided to users are almost the same, but the prices have been lowered; Hua Xiaozhu is like the coupon flyers that McDonald's distributed to the public in the early years. The hamburger is still a hamburger, but it's a little more difficult to eat it with the flyer.

Hua Xiaozhu follows a similar logic. It divides users more finely. Those who are less sensitive to prices continue to use Didi; at the same time, it serves the user groups who are more concerned about prices. They can attract new users or collect coupons from time to time, using their time costs in exchange for price discounts.

The "trouble" for users is mostly reflected in the riding experience, such as the speed of calling a car, confirming the verification code after getting on the car, and paying before getting off the car. Correspondingly, passengers also have a choice. If they want to have dinner with friends and are not in a hurry to go out, they can wait a little longer. If they want to be faster and more comfortable, they can take Didi or a private car.

After the birth of the cheap Hua Xiaozhu, Didi's tone has become a little higher; people may gradually become aware of the extra services provided by Didi, such as human customer service who can be contacted at any time, and the payment rule of getting off the car and leaving; Didi bears the cost for these services, but users usually find it difficult to feel it intuitively.

From the driver's perspective, Hua Xiaozhu's subsidies to drivers are quite substantial. New drivers receive a registration reward of 300 yuan, and a reward of 60 yuan for completing five orders a day. Drivers will also receive additional rewards for registering passengers.

Even if we put aside short-term subsidies, drivers can accept orders on Didi and Hua Xiaozhu at the same time, which means they have more options. By using Didi during rush hours in the morning and evening, they can earn relatively higher income; during less busy periods, they can also run more Hua Xiaozhu orders. The income may not be as good as Didi, but it is worse than nothing.

In theory, having different pricing strategies for different groups of people will maximize drivers' profits.

However, there are many negative reviews about Hua Xiaozhu drivers on the market. Hua Xiaozhu should increase its efforts in driver supervision.

2. Create a brand that people can remember

Open Gaode Map, and you can call no less than ten brands of online ride-hailing vehicles at a time. The more famous ones include Didi, Cao Cao, and Shouqi, while the lesser-known ones include AA Travel, Timely Car Rental, Jinyinjian Travel, etc. For passengers, they don’t care which brand of car they get. What’s more important is the speed, cost, service, and safety of calling a car.

Among these factors that people care about when taking a taxi, the only one that has made some differentiation is "service". Didi's Youli Orange private car product line is designed to meet the travel needs of mid- to high-end users; but "service" is actually a relatively unimportant consideration indicator. Most users do not demand to enjoy imperial treatment when riding in a taxi. As long as the driver is a little polite and does not speak ill of them, it is fine.

Putting aside the private car lines and only talking about online ride-hailing, the services Didi has always provided to users are similar to those of other brands; therefore, even though Didi has long been the leader in the travel market, users still have little loyalty.

What should I do?

One way is for Didi to expand its business outward so that it can do more than just transportation; another way is to strengthen the brand effect so that people will think of Didi whenever they need a car; judging from Didi’s recent actions, it is undoubtedly the latter.

If you want to have a brand effect, the product must at least be differentiated first, starting with the "price" that people care about, which is what Hua Xiaozhu is doing.

Then why doesn’t Didi do this itself and incubate another brand?

There have been many discussions about why new customer acquisition subsidies will hurt Didi's brand, so I won't go into details here; however, compared to this point, what may be more important is that Didi's current revenue structure can hardly withstand further price cuts.

Taking a taxi is an immediate need, unlike buying things where I would stock up when it is cheap. Didi's price war is a long-term move that requires the participation of the entire online ride-hailing department. Didi's business has just barely broken even, and heavy subsidies at this time may help it temporarily regain some of the market share that has been taken away. But once the subsidies stop, everything will be back to normal.

A better way would be to create a relatively low-cost taxi-hailing platform, focus on low-price tags, and strongly associate it with users' perception of "affordability" in the form of subsidies, so that "Hua Xiaozhu is the cheapest taxi-hailing platform" occupies people's minds; just like when people buy things on Pinduoduo, they are less likely to go to Taobao to compare prices.

This is a brand that people can remember. Once the market is educated, other platforms will have to pay a higher cost to enter.

3. Capture the sinking market

The population of cities below the third tier in the country exceeds 1 billion, including county towns, which constitute what we often call the sinking market; Pinduoduo’s success proves that the potential of the sinking market has always been underestimated.

When Hua Xiaozhu went online, it selected two third-tier cities, Linyi and Zunyi, as pilot cities. These two cities are very ordinary, and Hua Xiaozhu may have wanted to use them as samples.

The results have been quite good. Three months after its launch, the overall size of the local online car-hailing market has increased by 10-15%. Compared with first- and second-tier cities, the sinking market still has a lot of room for growth, which is enough for a Hua Xiaozhu to rise.

You can try to analyze the needs and pain points first.

In third- and fourth-tier cities and counties where online ride-hailing services are not yet popular, people who want to take a taxi generally still rely on hailing one on the roadside; taxis tend to gather in crowded places such as auto shows and business districts, and some will even drive around the city.

The pain point of taxis is that the population density in third- and fourth-tier cities is low, there are often empty taxis around the city, and the membership fee is high. As a result, some "black taxis" have emerged. They use their spare time to make extra money. The corresponding problem is that they are not affiliated with a company, there are safety risks, and it is difficult to gain the trust of users.

The problems on the passenger side are equally obvious. It is difficult to get a taxi in remote areas, the waiting time is unknown, and the safety of riding in "illegal cars" is not guaranteed. The information gap forms isolated islands, making it difficult for passengers and drivers to find each other. This is also the meaning of the platform's existence.

Hua Xiaozhu's path to becoming a lower-end platform is not much different from Didi's initial start. Both involve building a communication channel between drivers and passengers and realizing intelligent vehicle dispatch.

Today's sinking market is no longer the same as it was five years ago. After a round of education from Pinduoduo, users are familiar with and able to accept the subsidy fission gameplay; and there are demand points, which is likely to bring new growth to Didi.

What Hua Xiaozhu needs to balance is the problem of overcapacity. There are already many private cars in third- and fourth-tier cities, and people already have a familiar way of traveling; riding a tricycle or a motorcycle is also good, and the capacity of taxis can basically cover the demand for rides; at this time, Hua Xiaozhu is entering the market with private cars, and it is inevitable that it will be resisted by taxis.

However, compared with first- and second-tier cities where there are dozens of online ride-hailing companies, the competitiveness of the sinking market is much smaller; if Hua Xiaozhu can gain a firm foothold in the market and take the approach of surrounding the cities from the countryside, there is also much room for imagination.

4. Didi’s Outlook

In general, the emergence of Hua Xiaozhu is Didi's attempt to formulate a better pricing strategy for first- and second-tier cities, while looking for a new traffic pool in third- and fourth-tier cities.

In the long run, Hua Xiaozhu can also provide data support for Didi's autonomous driving business, filling the data gap in third-tier and below cities.

In an interview, Sun Shu mentioned: Hua Xiaozhu is not Didi’s retreat. On the contrary, Hua Xiaozhu is actually an attempt by Didi to innovate its business. It represents innovation and progress.

Didi has been silent for a long time, but this time, perhaps there will be a new story.

Author: Zhang Meiya

Source: fromzyx