Source | Deep Sound Original
Author ｜ Hong Jian
Core points
58 The business in the same city is complicated, but the core model is still to earn poor information, which leads to a single revenue model and growth slows when the traffic dividend disappears.
58 The same city is developing a sinking market to make a large flow plate, and is focusing on key categories (real estate, cars), but the information poor business is still the core idea.
The transformation from information platform to service platform has a long period of time and high investment. How much determination can 58 cities go out of the comfort zone to determine whether their transformation can be implemented.
Five years ago, when 58-city merged with Ganji.com, the founder of 58-city, and Yao Jinbo, the founder of 58-city, wished to unify the domestic information classification business. Pattern expectations.
This expectation is not without reason. After 58 years of development, the 58 city and Ganji, which were founded in 2005, have become the head players of the domestic information classification circuit in many years of competition, and each has a considerable market share. According to the analysis of the third-party organization at that time, after the merger, 58 Tongcheng and Ganji together accounted for more than 80% of the market, and they completely stabilized the position of the industry leader.
Former Ganji CEO Yang Haoyong (left) and Yao Jinbo (right)
In 2015 when the merger took place, the O2O trend was booming, and 58 cities and Ganji have also deployed related categories. While the merger reduces competition from each other, it also increases the synergy of both businesses, regardless of recruitment, real estate, home services Still used cars, each vertical segment has hidden market opportunities. If the combined 58 Group (hereinafter referred to as 58) can select a few vertical directions based on the existing plates, it means more depth. Big opportunities and possibilities.
But in the past five years, 58 of the unified industry has its own place in the rivers and lakes, but it has not changed the industry pattern. 58 The market value of the same city is still on the ladder of 10 billion US dollars, which is mediocre compared with the market's expectations of it at the beginning of the merger.
During the outbreak, the two news related to 58 did not attract much attention, but for this company that is seeking breakthroughs, the two dynamics are of great significance.
One reflects 58's current efforts to break through the bottleneck-March 24, 58 City announced that it signed an agreement with Uxin Group to acquire assets related to Uxin's shooting business for USD 105 million. This is the same time that City 58 took over Uxin's business. In July last year, City 58 acquired Uxin's financial business for US $ 100 million in cash and a certain number of Golden Pacer (58 Finance) shares.
Another indicated the possible future outcome of 58-on April 2, the 58 City Board of Directors announced that it had received a non-binding acquisition offer from Ocean Link Partners Limited, with Class A or B Ordinary shares of 27.5 US dollars in cash, or 55 US dollars / ADS quotation to acquire all the common shares of the company in circulation. In response, 58 responded that it would evaluate the proposal. At present, 58 city has not disclosed more information about privatization, but 58 has clearly stood in front of an important choice, waiting to decide its own destiny.
In 2013, 58 Tongcheng was listed on the NYSE
Whether it is an active attack or a passive valuation, the core behind these actions is the reality that 58 is stuck in a bottleneck.
From the property classification information at the start, to recruitment, home, city express, second-hand transactions, to the used cars and sinking businesses that have been exerted in recent years, 58 has continued to expand the border and the business is complicated, but its strength in the vertical field Not big. At the same time, due to the excessive reliance on poor information for profit, in the predicament of peak traffic growth, the past business experience is no longer effective.
Around the corner, the old Internet company 58 came to the crossroads.
Out of information classification
Fifteen years of fierce fighting in the Chinese Internet industry, Yao Jinbo is an entrepreneur with a profound sense of crisis.
On January 15 this year, 58 Tongcheng announced the latest adjustment of the company's organizational structure. Yao Jinbo said that 58 Tongcheng will officially move from the era of traffic revenue to the era of service revenue, promote traffic growth with high-quality services, and enhance user reputation.
For those who have long been concerned about 58, this strategy is not new. As early as the "58 Magic Day" summit on May 8 last year, Yao Jinbo said that the next strength of the 58 city will be placed in service, hoping to endow For enterprises and merchants, the 58 city will also transform from a pure flow platform to a service enterprise that is closer to customers.
Making such a strategic decision is not difficult to understand. A simple fact is that, as China Mobile ’s Internet dividend peaks, and then relying solely on traffic to monetize, there is really no room for growth.
According to the data disclosed by QuestMobile in August 2019, China Mobile's Internet user scale exceeded 1.13 billion, and the growth rate continued to slow down. It has now fallen below 2%, and the acquisition and competition of traffic within the industry will become more severe.
In this context, the business ceiling based purely on traffic appears, and companies need to tap the stock value. More importantly, the mobile Internet disrupted the concept of "portal", and the large and comprehensive platform encountered the impact of different competitors. This is especially urgent for the 58 cities in the city that continue to slow down and do information classification business. Yao Jinbo reaffirmed his determination to transform at this time, the purpose is self-evident.
According to the fourth quarter of 2019 and the annual performance report released by the 58 city on March 12, the 58 city in the fourth quarter achieved revenue of 4.16 billion yuan, an increase of 15.1% year-on-year; the annual revenue of 15.58 billion yuan, an increase of 18.6% year-on-year .
According to the data of the 58 city's financial reports over the years, whether it is quarterly or annual, the growth rate of the 58 city's revenue continues to slow down.
Under pressure, transformation has become a top priority.
After the adjustment in January this year, the 58 city's latest structure has been made up of four front-end business groups, namely: human resources and vocational education business group, local service business group, automotive business group and real estate business group. From the architecture, it can be seen that the intention of the 58 city is obvious: on the basis of the existing business, deepen the vertical field and force the B-end service.
The premise of being able to deepen the vertical field is the huge traffic of B-end and C-end accumulated by 58 cities in the information classification business for many years. The 58 city that emerged from the PC era has accumulated a large number of users with its "large and comprehensive" information services, and has achieved rapid growth based on this.
The 58 that constructed the traffic barriers through classified information is not the only attempt to cut into some vertical categories. For example, in the same year when the war ended with the catch-up, 58 Tongcheng successively strategically invested in Tubatu, acquired Anjuke, and merged with China Elite.
Increasing investment in vertical fields is aimed at getting rid of the business limitations of information classification services. Taking the used car business as an example, once the related financial business matures, the revenue and net profit space it can bring is much higher than the revenue under the current business model. The same logic applies in real estate, recruitment and other fields.
The external faced with the dilemma of the exhausted growth of the traffic dividend, and the internal search for more efficient monetization methods under the premise of hoarding considerable traffic, double factor superposition, and out of the old bank information classification is an inevitable choice for 58 cities.
It's just that clear and smooth logic doesn't necessarily mean that you can achieve the desired realistic effect.
A mixed transition
In the popular TV series "Anjia" in the first quarter of this year, Anjuke has a strong sense of presence.
It is expensive to cooperate with the popular drama content, but for the current 58 cities, it is a necessary choice to make relevant investment for Anjuke, because the enemy has hit the front door.
Since Lianjia launched the "Shell Finding House" platform in April 2018 and used "real housing" as its core promotional point, the war between Anjuke and Lianjia has not stopped. Firstly, all the opponents of the 58-city alliance chains formed a "real house" alliance; then Anjuke sued the shell pirates for 60,000 pieces for a claim of 90 million, and later was counterclaimed.
Behind the lively industry slobber war, An Juke is deeply anxious about finding a house with a shell.
In the past, Lianjia has implemented a direct-to-offline model that focuses on offline. Launching a shell to find a house means that it is using a combination of light and heavy models to simultaneously deploy offline and online markets. Lianjia's deep cultivation in the real estate field for many years has formed the advantages of its launch platform: it has sufficient control over the listing information and can be fully linked with offline channels, which is the shortcoming of 58 city.
Shell finds a house with "real house", "save worry" as the core promotion point
In the real estate business, 58 Tongcheng has always adhered to the platform positioning of its information intermediary and cooperated extensively with developers and brokerage companies. However, due to the lack of control over the listing information and the upstream and downstream, the "fake housing" on the platform is still to be solved. Resolved, "fake house" has also become a weakness targeted by opponents.
The 58 city that started with traffic, and the chain house that started with the housing intermediary business, are tit for tat in the real estate track. The sense of crisis in the 58 city can be imagined. Therefore, increasing marketing investment is an inevitable choice to deal with competitors.
In a speech in November 2019, Yao Jinbo made it clear that in 2020, he will increase advertising investment against the trend.
Facing the same situation, there is also a car drop.
58 City has a long-standing layout in the automotive field, from the early driving school point pass, 58 car sparring, Zhuojie line to 273 used car trading network, e-generation driving, Baojia car rental, covering all aspects of the automotive field, but until 2018 It was only in 2005 that 58 increased its investment in the used car trading business. In that year, 58 generously launched the brand advertising of "a great platform for affordable second-hand cars"; subsequently, Yao Jinbo said in early 2019: New car business in 2019 will become the front of vertical industries Three.
Subsequently, 58 City continued to increase its related business layout. In July 2019, 58 City acquired 100% of US $ 100 million in cash and a certain amount of Golden Pacer (58 Finance) shares in Uxin ’s financial business. The continuation of this strategy.
Similar to the real estate business, 58 City continues the idea of matching transactions in the automobile business. Compared with the deeper layout of the industry chain by players in the industry, such as second-hand cars and Renren vehicles, 58 City prefers the flow mode.
On the "58 Magic Day" last year, Yao Jinbo said, "58 in the same city will never be self-employed and will always be an open platform. We will always only do what we are good at." We only do the asset-light model of the platform and the offline self-employment. Each camp model has its own advantages: being a platform with high profits does not require hard work. Although the cost of self-employment is high, it has stronger control over the upstream and downstream, and thus provides better services.
58 The strategic positioning of the same city combines its own advantages, but it always acts as an information intermediary and does not participate in other links in the industrial chain. On the one hand, it is difficult to truly enhance the competitiveness of vertical businesses, and it also leads to a single revenue structure Get more income from added value.
Therefore, the reality in front of the 58 city is that although its layout is not late in the vertical field, the 58 city is not the most thorough one of the various vertical circuits, which makes it difficult to enjoy the vertical city. The most generous dividend on the track has formed an embarrassing situation to a certain extent.
58 The same city has not encountered similar embarrassment in all verticals. In its field of Daojia services, 58 Daojia has become a unicorn with a valuation of more than 1 billion US dollars; its second-hand trading platform has been transferred after obtaining the WeChat Jiugongge entrance. A new round of financing of US $ 300 million was also completed in the second half of 2019.
However, in these two areas where 58 successfully hatched, it is facing strong external competition. In 2019, Ali Local Life Services Inc. increased its investment in Daojia business. In the second-hand transaction category, Xianyu is still the platform with the highest voice volume.
Overall, the transformation of 58 cities from information to services is mixed. In terms of the timing, investment, and flow advantages of 58 city entering the vertical track, it could have achieved greater results, but the reality is that the past success has become the biggest obstacle to the self-transformation of 58 city.
Earn easy and hard money
58 The same city has always been an excellent practitioner of poor information business.
Today, in the context of the disappearance of the traffic dividend and the rise of vertical competitors, 58 cities still maintain a high gross profit margin level. According to the financial report, its gross profit margin in 2019 was 88.5%, although it was lower than 89.1% in 2018, but it still showed strong profitability, which is related to the 58 city's business model.
A closer look at the 58 city's play in the vertical field will reveal that although the volume is not what it used to be, the business logic of the 58 city is still connecting the supply and demand ends and earning income from the information gap.
Making money from poor information is a time-honored business model, and its advantages are obvious: the platform is only a matching party, not directly involved in asset management or offline service links. It is a good business with low investment and high returns. It is relatively easy to make money.
58 City revenue consists of four parts: membership services, online marketing services, e-commerce services and other income. Among them, membership services and online marketing services are still the main sources of income in 58 cities:
In the fourth quarter of 2019, the membership service revenue of 58 cities was 1.11 billion yuan, accounting for 26.8% of the total revenue; online marketing service revenue was 2.71 billion yuan, accounting for 65% of the total revenue.
For the whole year of 2019, the membership service revenue of 58 cities is 4.47 billion yuan, accounting for 28.7% of the total revenue; online marketing service revenue is 10.16 billion yuan, accounting for 65.2% of the total revenue.
Through the "big and complete" information service, 58 city gathers enough C-end traffic, and then earns income by selling services and advertisements to merchants. This trick has been tested for more than ten years, making 58 city a long time The high-margin myth has been maintained over time, but due to the relatively single revenue structure, when the external environment changes, performance shocks become inevitable.
Like many peers, faced with the dilemma of peak traffic, 58 cities are eyeing the sinking market.
In 2017, 58 Tongcheng launched the 58 Tongzhen project, hoping to sink information services to the county and rural areas. Since its establishment, 58 Tongzhen has released various life service information such as job search, real estate, second-hand cars, dating, travel, and agricultural product sales through recruitment of station masters, which continues its mature information service model in the city.
It is worth noting that the core of the 58 town is still the information poor business, that is, the business model has not changed, but it has been put into an untouched market to try to make the plate bigger.
Unlike the relatively standardized scene in the city, in actual operation, 58 Tongzhen not only needs to familiarize the farmers with the technology, but also needs to sort out the regional characteristics of various regions, which means higher operational difficulty. In addition, the willingness and ability of the sinking market to pay for information services also pose challenges to commercialization. In the interview, Yao Jinbo also said that the commercial value of 58 Tongzhen will not be reflected so quickly, and it is still in the stage of horse racing and obtaining users.
In other words, the commercial value of the sinking market has yet to be tested. How much traffic can be done and to what extent can boost performance is still unknown.
It can be seen that the development of the sinking market is a continuation of the 58 city's business model, and the 58 city's efforts in key properties such as real estate and automobiles can still see the trace of the difference in information as the core. This style of play or It will lead to 58 cities to reap the outcome of "starting up early but rushing to a late set".
The moat can sometimes be transformed into a siege.
Compared with five years ago, today's 58 cities face more intense and complex competition in related categories. In the past, it was relatively easy to make money. In the face of new challenges in the industry, how determined is to come out and determine whether its transformation can be implemented.
Ten years ago, with the brainwashing cry of spokesperson Yang Mi, 58 Tongcheng resisted the fierce offensive from Ganji, defended its own market, and staged the merged Ganji plot five years later. However, in terms of vertical expansion, this style of play failed to reproduce magical magic.
Before the urgent request for transformation, whether the 58 city that lost its "magic" could get out of its own siege, only it can answer.
