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Text / Yu Bin
Source: Internet analyst Yu Bin (ID: fenxishiyubin)
The development process of the Internet platform-based business can be traced back to the history of the “BAT” bigwigs. During this period, Internet companies represented by BAT also drove many traditional industries to transform into the direction of mutual benefit. At that time, Zhubajie, which was built with crowdsourcing business, was also known as the “Taobao of the enterprise service industry”, and its popularity was unparalleled for a while. But within a few years, Zhubajie gradually lost its voice.
A few days ago, the news that Zhubajie.com submitted its prospectus to the Hong Kong Stock Exchange brought the almost forgotten “Internet veteran” Zhubajie.com back to the public eye. When netizens thought that Zhubajie had finally ushered in spring after 16 years of struggle, the various data of Zhubajie’s prospectus revealed its unbearable operating conditions.
You know, this is the third time that Zhubajie has hit an IPO to seek listing. At this time, the impact of the IPO has a kind of meaning that it has reached the end of the turret, and it is also regarded by the industry as a helpless means of self-help. However, it is still unknown whether Zhubajie.com, which lacks hematopoietic ability, can successfully go public.
01
Under the shadow of equity, Zhu Bajie may be difficult to list
In fact, Zhubajie.com failed to go public three times. It is understood that in the process of preparing for the listing, Zhu Bajie went through 2011 to seek listing on the Nasdaq in the United States, and then returned to the domestic A-share market in 2016 to submit the table, but in the end, it all fell into disarray. This turn to impact the Hong Kong stock market once again submitted the table, which also highlights its twists and turns on the road to listing.
However, compared with the development of Zhubajie in previous years, it was still smooth sailing. At this time, the performance of Zhubajie fell sharply, and the core commission business was already exhausted. Therefore, more people in the industry tend to believe that the chances of success of Zhubajie.com seeking to be listed now seem even more slim.
Although according to the data disclosed in Zhu Bajie’s prospectus, Zhu Bajie has a high gross profit margin of nearly 60%. However, the cumulative loss in the past three years has also reached 1 billion yuan. In the first half of this year, the fate of the loss has not been reversed, and the actual loss is as high as 133 million yuan.
What’s more urgent is that as the performance losses continue, Zhu Bajie’s cash flow is also facing a crisis. Data show that from 2021 to the present, its operating cash has dropped from 570 million yuan to 250 million yuan. This also means that if Zhu Bajie cannot continue financing blood transfusions, it may be difficult to maintain the cash flow required for its daily operations, and it may even fall into the dilemma of cash exhaustion in the next year and a half.
It is worth noting that Zhu Bajie has no new equity financing since 2018, which also reflects the urgency of Zhu Bajie’s IPO financing at this time, and may even be related to the life and death of Zhu Bajie.
However, even if Zhu Bajie overcomes many difficulties and successfully landed on the Hong Kong Stock Exchange, Zhu Bajie may still not be able to sit back and relax. This can be seen through the fact that its third largest shareholder, Born Group, is riddled with lawsuits, and even the actual controller is listed as a dishonest executor. It is understood that the shares held by this shareholder are also under judicial freeze.
Analysis believes that the debt problem of major shareholders is not a good thing for Zhubajie, which is in the critical period of listing, unless after the judicial auction, these shares can be taken over by more well-known companies with better operating conditions. Under the shadow of such equity, the road to listing of Zhubajie.com was also cast a shadow.
02
The losses continued to expand, and the hematopoietic ability of Zhu Bajie was insufficient
As a 16-year-old company, Zhubajie can be regarded as a leading platform for customized enterprise services. In terms of GMV in 2021, Zhubajie ranks first in the domestic comprehensive customized enterprise service e-commerce market. Why did the former industry giants fall to the point of continuous losses and pressure on cash liquidity?
What is embarrassing is that Zhubajie, which was born in the PC Internet era, relied on the crowdsourcing service trading platform, which was a business model that no one had set foot on at that time, and Zhubajie also attracted investment from IDG and other star capital. However, with the advent of the Internet mobile era, Zhubajie did not take advantage of the dividends of the mobile Internet era, but made achievements, resulting in the loss of performance and the gradual loss of capital.
For the reasons for the loss, in addition to the decline in performance, the high cost is also fatal. Data show that in the first half of the year alone, Zhubajie’s administrative expenses were as high as 100 million yuan, while the gross profit in the first half of the year was only 170 million.
In other words, nearly 60% of Zhubajie’s gross profit is spent on administrative expenses. At the same time, this also means that Zhu Bajie seems to be more able to spend money, but less able to “make money”. Therefore, at present, it seems that Zhu Bajie is imminent, how to increase the realization income.
As we all know, Zhubajie’s business model does not look complicated, but it is not easy to do. Even a veteran player like Zhubajie.com is at the head of the industry track, but it has not proven itself to be capable of large-scale profitability in the past 16 years, which is the best proof.
And the reason behind this may be related to its model. On the one hand, compared with earlier businesses such as enterprise service platforms, the new businesses opened by Zhubajie in recent years, such as industrial services and government-enterprise cooperation, are mostly high-cost input types, and the average gross profit margin is generally lower than 50%, which also leads to , after deducting the two biggest expenses of sales and administration, Zhubajie’s losses are almost normal.
On the other hand, Zhubajie, which advertises its role as a service intermediary platform, is also the service with the largest revenue share, but it actually focuses on agency bookkeeping and trademark agency. It’s just that even the two most-accounted revenue will only be more than 100 million in 2021, and it is in a state of decline.
It can be seen that under the bad situation of continuous expansion of losses, Zhu Bajie’s own hematopoietic ability cannot keep up with the pace of the development of the times. This is also worrying. How can such a Zhubajie network gain the favor of secondary market investors?
03
The crux of the commission model is highlighted, and platform trust is declining
From the perspective of income composition, Zhubajie.com used to be the largest source of income among the income of enterprise service platforms. In the era when the domestic enterprise service market was not yet formed, Zhubajie.com adopted the profit model of commission fees in the early days.
Only in the past three years, due to the impact of the mobile Internet, there have been more and more targeted solutions to the problem of information asymmetry in all walks of life. Therefore, its matching service is also facing growth bottlenecks, and its revenue continues to decline, and its proportion in the revenue of enterprise service platforms has also shrunk significantly.
It has been observed that this kind of matching service is actually difficult to form a sustained and stable demand, especially after the channels and forms of people’s access to information become more and more diversified, the value of its existence is further reduced. So while its commission-based model looks great, it has always been a difficult business to make money.
At the same time, complaints about Zhubajie on the Internet are not uncommon.
On the one hand, the employer paid someone to design the design, but it turned out that the design draft was copied by the other party. On the other hand, service providers provide services in advance on the platform, but they may not be able to win the bid and get paid, which makes it difficult to build trust between the supply and demand sides, and it is even more difficult to maintain it for a long time.
In addition, after the platform matched the transaction between the two parties, the employer and the platform service provider user crossed the platform and skipped the private transaction on the platform, which also made Zhu Bajie hard to guard against.
In fact, the industry track where Zhubajie.com is located still has some room for growth. It is worth thinking about why the number of employers on the Zhubajie.com platform is increasing, and the number of services provided has maintained a steady growth, but the matching service revenue has declined instead. What is the truth behind it?
According to the analysis, the reason is nothing more than Zhubajie.com’s many charging items and the high cost of acquiring new customers. At the same time, due to the serious price comparison between service providers, the unit price of their customers is generally not high, and the room for improvement is limited, so they are gradually “abandoned” by bilateral users.
It is worth noting that Zhubajie provides only one channel to service providers. Although this is a niche channel relative to the entire industry market, its competition is even more brutal. It is not difficult to understand why we can often see that there are service provider teams fighting price wars on the platform.
What’s more, through “cutting corners” in the service process, to increase involution. Taking the solicitation of contributions as an example, some service providers often pirate the works of other authors and submit them, resulting in the clients receiving a lot of works, but most of them are simple and crude works.
Moreover, the phenomenon of layer-by-layer subcontracting during the period is also very serious. When A receives an order, it often subcontracts it to B at a lower price. The result from this is obvious. That is, Zhu Bajie is getting bigger and bigger, but his reputation is getting worse and worse.
“Look for Zhu Bajie when you start a company”, this is the advertising slogan of Zhu Bajie a few years ago, and it does meet the needs of small and medium-sized enterprises.
However, Zhu Bajie is often scolded by both companies and service providers. He is accused of too many loopholes, and neither service providers nor buyers can get actual interests guaranteed. This also revealed that the lack of management of the Zhubajie platform, as well as the ubiquitous “tolls”, and the simultaneous decline of two-way word of mouth, naturally made Zhubajie’s survival more difficult.
As a platform-based product, the value of Zhubajie is that it can provide convenience for service objects or create value for customers. That is to say, when enterprise users enter Zhubajie, they hope to find all kinds of cost-effective artificial services, while individual users or service providers enter Zhubajie in the hope of providing skills to gain profits and realize skills realization.
When service providers look for service orders, because Zhubajie adopts the bidding method, which means that most of the service providers have paid for the labor in it, but they cannot get paid, which is obviously contrary to “paying is rewarding”. Human logic. Under such a business model, it is not difficult to understand why there are very few actual transaction volumes in the trading floor.
04
Epilogue
At present, Zhubajie.com has taken the lead in China’s comprehensive customized enterprise service e-commerce market, and the development of small and medium-sized enterprises faces challenges such as tight budgets, lack of professionalism or technical capabilities. However, such enterprises also have a strong demand for professional technology and services. At the same time, flexible employment groups also need to find part-time assignments, job opportunities, etc. online. This is also the value of the existence of Zhubajie.com.
However, how to better serve users on both sides of the network and achieve positive profits at the same time is still a difficult problem for Zhubajie. In this regard, the capital market’s views on Zhubajie’s IPO are also quite worried.
It is foreseeable that even if Zhubajie is successfully listed, but if investors want to pay the bill and help them, the priority needs to be solved is to prove to the capital market that Zhubajie is not only a platform with social value, but also a platform. A profitable commercial enterprise. And to complete this task, for Zhu Bajie, there is obviously a long way to go, and the road is difficult and difficult.
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