After experiencing the ups and downs of "heavy financing" areas such as shared bicycles and online car-hailing, investors are no longer confident in the rapid expansion of Tubu tigers, but seem to have questions about its continued growth after "burning money". Admittedly, After the expansion, Tuhu does have a lot of hidden worries.
Author 丨shui Shuishui
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Rumor has been around for a long time that Tuhu Yangche, which has been established for 11 years, has finally opened the road to IPO in the Year of the Tiger, seeking to provide a different path for future development through financing.
On January 24, Tuhu Yangche formally submitted a prospectus to the Hong Kong Stock Exchange to seek listing on the Main Board, with Goldman Sachs, CICC, Bank of America Securities and UBS Group as joint sponsors.
From the perspective of the expanding store scale, Tuhu still follows the path of the "Internet +" industry focusing on financing and hoping to exchange user resources for future profit space. From Tuhu's prospectus and recent developments, we can not only see Tuhu's entrepreneurial achievements as the "leading boss", but also feel the hidden worries of Tuhu after "high-speed running".
In the author's opinion, what Tubu tiger needs to pay attention to after the IPO may be a road from scale to lean. Tuhu needs to dig deeper into its own advantages in order to maintain an irreplaceable competitive advantage after rapid expansion.
1
16 rounds of fundraising of 9.1 billion
In 2011, Chen Min founded the tire sales website Tuhu Car Network. Five years later, Tuhu decided to open stores offline and gradually became a multi-category integrated service provider with more than 36,000 stores across the country. With the help of the Internet, Tuhu has become a "new force" in the uneven automotive aftermarket.
In fact, Tuhu's business model is not difficult to understand. Users buy maintenance accessories online at a lower price and then install them in designated offline stores. As a sales platform, Tuhu ensures product quality and provides high-quality and inexpensive products. In the low-threshold, opaque automotive aftermarket, Tuhu has formed its own reputation.
In addition, Tuhu has also made efforts in the supply chain. Tuhu operates 42 regional distribution centers and 374 front-end distribution centers, with a self-built logistics fleet. This has led many analysts to refer to Tuhu as "JD.com in the automotive aftermarket."
With a basic business model, Tuhu also reflects the characteristics of the "new forces" of the Internet in the way of expansion: financing and throwing money, expanding the scale, accumulating users, and impacting the listing.
Prior to the IPO, Tuhu conducted 16 rounds of financing, raising a total of 9.1 billion yuan, and investors included Tencent, Baidu, Goldman Sachs, Hillhouse Capital, Sequoia China, CICC and many other "big names".
Among the many "big names", Tencent has become Tuhu's largest shareholder with 19.41% of the shares. Tencent not only participated in tuhoo's multiple rounds of financing, but also led Tuhu's series E financing in September 2018 with $450 million, and also carried out more in-depth cooperation with Tuhoo. At the end of 2018, Tencent and Tuhu launched the "Tenghu Plan 1.0" action in precision marketing, store intelligence and brand services. In September 2021, Tuhu Car was connected to the WeChat "Travel Service" Jiugongge Entrance, and Tuhu officially became a member of the "Tencent System" service.
It is worth mentioning that Tencent was also fined 500,000 yuan by the State Administration for Market Regulation for acquiring Tuhoo in violation of the declaration requirements of the Fa Monopoly Law.
Under the favor of affordable brand image and capital, Tuhu ran all the way. According to the information in the prospectus, Tuhu has become the largest tire retailer and oil retailer in China. In the first nine months of 2021, the integrated automotive products and services to the C-end achieved revenue of about 8 billion yuan, with a total revenue of 8.44 billion yuan, and the repurchase rate exceeded 60%.
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Hidden dangers in the store
After experiencing the ups and downs of "heavy financing" areas such as shared bicycles and online car-hailing, investors are no longer confident in the rapid expansion of Tubu tigers, but seem to have doubts about its continued growth after "burning money". Admittedly, After the expansion, Tuhu does have a lot of hidden worries.
First of all, Tuhu's profitability has not yet been demonstrated.
According to the prospectus, after deducting the change in the fair value of the convertible redeemable preferred stock, Tuhu's annual losses are not as exaggerated as the "three-year loss of more than 10 billion yuan" before deducting it, but they are maintained at about 1 billion yuan, and the phenomenon of "increasing revenue without increasing profits" still exists.
What is more noteworthy is that Tuhu's growth curve may also have peaked. According to the prospectus, by September 2021, Tuhu's average monthly active growth rate was 37.4%, which was already lower than the growth rate of Tuhu factory stores, and marketing expenses were also increasing significantly. It is also pointed out that Tuhoo's gross profit margin of 15.5% in 2021 is difficult to maintain in the maintenance industry.
Secondly, Tuhu's business model is not small.
Tuhu's store network is divided into three levels, and as of September 2021, there are only 202 self-operated Tuhu factory stores, accounting for 0.6%. There are a total of 3167 franchised factory stores, and the model is that Tuhu directly sells goods to customers, and then the franchise stores provide offline services, tuhu regularly settles service fees with franchisees and obtains franchise fees and management fee income. More Tuhu stores are cooperative stores, and the relationship between Tuhu and partner stores is similar to paid services, and the control over cooperative stores is weaker.
As of September 2021, the number of cooperative stores is 33,233, accounting for 90.8%, covering most prefecture-level cities in China. It can be seen that the largest number of Tuhu stores is the most difficult to manage uniformly.
Signs of inconsistency in service perception have emerged. In online reports, some consumers said that many of the stores provided by the platform are maintenance workshops and lack professional qualifications. Among the online complaint platform black cats, there are 688 involving Tuhu's car ownership, of which the latest few can see problems closely related to service quality, such as "maintenance without tools", "prevarication", "maintenance caused by oil leakage".
Complaints about Tuhu on the Black Cat platform
It can be seen that scale may not only be an advantage for Tuhu, but also a shortcoming.
In the farther future, changes in the automotive industry will also affect the development of the automotive aftermarket. At the moment when the market penetration rate of new energy vehicles is constantly increasing, it will first cause the maintenance category to trade in and out. The demand for components such as tires and wipers still exists, the demand for engine components such as engine oil will be reduced, and the integration of the three-electric system and technical content of new energy vehicles are very high, and whether it can be handed over to a third party for processing needs to be further observed.
On the other hand, in order to ensure product safety and attract users, new energy vehicle companies often provide ultra-long warranties and even lifetime warranties for vehicles. In the quality assurance policy, car companies will also limit the provider of maintenance and repair to varying degrees. In addition, many car companies such as Ideal and Weilai will take convenient and meticulous official maintenance services as selling points, and these factors will affect users' choice of third-party service providers such as Tuhu.
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Where is the breakthrough
Tuhu's prospectus clarifies that the purpose of the fundraising is to improve supply chain capabilities, data analysis and other technology research and development, expand the store network, and invest in new energy conservation. The first two of them reveal that in addition to large-scale development, the use of lean data that we have may be a new breakthrough for Tuhu.
As the leading boss, Tuhu also has a lot of gains in addition to revenue. With more than 10 million monthly active users, Tuhu is the largest community of car owners gathered by Chinese car service providers. A large number of car owners, more than 3,000 suppliers and more than 36,000 stores form the "automotive service ecosystem" in Tuhu's mouth.
At the same time, Tuhu has the largest and most accurate auto parts database in China, covering 44,000 models from 239 brands, and the matching accuracy has reached 99.94%. In addition, Tuhu's technician management system for store merchants, Blue Tiger, has also become the number one monthly active person in the industry.
Tuhu is indeed using its own data. In the business disclosed in the prospectus, Tuhu is using the C2M model to develop its own brands and exclusive brands, identify customer needs through sales data, and assess product feasibility. Tuhu is also working with international brands to provide reference for localization research and development, participating in product design, marketing decisions, market distribution and other processes. This helps to transform Tuhu from a mere "seller" to an irreplaceable "partner" for the brand.
In terms of new energy transformation, Tuhu has also begun its own layout. In August 2021, Tuhu signed a strategic cooperation agreement with Zero Run Automobile, and the first batch of cooperation was launched from more than 30 cities across the country, with Tuhoo store technicians and zero run certified full-time account managers jointly serving car owners. Chen Min, CEO of Tuhu, said directly, "This cooperation between the two sides means that the after-sales service network of Zero Run will be greatly expanded. ”
Soon after, in October 2021, Tuhu reached a strategic cooperation with Beiqi Blue Valley's Jihu Automobile and opened the first "Co-creation Jihu Center" in Shenzhen, and Tuhu CEO Chen Min once again attended the scene. In this cooperation, Polar Fox will not only introduce Tuhu's conservation resources, but also open up a brand section in the Tuhu APP for marketing. This "operation" of Jihu is undoubtedly a look at the huge user base that Tuhu has.
Compared with fuel vehicles, the maintenance of new energy vehicles is simpler and more convenient, but the transparency of the entire industry in maintenance is also higher than that of traditional car companies' 4S stores.
For new energy brands such as Zero Run and Jihu, which do not have a deep brand foundation, cooperation with Tuhu can not only meet the needs of new energy vehicle maintenance, provide car owners with good reputation services, but also reduce the cost of their own channel construction, and better catch up with the service scale of head enterprises such as Tesla and "Wei Xiaoli".
4
Tuhu meets "Tiger"
According to the information disclosed in the prospectus, Tuhu's future imagination space is still not small. On the basis of three consecutive years of revenue growth, which will exceed 10 billion yuan (based on data from the first three quarters of 2021 and the fourth quarter of 2020), Tuhu maintained an abundant cash flow of 1.4 billion yuan.
The size of China's auto service market is still growing, according to the information in the prospectus, the market from 2016 to 2020 compound annual growth rate of 12.3%, ranking first in the world, 2025 or the market size will reach 1.7 trillion yuan. The data of China Insight Consulting also shows that the size of the automotive service market has exceeded 1 trillion yuan in 2020.
In recent years, the sales of luxury brand cars have gradually increased, these vehicles tend to have higher maintenance costs, and after exceeding the warranty period, more car owners may turn to third-party service providers with higher cost performance.
However, as a synonym for Tencent's "car products", Many competitors around Tuhu are eyeing the tiger. In addition to the aforementioned 4S stores and car companies' self-operated channels, Internet giants are also interested in accumulating power in the automotive aftermarket.
In 2018, JD.com launched the "Beijing Tokyo Car Club" brand, connecting online and offline "car products" services, and has opened 1,400 stores across the country. In October 2021, JD.com also launched the B2B "JD Auto Parts" APP.
Also since 2018, Tmall has also set up a company focusing on the automotive aftermarket, Xinkangzhong, using brands such as "Tmall Station" and "Tmall Car" to link online and offline resources, and more than 1,700 stores across the country have joined, and the total number of stores that have applied to join since the investment has reached 26,000.
Compared with Tuhu, the Internet giants are more well-funded, have stronger execution of offline stores, and have better control over stores. For those who do not know much about car maintenance, a commonly used and reliable e-commerce platform may also have greater appeal than "the first stock in China's digital car aftermarket".
All in all, as the head player of the "new retail" of the automotive aftermarket, Tuhu is trying to find the value generated by the "service ecology" outside the scale. Whether it is a partner, marketing platform or a database of auto parts companies, Tuhu and its huge user base can bring greater imagination space. What cannot be ignored is that the fate of Tuhu and many competitors will also be closely related to the fast-growing but variable industry of the automotive aftermarket. Whether it is looking forward to copying a JD.com or recreating a Didi, Tuhu will face no small challenge.