"Science and Technology Innovation Board Daily" (Beijing reporter Hu Jiaming) news, recently, a number of Internet serious illness fundraising platforms have been exposed to start charging "support fees" to donors, and even donated 1 yuan to collect 3 yuan. At the same time, water drop chip, which was listed on the U.S. stock market last year, also began to charge service fees to fundraisers on April 7, and it said in the trial announcement that in the past five years, the cost of water drop chip to maintain operations has been subsidized by water drop company and has not been charged to fundraisers.
The "Science and Technology Innovation Board Daily" reporter inquired about the prospectus of the water drop company and found that since 2018, the net cash flow of the water drop company's operating activities has been in a net outflow state, and there is a trend of expansion; compared with the operating income that is not obviously increased, the net loss of the water drop company is also gradually expanding, which also greatly increases the financial pressure of the water drop company's operation of the fundraising platform.
From the perspective of financial reporting, the company's funds are no longer abundant, which may be the original intention of prompting Internet fundraising platforms such as Waterdrop Chip to charge service fees to both fundraising and donation parties. However, from the perspective of the amount of fees charged, it is still a drop in the bucket for the pressure on the operation of the fundraising platform.
When donations and withdrawals are "no longer free"
Charging service fees to donors or fundraisers in proportion to the donation fees are the two main ways of mainstream Internet fundraising platforms.
For example, the platform represented by easy fundraising, when the donor has previously donated on the platform page, the check option will appear in the last step, asking the user whether to read and agree to the "User Funding Instructions", if the project is not canceled, 3 yuan of "support fee" will be deducted when the actual donation is made. The "Science and Technology Innovation Board Daily" reporter inquired about the black cat complaint platform and found that most of the content of donor complaints was related to this - without canceling the check box, an additional 3 yuan of donation fees were deducted.
In the merchant's reply, Easy Chip said that the platform did not charge any service fees, nor did it mislead the payment. If the donor needs a refund, he can apply for a refund at the Easy Fundraising Public Account - Personal Center - My Donation - Funding Platform. The "Science and Technology Innovation Board Daily" reporter logged on to the easy fundraising client and found that as of now, the check option of the "User Funding Instructions" has been taken offline, and after the reporter randomly donated 1 yuan, similar additional service fee deductions have not reappeared.
In January this year, Waterdrop Chip, on the other hand, piloted service fees from fundraisers in Cities such as Xuzhou. In pilot areas such as Xuzhou, the amount of the service fee is 3% of the actual fundraising amount, and the upper limit of the service fee per case is 5000.00 yuan, which is the same as the proportion in the previously announced trial plan.
In addition, the third-party payment platform will separately deduct 0.6% of the withdrawal amount as a payment channel fee. If you want to view the specific pilot plan, you can check it yourself at the Implementation Announcement under the Withdrawal Announcement and Platform Statement.
Water drop related people told the "Science and Technology Innovation Board Daily reporter" that before the fundraiser initiates fundraising, the fundraising consultant will explain the rules of the service fee to the fundraiser, and the fundraiser has a confirmation when submitting personal information, and there is also a prompt when withdrawing. In other words, the fee is charged only after the fundraiser's consent is obtained. If the fundraiser does not recognize the service fee rule, he can choose another fundraising platform, or the water drop platform can help him contact another non-profit organization.
From this point of view, whether it is a fundraising platform to charge donors or fundraisers, its starting point comes from the rising operating costs of the platform, but the "0 service fee" model that has been operating for many years has cultivated the habit of free use for users, and suddenly becomes a charging model, which may adversely affect the user's reputation in the short term.
The "Science and Technology Innovation Board Daily" reporter checked the financial report of the water drop company and found that even according to the current deduction ratio of about 3%, the service fee scale charged by the water drop company is difficult to cover its high operating expenses, and it is still unknown whether it can alleviate the current operating conditions.
"Burning money marketing" buy traffic quickly bigger model sequelae
According to public information, The parent company of Waterdrop Chip, Waterdrop, was founded in 2016, and the founder is Shen Peng, the No. 10 employee of Meituan. From the perspective of family background, Shen Peng's family has been engaged in the insurance industry for many years. Meituan's work experience has given him a deep understanding and insight into both the Internet and insurance fields.
Since its inception, the company has experienced six rounds of investment, each of which Tencent has participated in all rounds. The most recent funding round was in November 2020, when Waterdrop accepted an exclusive $150 million strategic investment from Tencent. After six rounds of financing, Waterdrop received an investment amount of nearly RMB4.4 billion.
Of course, due to the public welfare constitution of the Internet fundraising business itself, coupled with the publicity strategy of "0 service fee", Waterdrop cannot obtain operating income from the business, so the traffic obtained by the fundraising platform is converted into the agent and distribution of Internet medical insurance, which has become an important way for fundraising platforms such as Waterdrop Chip and Easy Fundraising to obtain income.
In recent years, affected by the epidemic, the growth rate of online medical services has exceeded that of other medical methods in the same period, according to iResearch' forecast, the online medical service market is expected to reach 437.4 billion yuan by 2024, which objectively provides room for the growth of the insurance business of Waterdrop.
In addition, the relevant person of the water drop told the "Science and Technology Innovation Board Daily" reporter that the third-party insurance type it is responsible for acting for is mostly a one-time consumer insurance, which has a large insurance amount and a relatively small premium to be paid. Because of this, this type of insurance is more suitable for sales from the Internet and other channels, and the revenue of Waterdrop has also ushered in explosive growth in the three-year period of the prospectus - in 2019, the operating income of Waterdrop Company increased by 534.5% to 1.51 billion yuan, and in 2020, the operating income increased by 100.4% to 3.03 billion yuan. That's a nearly 12-fold increase in two years. The growth rate and amount are far more than that of Wise Choice Holdings, which also belongs to the Internet insurance brokerage industry.
However, behind the significant increase in revenue, Shui di still relies on the routine of "burning money marketing" on the previous Internet platform relying on third-party traffic. And this approach is effective during the expansion of the enterprise. The prospectus shows that in terms of revenue flow sources, in the early days, water droplets are still dominated by internal traffic (crowdfunding and mutual aid), but by 2020, this proportion has dropped to about 16%, replaced by organic traffic and third-party traffic.
However, the disadvantages of this style of play are obvious, that is, it is extremely expensive to put in the market. Therefore, in terms of net profit alone, the loss of Waterdrop Company has been expanding in recent years - in 2018, Waterdrop revenue was 238 million, net loss was 188 million; in 2020, Waterdrop revenue was 3.028 billion, net loss was 664 million, and in the latest disclosed 2021 financial report, the growth rate of Waterdrop was greatly discounted compared with the previous growth rate of several times, the growth rate was only about 5%, 3.206 billion, and the net loss was close to 1.6 billion, a sharp increase of nearly 1 billion compared with 2020.
Shortly after the listing of waterdrops in 2021, the Banking and Insurance Regulatory Commission issued the Notice on Carrying out Special Rectification work on Internet insurance chaos, focusing on the frequent chaos areas such as Internet insurance product management, sales management, claims management, and information security, focusing on rectifying problems such as misleading sales, forced tying, induced sales, inflated costs, illegal operations, and user information leakage.
In other words, the previous expansion of the Internet insurance business through "wild roads" such as burning money has no longer worked, which is undoubtedly another blow to the water droplets that have just taken shape in the business model.
Experts: You can refer to the charging standards of charitable foundations
The reporter of "Science and Technology Innovation Board Daily" checked the financial report of Waterdrop Company and found that its net operating cash flow in 2020 was -777 million yuan, which means that in the best year of Waterdrop revenue, the company's operating conditions are still in a state of "blood loss". In 2021, the revenue growth of water drops has stagnated, while the loss has further expanded, which also means that the previous vision of the fundraising business of relying on Internet insurance to feed back 0 service fees has become no longer feasible. This may be the intrinsic reason why Waterdrops started charging fundraisers for their services.
The reason why Waterdrop does not collect money from donors is that Waterdrop needs to sell Internet insurance to this part of the donor population, and in order to ensure the stability of its fundraising business flow, it chooses to charge fees to fundraisers.
It is worth noting that the water drop company said in the trial plan that the maximum service fee charged for each fundraising case will not exceed 5,000 yuan, if the proportion of 3%, it means that if the fundraising exceeds 166,700 yuan, the upper limit of the service fee can be reached, which is not difficult to achieve for seriously ill patients with treatment costs of hundreds of thousands of yuan.
The company claims to have raised medical funds for more than 2.4 million patients with serious illnesses in the past five years, so the annual droplet fundraising serves an average of 480,000 patients with serious diseases. If these 2.4 million patients with serious diseases have paid a service fee of 5,000 yuan, Waterdrop will charge a total of 2.4 billion yuan in service fees from them, but from 2020, the operating expenses of Waterdrop have exceeded 3.5 billion yuan, and in 2020, it will reach 5 billion yuan, and the above 2.4 billion service fees are only ideal.
"The free service method is not enough to support the sustainable development of the business, and it will hinder the platform to further exert the role of social force relief." Zhao Wanping, a deputy to the National People's Congress and vice president of the Anhui Academy of Agricultural Sciences, said in an interview with the media that as an Internet platform with efficiency advantages, it can refer to the current foundation management fee standards and set up reasonable industry service fee standards, so as to promote the benign and lasting development of the industry. Professor Xie Qiong, director of the People's Livelihood Security Research Center of Beijing Normal University, also believes that charging service fees is more beneficial to a certain extent than the "commercial feedback" model, but it is necessary to carefully stipulate the charging rates to ensure sustainable development.