Huolala summoned for talks, is the same-city freight industry facing major changes?
Recently, the State Administration for Market Regulation publicly interviewed Huolala. Based on the Anti - Monopoly Law, it required Huolala to stop using algorithms to unreasonably lower freight prices and using platform rules to enforce exclusive vehicle stickers, and to conduct a comprehensive self - inspection and rectification. The regulatory authorities require Huolala to reduce the platform commission rate from the current approximately 11% to the range of about 9%, and return a total of 120 million yuan to drivers affected by unreasonable rules. The longest order traceability period can reach three years. For Huolala, which has failed to list on the Hong Kong Stock Exchange multiple times, this is not only a warning from the regulators but also a profound examination of its business model.
01. The Galloping Huolala and Its Hesitation in Front of the Hong Kong Stock Exchange
Looking back at Huolala's development history, it is a typical expansion history of an Internet platform "burning money for scale". Since its establishment in 2013, Huolala has entered the same - city freight market with the O2O model. Catalyzed by the capital of first - tier institutions such as Sequoia Capital and Hillhouse Capital, it has rapidly expanded its market share. However, as the dividends of the mobile Internet reach their peak and the capital's patience for returns is gradually exhausted, IPO has become an inevitable exit path for it.
In the past two years, Huolala has submitted its prospectus to the Hong Kong Stock Exchange multiple times. According to the disclosed financial data, in 2023, the company achieved an annual revenue of 1.334 billion US dollars, a year - on - year increase of 28.8%. The operating profit turned positive in 2022, and the adjusted net profit in 2023 achieved a turnaround from loss to profit, reaching 391 million US dollars.
However, if we peel off the "surface" of this profitability, its "core" remains fragile. Huolala's profit turning positive largely depends on investment income and cost - reduction and efficiency - improvement. The profit margin of its core platform matching business is still meager. Same - city freight is essentially a tough and tiring job, with a very low ceiling for gross profit margin. In the logic of the capital market, the lack of high - quality and sustainable profitability of the main business is the biggest constraint it faces in IPO pricing and valuation. The regulatory interview undoubtedly adds more uncertainties to this already bumpy listing journey.
02. Algorithms, Commissions and the Real - World Dilemma of "Failing to Please Both Sides"
The biggest controversy Huolala currently faces is that it has fallen into an awkward situation of "failing to please both drivers and users".
On the driver side, the core pain points are concentrated on the commission rate and algorithm - based price suppression. As the platform's market share stabilizes, the early strategy of using subsidies to gain scale is no longer sustainable. Increasing the commission rate has become a direct means for the platform to achieve commercial monetization. According to some drivers, the platform's comprehensive commission rate sometimes even exceeds 20%. Coupled with hidden costs such as membership fees, drivers have to accept low - price orders dispatched by the algorithm in order to maintain their income, falling into the involution of "running more but not making money". This time, the State Administration for Market Regulation requires the commission rate to be reduced to 9% and the refund of 120 million yuan in unreasonable fees, precisely to alleviate this contradiction.
On the user side, the pain points in the experience lie in non - standardized services and temporary price increases. Especially in C - end scenarios such as moving, due to the lack of unified pricing and service standards, some drivers will temporarily increase the price on - site in the name of floor fees, distance fees, etc. to make up for the losses of low - price orders, seriously damaging the platform's reputation.
Objectively speaking, this is not a problem of the platform alone, but a game between the capital's return requirements and the low - gross - margin characteristics of the industry. The platform bore huge R & D and customer - acquisition costs in the early stage, and it is inevitable to "take a cut" to recover the costs in the later stage. However, when the platform has a certain market dominance, if this "taking a cut" lacks transparency and rationality, it will turn into a zero - sum game between the platform and the laborers. This time, the State Administration for Market Regulation requires the rectification of the commission rate and the protection of drivers' rights, precisely to break this internal strife and promote the platform's transformation from "one - way harvesting" to "ecosystem co - construction".
03. In the Second Half of the Same - City Freight Market, Where Is Huolala's Moat?
Looking beyond a single enterprise and examining the overall pattern of the same - city freight industry, we will find that it is a trillion - level market but extremely fragmented. Although Huolala ranks first in the industry with a market share of over 69% in the Chinese mainland market (calculated by closed - loop freight GTV), its global market share in 2024 is about 53.4% - 53.9%, and its moat is not as deep as expected.
The threshold for same - city freight is relatively low, and the switching costs for drivers and users are extremely low. In the competitive landscape, Huolala is facing a multi - pronged siege. In the fields of express delivery and same - city urgent delivery, enterprises such as SF Express Same - City (9699.HK) are also continuously deepening their instant delivery services.
In addition, Kuaigou Dache (stock code 2246.HK), once the second - largest player in the industry, has been under continuous pressure on its performance. Its revenue in 2023 decreased by 2.6% year - on - year, and it suffered a loss of 1.1 billion yuan. Its founder, Chen Xiaohua, has left the company. Kuaigou's outcome confirms the fragility of the "burning money for scale" model in the same - city freight track - once the capital fails to keep up, the scale advantage will quickly collapse.
If we take a longer - term view and compare with Manbang Group (YMM.N), the leading enterprise in trunk logistics, we can better see the business difficulties of same - city freight. Manbang is engaged in trunk logistics, with relatively fixed routes and a high degree of cargo standardization, which is easy to form economies of scale and network barriers. In contrast, same - city freight is short - term, frequent, and fast, and extremely non - standardized, highly relying on offline fulfillment capabilities. This means that Huolala cannot simply stay at the stage of an Internet platform for "information matching" and must transform into a heavy - asset operation model with standardized services. However, this requires extremely high management costs and a long - term accumulation, which is by no means an overnight achievement.
From wild growth to compliant development is an inevitable path for every platform - type enterprise. The regulatory interview with Huolala is a short - term pain on its IPO journey, but a long - term opportunity for the reshaping of its business model.
For Huolala, the real moat is not a large number of drivers or algorithm efficiency, but whether it can find a sustainable balance among platform profitability, drivers' dignity, and user experience. After all, only when every participant in the ecosystem has a future can this same - city freight giant truly cross the hidden reefs of the cycle and knock on the door of the capital market.
(This article is for reference only and does not constitute investment advice. The market is risky, and investment should be made with caution.)
This article is from the WeChat official account "Investor Network - Thinking Finance", written by Jiang Ji, and is published by 36Kr with authorization.