Ctrip layoffs: Ten years of "mouse + cement" mode towards the end

In the spring of 2013, when the online tour service provider enters the hotel and the ticket booking peak, China's largest online travel service merchant Ctrip (CTRP,NSDAQ, hereinafter referred to as "Ctrip") has cut off his wrist as the offline ground team that has made a contribution to it: In addition to retaining Beijing, Shanghai, Guangzhou, Shenzhen 7 major airport channels, other two or three-line city airport, high-speed rail, railway station, bus station and other ground sales staff will be abolished, at least more than 500 people.

Behind the big layoffs is a series of troubling numbers: Ctrip, which was listed in the US in 2003, was once as high as $53/share, and now shares are hovering at $23/share, and Ctrip has been struck out of the Nasdaq 100 Index because of continued low share prices.

Ctrip is not no "self-help". Since the second half of 2012, Ctrip has set off 500 million of dollars in promotional activities, but the price of post-war earnings directly to investors poured cold water-February 1, 2013 announced the fourth quarter of December 31, 2012 and the year 2012 unaudited financial results. Ctrip reported in the fourth quarter of 2012, operating profit fell 48% Year-on-year, the net profit attributable to the shareholders of Ctrip fell 24%.

With the changes in the online travel market, sticking to the ten-year "Mouse + cement" business model is taking Ctrip to a dead end. is to cut off the traditional channels to the line or to cling to the jiangshan to suppress opponents, Ctrip must make a choice.

Forced layoffs

"Ctrip is completely under the pressure of the market under the passive transformation." As the industry boss, Ctrip's own transformation is not enough, the speed of innovation relative to the industry's competitors much slower. ”

"Ctrip layoffs are expected. From our order source and consumer group booking habits, the trend of online consumption is very clear, offline business volume is shrinking rapidly. Because online business is to spell technology and products, and offline business requires a large number of human costs, in the network coverage of the increasingly widespread situation, Ctrip's ' mouse + cement ' mode advantage gradually lost. "An Ctrip employee told the China Business newspaper."

The so-called "mouse + cement" model is Ctrip since 1999 has been adhering to the business model: that is, after 13 years of development, Ctrip built a website, membership system and a huge call center based on the operating model. "Mouse" refers to the call center staff for guests on the internet to achieve hotel and air tickets booking; and "cement" refers to Ctrip has been in Beijing, Guangzhou, Shenzhen, Chengdu and other 12 cities set up branch offices, responsible for offline sales, business travel management, the total staff of more than 10000 people.

An employee told the reporter, at the end of December 2012, Ctrip Chongqing Branch near hundreds of sales staff were suddenly verbally informed that "has been laid off," for this "surprise attack", "in fact, the internal high-level already decided, in order to avoid outside speculation, the company adopted a sudden notice of the way".

Recently, Ctrip's offline sales staff are deeply in jeopardy. and similar to offline sales, the same labor-intensive call center, but also become the next dangerous eggs.

Ctrip's huge call center in its rise in the process of work. Ctrip has the world's largest tourism service contact center with more than 7,000 call center employees. Ctrip's business model is "mouse + cement" rather than "telephone + cement". Until now, through the telephone booking Ctrip hotel, ticket orders still account for the largest volume of business.

However, the huge call center is almost the main reason for the high cost of Ctrip. According to industry sources, the cost of building a call center, including the cost of the site, 7,000 telephone sales costs, system construction, telephone costs, system maintenance, management costs and other aspects, and each part of the cost is not expensive, so this almost become a big shackle of the development of Ctrip. To achieve the line down to the line of Light Asset company transformation, Ctrip first cut off is the labor costs. Wei Changren, a senior online travel industry analyst, said that Ctrip was completely under the pressure of a passive transformation in the market.

Along with where to go nets, Taobao and other differences traditional OTA (online travel service agents) of the rise of the Web site and mobile application of the new model of the gradual, Ctrip market share is gradually being eroded. "Although the passive transformation has its positive side, but because Ctrip cut off the still have a certain business contribution to the ground service team, if the short term Ctrip online performance can not immediately make up for this, this will have a direct impact on the company's performance." "Industry experts say.

The advantages of losing

Ctrip's business base is relatively weak, still facing fierce market competition.

has been very innovative ctrip benefits from the "Mouse + cement" model, but the frequent problems of Ctrip is caused by this pattern inherent in the short plate.

In this respect, Yi Long network Vice President Shei Shen said, Art Dragon from 2008 to see this short board, began to focus on hotel online booking business, cut ground team, "The move was criticized by industry experts, now look at then made a right choice." ”

In fact, "mouse + cement" mode is determined by the Internet operation and payment conditions at that time, but now the number of Chinese netizens has reached 538 million, mobile phone users reached 388 million, online sales of the market environment has matured, plus online payments become more convenient, The original Ctrip model relied on the foundation has changed dramatically.

Ctrip is not unaware of the change of opponents, it chose the "Resistance" way is: Price war. July 2012, Ctrip launched a 500 million dollar low price promotional activities. The move has increased the number of hotel bookings by 40% in the same period, but at the same time, sales and marketing costs increased 74% year-on-year, the chain growth of 39%.

According to Citigroup analysts, Ctrip's business base is weak and still faces intense market competition – meaning that Ctrip's profits are likely to become thinner and that customers with low prices may be taken away at any time by low prices. Price war does not reflect the progress of Ctrip in service and technological innovation.

True and False Open

If Ctrip is still holding on to the traditional brand ban on mobile-end applications, but not with it, this will be a strategic mistake.

In fact, in September 2012, Ctrip has been aware of the need to work with third-party applications to the mobile terminal. But at the moment, the results are not satisfactory.

September 2012, Hotel reservation Application "hotel talent" announced with the largest hotel OTA Ctrip reached cooperation, which Ctrip began to try to open their own back to the Third-party application of hotel resources. Prior to this, Ctrip does not allow its own hotel channels to be used by third parties. It requires the hotel can not cooperate with it, once Ctrip found that this cooperative hotel will be Ctrip "blocked."

However, the hand of Ctrip holding more than 30,000 hotel resources, although announced open, but in the cooperation with the third party applications rarely movement. Ctrip's CEO, fan, said at an analyst meeting in the third quarter of 2012 that Ctrip's third-party open platform would introduce more providers, provide more services, and provide diversified services to partners. But during the analyst meeting, Morgan Stanley analyst Ji the "open platform" question: What about the feedback from service providers? But the Ctrip management did not give a clear explanation at that time, just stressed that Ctrip has to do a good foundation for open platform.

Because the hotel ticket is a standardized product, suitable for mobile end operation, 2011-2012 years in this field has emerged a lot of booking hotels or air tickets applications, but these waiting offline resources can butt the light company has been to ctrip more than 30,000 hotels and closed attitude.

It is understood that the current popular hotel applications such as Fast Hotel Butler, tonight hotel specials and no cooperation with Ctrip.

A senior industry personage said, at this stage, OTA brand diversification, channel diversification, product diversification. If Ctrip is still holding on to the traditional brand ban on mobile-end applications, but not with it, this will be a strategic mistake.

"Future Ctrip many lines of business will face the Art dragon, where to go, Taobao travel and other powerful opponents, it has been difficult to return to the original full line monopoly status." ”