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Corporate Profile

Corporate Profile

Quhuo Limited (NASDAQ: QH) ("Quhuo" or the "Company") is the largest workforce operational solution platform in China. Quhuo provides tech-enabled, end-to-end operational solutions to blue-chip on-demand consumer service businesses in industries with significant ecommerce exposure, including food delivery, ride-hailing, housekeeping and bike-sharing. In 2019, the Company ranked No.1 in the on-demand food delivery solution market in terms of both the number of delivery orders and revenue, with a market share equal to that of the next top four market players combined in terms of revenue, according to the F&S report. Within the on-demand consumer service ecosystem, the Company plays a unique and indispensable role as the link between consumer service businesses and the end consumers to enable the delivery of goods, services and experiences to consumers.

Quhuo's story began in 2012 when a trio of ex-DHL entrepreneurs founded the Company to partner with the rapidly growing on-demand food delivery businesses in China and provide a platform of large, flexible and standardized workforce focused on the last-mile delivery of prepared food. In the years that followed, the on-demand consumer service industry has flourished with the increasing society-wide consumer embracement of the on-demand economy, driven by rapid urbanization, consumption upgrade and democratization of mobile internet. According to the F&S report, China’s on-demand consumer service market, in terms of gross transaction value, increased from RMB1,296.4 billion in 2015 to RMB4,641.4 billion in 2019 at a CAGR of 37.6%, and is expected to reach RMB9,482.2 billion by 2024 at a CAGR of 15.4% from 2019 to 2024. The proliferation of on-demand consumer service industry has created a new and expansive demand for flexible, stable and trained workforce to deliver standardized, high-quality services to consumers. However, China’s labor market is experiencing significant challenges, including a continuous decline in skilled working-age labor force and persistently increasing labor costs. The on-demand consumer service companies also generally lack in-house resources or capability to deliver standardized and high-quality services to end consumers. This mismatch among demand, supply and capability creates an enormous and sustainable business opportunity for us. As a clear leader in the workforce operational solution market, Quhuo believes it is well positioned to capture the enormous opportunity in this highly fragmented market with a number of small-scale, single-industry players incapable of delivering standardized solutions.

To the on-demand consumer service companies that it serves, Quhuo's solutions have become critical to their business strategy, operational focus and financial performance. The Company has established deep-rooted, long standing partnerships with blue-chip industry customers in an increasing number of on-demand consumer service industries in China. Quhuo's platform helps industry customers mobilize a large team of workers and utilizes a combination of training, performance monitoring and refinement, and incentives to transform them into skilled workers who can follow industry-specific, standardized and highly efficient service procedures. In the on-demand food delivery market alone, Quhuo has been able to achieve an average of approximately 40% cost saving for industry customers in terms of operational cost per order, according to the F&S report. Leveraging its technological capabilities, Quhuo conducts data-driven operational analysis to assist its industry customers in improving their service quality and consumer satisfaction. For example, the Company has been able to work with its largest industry customer and limit delivery times for prepared food generally within 30 minutes.

To the workers on its platform, Quhuo believes it has become a "go-to" one-stop platform that provides them with diversified, flexible earning opportunities. Workers are also attracted to its platform for career advancement prospects and various work-life support and services. The Company empowers workers with minimal work experience to begin their career and progress with it. Quhuo believes that the size of its workforce allows it to further cement its relationship with industry customers and become their partner of choice when they enter new geographical markets or new on-demand consumer service industries. Workers on its platform are also encouraged to bring in their friends, relatives and acquaintances to continually and organically expand the workforce network. Over 74% of those who joined Quhuo's platform in 2019 were referred by existing workers. The Company believes that the bonds among workers on its platform can be forged by such social relations, minimizing worker turnover and making its platform more stable.

Quhuo's ability to quickly scale up its business and effectively manage its workers rests on Quhuo+, a proprietary technology infrastructure that centralizes operational management and streamlines the solutions process. For workers in a management position, such as team leaders for it on-demand food delivery solutions, Quhuo+ allows them to pinpoint workers on their platform to monitor their workload and performance, and dynamically manage staffing and maintain solution quality. With Quhuo+, team leaders are able to transcribe industry-specific KPIs obtained from industry customers into executable guidance for workers on Quhuo's platform, and benchmark workforce performance across all workers and teams based on data-driven analytics to refine its solutions and optimize its operational efficiency. For rank-and-file workers, Quhuo+ allows them to review their workload, access on-the-job training and review their performance. As a result, the Company is able to cultivate a specialized yet flexible workforce and deploy the same workers across different industry settings based on their work schedules by, for example, allowing delivery riders on its platform to take part in Quhuo's shared-bike maintenance solutions during their off-peak hours, which serves to optimize its operational cost and also diversify their earning opportunities. The Company has developed Quhuo+ into a scalable modular system with customizable parameters and settings to smoothly manage and transfer massive workers across different regions and industries it serves, which forms the bedrock of Quhuo's highly scalable and replicable business model. As a result, Quhuo is able to scale its operations and replicate its success into greenfield regions or industries quickly and cost-effectively with minimal incremental costs on infrastructure.