Tiger Sniffing Business Group
Author | Zhenzhen
The head picture is from the stills of “Get Home at One Point”
This year’s Spring Festival, you may not have to worry about not being able to receive express delivery or slow delivery. Buying, buying, and receiving will not matter this year.
Entering the end of January 2021, the clarion call for express delivery “not closing during the Spring Festival” has been sounded in China. Unlike previous years, this year’s express delivery will not close during the Spring Festival. All major private express companies, including Suning Logistics and JD Logistics , They are all working hard to keep the couriers with cash, red envelopes, welfare and other measures.
Shentong, for example, told Tiger Sniff that they aimed at “not closing the Spring Festival” and the company headquarters directly found cash incentives. During the Spring Festival, there are expected to be 40,000 couriers voluntarily on duty. Each of them can receive more than 2500 yuan in cash rewards for the Spring Festival. The incentive fund exceeds 100 million yuan. In addition, in addition to direct delivery from the headquarters, the company also encourages local outlets to provide Spring Festival incentives to couriers participating in “not closed” based on local actual conditions.
Direct cash of 2500 yuan per person, which is really something that express companies did not have during the Spring Festival.
Why are the courier companies so hard this Spring Festival? On the one hand, we will work hard to keep express delivery during the epidemic, on the one hand, we will respond to the country’s “in-situ Chinese New Year” as a guarantee, and the most important and critical aspect is “competing for business volume and service reputation.
In 2020, due to the impact of the epidemic, the Tongda business belonging to the franchise express delivery company will be restricted to franchisees in various places and the transfer of express personnel in different places, which will cause consumers to purchase goods on e-commerce platforms late. Delivery is not shipped or delivery is slow, business volume, word of mouth, etc. are greatly affected. The direct-operated SF Express, JD Logistics, and Post will be affected.The degree is smaller.
So, this time we must have a good year in the New Year!
In 2020, differentiation will increase
As of now, four listed express delivery companies, SF Express, Yunda, YTO, and Shentong have released their business volume in December. SF Express has 870 million votes, Yunda 1.541 billion, YTO 1.49 billion, and Shentong 964 million.
As far as ZTO is concerned, according to ZTO’s full-year business volume of 17 billion in 2020 minus 6.97 billion in the first half of the year and 4.62 billion in the third quarter, the business volume in the fourth quarter is 5.41 billion. If ZTO’s business volume in the fourth quarter is 5.41 billion votes based on the monthly average, ZTO’s business volume in December will be about 1.8 billion votes.
Best has not yet announced the financial report data, so the business volume in December 2020 cannot be inferred. However, on November 16, 2020, Best announced a strategic adjustment to withdraw from store-plus business operations and focus more on its core logistics business. Therefore, it can be roughly judged that Best’s business volume in the fourth quarter is growing at a positive rate, but the growth rate will not be too large. In the third quarter of 2020, Best’s business volume was 2.36 billion votes.
From the perspective of package volume, Zhongtong still occupies the first position, Yunda second, Yuantong followed closely, followed by Shentong or Baishi, and finally SF. It is not surprising that SF Express is ranked last, after all, it has just picked up on special and e-commerce products.
In addition, in December 2020, due to the epidemic, community group buying has ushered in its second spring. Giants such as Ali, JD, Pinduoduo, Tencent, and Meituan have all joined the community group buying camp to seize the sinking market.
Community group buying is not only an opportunity for the above major manufacturers, but also a good opportunity for major express companies to enter the sinking market and seek incremental markets.
Analyzed by Essence Securities, express companies can participate in the community group-buying supply chain system by virtue of their end outlets/express stations, venues and transportation resources in the sinking market. The strategic layout and management experience accumulated by express companies in the same city and fresh cold chain may bring opportunities for cooperation with group buying platforms. In terms of the end, due to the high liquidity and low service standardization of the current community group buying group leader, the end point of express delivery may participate in the community group buying and distribution link in the future.
At present, community group buying has not had a big impact on the business volume of express companies. However, SF Express has quietly launched “Fenghuotai”, a similar community group buying platform.
Of course, according to 2In 020, the business volume of SF, YTO, Yunda, and Shentong in December, “Zhitong Finance” calculated their business volume in 2020, as shown in the figure below.
Even though the Best data has not yet been released, the answer has already surfaced. In terms of business volume alone, domestic leading express delivery companies are accelerating differentiation, and the echelon situation is also particularly clear under the epidemic. Even so, none of the express delivery companies that have developed for nearly 20 years are willing to give up, especially the companies at the end, they are holding their positions in various forms.
For example, Best will re-list the express parcel business in 2020, and make strategic adjustments on November 16; Debon and Yunda hold together for warmth.
Which one is better for express delivery?
In essence, express delivery is a very passive industry. They are mainly driven by e-commerce, including SF Express.
Affected by the epidemic, online consumption has increased, which is very good for the development of the entire express delivery industry, but this benefit is only concentrated in the leading express companies, namely SF Express and Tongda. This was accompanied by the withdrawal of another batch of small and medium express delivery companies, and the further acceleration of industry integration, such as Tiantian Express, which was acquired by Suning. After these small and medium companies are cleared, the volume of express delivery will be more concentrated on leading express companies. This also means that the express price war will not stop in 1-2 or 3 years and will become more and more serious.
So, if the business volume is concentrated to the leading express companies, which express company is more promising? In terms of overall development, is it SF Express, Zhongtong, or Yunda?
Currently, the domestic epidemic is in a recurring stage. SF Express is a direct-operated express delivery company, and its direct-operating advantage will continue during the epidemic. The launch of SF Express and Fengwang has made its business volume and revenue growth much better than before. Therefore, it is optimistic in the short term, but there are other risks in the long term. Why?
On the one hand, as far as SF Express is concerned, compared with the low-end express delivery market, the high-end market has a lower ceiling. At present, many franchised express delivery companies and JD Logistics are also working on the high-end market. Market competition has intensified, resulting in SF Express The development of advantageous areas of the company is further restricted; on the other hand, it is restricted by the direct operation of heavy assetsModel, it is difficult for SF Express to grab a larger share of the e-commerce express delivery market.
Furthermore, the data for the first half of 2020 shows that SF Express’s new business, intra-city express delivery, international and supply chain businesses are all in a rapid growth trend, but this business has a small contribution to SF’s overall revenue, accounting for only overall revenue At present, it is difficult to reverse the weak growth of the main business.
Analyzed by Ding Ping, an analyst at Magic Investment, SF Express is restricted by its own funds, and its network expansion speed is relatively slow, and its outlets cannot reach more low-end markets. This makes it difficult for SF Express to fully penetrate the low-end market. In addition, the franchise express delivery industry is experiencing serious homogeneity and is switching from the incremental era to the inventory era, and the price war is intensifying. The cost of SF Express is relatively high, and its single ticket cost remains above 14 yuan. Compared with franchised systems, such as Zhongtong’s single ticket cost of 0.71 yuan in 2020Q2, SF lacks a price advantage.
Nowadays, the homogeneity of the e-commerce express delivery industry is serious, and the price war is fierce. Yunda’s market share has been stable at the second position. However, its single ticket revenue in December 2020 has dropped by about 26% year-on-year, and both revenue and profit Has shrunk: In December, Yunda achieved revenue of 5.625 billion yuan, a year-on-year decrease of 15.86%, and non-net profit was 260 million yuan, a year-on-year decrease of 48.02%.
The drop in single ticket revenue may mean that Yunda’s market share has declined. Yunda wants to stabilize or grab a larger market share by significantly reducing single ticket revenue. Since 2020, Yunda’s single ticket revenue has fallen by more than 20% year-on-year, and its business volume market share in the third quarter reached 18%, which is only 2.8 percentage points behind Zhongtong, and the gap has become smaller.
In Ding Ping’s view, single ticket revenue cannot fall indefinitely. First of all, behind the drop in single ticket revenue is a sharp drop in revenue and profits. According to her knowledge, in the first, second and third quarters of 2020, Yunda’s operating income has stagnated or even shrunk, and its net profit attributable to its mother has been in a state of sharp decline. “When the growth of business volume cannot make up for the loss caused by the single-vote revenue reduction, Yunda will fall into the dilemma of both revenue and profit decline.” Ding Ping said.
Express companies that are deeply mired in price wars have limited room for cost reduction per ticket. Express companies reduce the cost of a single ticket by increasing the scale effect, but the space for cost reduction is limited. On the one hand, it is difficult to reduce the end cost; on the other hand, as the franchise outlets reach more areas with low business volume, the cost is more difficult to share. Asset investment will also increase the cost of use. Therefore, Yunda’s strategy of “trade price for quantity” is not sustainable.
According to the current market position of ZTO, if ZTO represents franchise express delivery and low-end express delivery, it can cover a lot of express business volume, then you may choose ZTO, not only the price is relatively low,And the quality is relatively leading.
S.F. and Yunda are optimistic about the short-term comparison, but in the long-term, there will be long-term concerns. Generally speaking, from a long-term perspective, SF Express and Zhongtong have better future development.