At the corporate level, express delivery companies have opened up a second battlefield, making efforts in cold chain, express, intra-city, and international sectors to find a new growth curve.
Editor’s note: This article is from the WeChat public account “Express Observer” (ID: exobserver), author: Yibao.com.
In a few days, JD Logistics will soon be listed, becoming the second largest express company in market value after SF Express. Whether on the B-side or the C-side, JD Logistics has the strength to launch a new round of sprints.
Set the time back to one year ago, SF Tongdabai also worked happily on a three-acre land. With the entry of Extreme Rabbit, the gross profit of the industry under price competition has repeatedly hit new lows, grabbing customers, grabbing outlets, The end of the fight was staged ahead of schedule.
The monopoly of regional outlets is staged
In the interactive group of Yibao.com fans, many terminal operators are full of confusion about the future. In joining the network, the outlets around them or in the area are constantly changing, some people leave the market and others enter, and they are increasingly unable to understand this industry that has been in business for many years.
The most direct manifestation of price wars is the continuous compression of profit margins when they are transmitted downstream to the grassroots outlets. On the one hand, the distribution fee has been continuously reduced. On the other hand, many outlets can hardly get the parts of major customers, only scattered parts are maintained.
According to Zhengguan News, in Shanghai’s Pudong New Area, many Best Express outlets are in a state of instability. Even the large outlets with large shipments have monthly losses of more than 100,000 yuan. Liu, who has been engaged in express delivery in 2010, said that the collection fee has dropped from about 10 yuan at the peak to more than 1 yuan now. Many franchisees have either closed down or stayed strong.
Yibao.com has learned that there are not a few outlets that have stagnated in all regions, and some headquarters have made it clear that they will continue to reduce the distribution fee in the future. “A year ago, the outlets could sell 1 million, but now it is difficult to sell 200,000.” In the background message of “Express Observer”, more and more young brothers recently reported that they have encountered problems such as wage arrears.
At the headquarters level, the performance tone of the express delivery industry in the first quarter did not improve significantly, and each company did not deny that the biggest reason for the turnaround from profit to loss was the continuous decline in single ticket prices.
In the case of unstable terminal outlets, regional mergers and acquisitions in many cities are being staged. Some outlets have not only expanded their business scope but also achieved a regional monopoly by wooing capital to acquire franchise outlets in nearby regions, thereby increasing their profit margins. “The franchise outlets that achieve a monopoly in the region generally have nothing to do with the head office.” If a new outlet fails, they will put it in their own outlets.
Even if there is a regional monopoly of outlets, it is difficult to achieve the profits of previous years through express delivery itself. “At present, we can only guarantee that the outlets will not lose money. We are now focusing on our own station, through the increase of spare parts and carrying retail, so as to ensure our own living space,” a Beijing-based practitioner who operates multiple brands in the region told Yili Leopard Net.
PriceWhat is behind the grid war? It is capital that is supporting it and it is burning money. The reason why the second-tier express delivery has fallen one after another is because the capital chain is broken and there is no money to burn. From the current point of view, the loss-making Best Shentong is undoubtedly facing the Alexander of the capital chain.
Who can optimize the supply chain can survive
On May 20th, JD Logistics announced that it would end its Hong Kong IPO subscription one day ahead of schedule. According to market news, JD Logistics has been subscribed by more than 1 million people. It announced the subscription result on the 27th and will officially land on the Hong Kong Stock Exchange on the 28th. Data that has not been updated shows that Jingdong Logistics has subscribed more than 270 times, but market sources have revealed that Jingdong Logistics has overbuyed 715 times.
Analysis believes that JD Logistics, which is touted by the capital market, is expected to become the second-highest new stock in Hong Kong stocks from 2021 to the present, second only to Kuaishou at HK$42 billion. After the company is listed, the market value is expected to reach approximately HK$239.8 billion to HK$264.1 billion.
Yibao.com believes that after the listing, JD Logistics has sufficient ammunition. As its opening degree becomes higher and higher, there is no doubt that it is inevitable to compete with SF Tongda in the fields of C-end, major customers, and end.
“Whoever has the ability to optimize the supply chain, who can reduce costs and increase efficiency, is eligible to survive.” In the current state of competition, this sentence applies equally to headquarters and outlets. Different outlets have different shipping costs, and the rebates received from the headquarters are also different.
Yibao.com found that all express companies are exhausted due to the price war. The situation has changed. Whether it is SF Express, which is developing its economy, trying to balance market share and profit, or Tongdabai, which is already under serious pressure, including the large-scale money-burning Extreme Rabbit, they are all facing a big test.
How to solve the vicious price competition? Regulatory action has already begun, and Zhejiang is preparing to introduce relevant laws and regulations to prohibit companies from competing at prices below cost, but the terms need to be further refined and the intensity needs to be strengthened. As the country’s anti-monopoly efforts increase, the phenomenon of queues between express delivery and e-commerce is expected to be broken, which will also help prices return.
At the corporate level, express delivery companies have opened up a second battlefield one after another, focusing on cold chain, express, intra-city, and international sectors, looking for a new growth curve. In this life-and-death contest, who can be the final winner is still not conclusive.