Express delivery is an industry with very Chinese characteristics.

The prosperity of e-commerce and the high population density have created cheap express delivery services. But the essence of express delivery is a delivery business, the core competitiveness is only cost. Except for the aging parts with extremely high barriers, there is little room for differentiation in the e-commerce market. So in the past decade, different express delivery companies have taken turns to take the top spot in listing, with a market share difference of less than 10% between the first and fifth places.

In 2021, extreme Rabbit Express was born, bringing the pattern of burning money for growth to the express industry. Shunfeng and JD.com also entered the franchise e-commerce market, and the whole industry was caught in a fierce price war based on wool. Under the impact, both the high-end SF and the cost-effective access system saw a decline in revenue and net profit in 2021.

However, the war suddenly stopped at the beginning of this year, because the Postal Administration representatives could see that the price war was illegal and illegal, which eventually led to a series of chain reactions.

At a time when Internet companies are collectively reducing costs and increasing efficiency, the express industry relying on platform companies is also changing dramatically. This paper is divided into three parts:

1. How did BABA's control of the express industry begin to waver?

2. After many efforts, Shunfeng withdrew from the e-commerce market.

3. What is the new focus of SF and JD.com? what is the integrated supply chain?

01. The rift of BABA's hegemony

In 2005, when Taobao's turnover just surpassed that of Walmart Inc, Jack Ma decided to find a reliable logistics company for his e-commerce platform. Yuantong founder Yu Weijiao made a decision against the rules of the industry: accept the terms of Taobao and reduce the express price to 8 yuan per order.

Yu Weijiao's decision once attracted a lot of scolding from the Tonglu gang, but after cooperating with Taobao, Yuantong's business volume soared and reached the first place in the industry in just a few years. In 2006, Shentong took the initiative to find Taobao, and then ZTO Express, Yunda and Best successively connected to the BABA network.

E-commerce can drive the scale of express delivery, and cheap express delivery has promoted the prosperity of e-commerce. E-commerce and express delivery depend on each other, but they also share a different bed.

The goal of express companies is to eliminate or merge rivals, and then rely on volume advantage to increase bargaining power. But e-commerce wants express prices to be as low as possible, and the best way to achieve thisIs to let several express companies into an endless price war.

When Yuantong reached a partnership with Yuantong in 2005, Yuantong traded 20 per cent of its equity to BABA, and BABA continued to increase his stake in Tongda until the completion of his stake in Yunda in early 2021. Sitong Yida all accepted BABA's investment.

On the other hand, BABA is deeply involved in the operation of express delivery companies through Cainiao. On the one hand, it provides management technology for express delivery companies and improves efficiency through services such as layout, warehousing and landing allocation; on the other hand, it also makes express delivery companies more and more standardized and homogeneous, allowing them to compete through price wars.

As JD.com has his own logistics system, only BABA, who has a market share of about 50%, can provide a large number of stable orders to express companies, and express companies can only accept BABA's rules.

Until the emergence of Puduo, and the rapid rise of live e-commerce.

After 2018, the rapid growth of Pinduo has not only saved the growth anxiety of the e-commerce industry, but also injected new increments into the stagnant express industry. At the same time, extreme Rabbit Express, which binds and spells more, has become the fastest-growing dark horse in the history of the industry. The change of e-commerce pattern and the appearance of extreme Rabbit make express companies see hope.

In addition, the emergence of live e-commerce once again divided the pattern of e-commerce market. 2021Live broadcast on TaobaoGMVJust after 500 billion, Kuaishou Technology was 680 billion and Douyin was 880 billion.BABA did not maintain the leading position in this new market. For express delivery companies, the market of Party A has changed from BABA to BABA, Pinduoduo and Douyin. Even Douyin's e-commerce business is enough to feed the express delivery company.

In January 2022, the "measures for the Administration of the Express Market (revised draft)" issued by the State Post Bureau completed the final blow, with the second naming of Article 27:It is illegal to provide express delivery service at a price below cost without good reason.。

The final result of all these changes is a substantial increase in the revenue and profits of express delivery companies.

Since the second half of last year, the single ticket price of the express delivery industry has gradually picked up. Yunda's data show that the single ticket income of the express delivery industry from January to April in 2022 is 2.62 yuan, 2.34 yuan, 2.59 yuan and 2.53 yuan respectively, which is much higher than that of the same period last year.

Reflected in the company's performance, Yuantong Express's latest financial report deducted non-net profit increased by 187.5% over the same period last year, Shentong 198.14%, with a rhyme of 36.43%, while leading brother ZTO Express reported a year-on-year increase of 38.2% in the second quarter.

A month after the sale of the post office, Tongda Department received another good news: Shunfeng, which has been addicted to e-commerce for many years, finally decided to shrink its e-commerce business, and this part of the market share was gladly taken over by Sitong Yida.

02. Shunfeng cut down e-commerce and bet on international.

E-commerce has been a piece of fat that SF has coveted for many years.

Shunfeng's traditional advantage project is the timely parts, as the name implies, most of the things sent are documents, bills, high-priced consumer goods, etc., usually sent by air capacity. We not only have to spend money on aircraft, but also ask relevant departments to approve routes, which is an area with strong first-mover advantages. Shunfeng has 75 cargo aircraft and can handle 1.6 million tons of air traffic every year, which is almost 1 / 3 of the national air cargo volume, far ahead of other express delivery companies.

SF has been trying to break into the e-commerce market since 2013. In October of that year, SF hired e-commerce express delivery at a 40% discount to fight a price war with Tongda. But SF's online stores and couriers are self-run, and the access department has joined. As a result, profits fell sharply in 2014 and had to be suspended.

In 2016, Shunfeng replaced each door-to-door pick-up with centralized parts, which depressed some of the costs, but the lowest price was 15 yuan. Although Shunfeng did not lose money, most merchants could not afford it at all. Coupled with the life-and-death price war of Tongda Department at that time, the attractiveness of Shunfeng declined again.

In 2019, Shunfeng made a comeback again, launching "preferential e-commerce parts" to transport e-commerce express delivery by plane.

The most important thing about aging parts is speed, so SF cannot wait until the plane is full before leaving, resulting in a loading rate of only 40-55% all the year round. In fact, "preferential e-commerce parts" is to use these idle space to install e-commerce express delivery, only 2-3 yuan higher than Tongda Department, you can enjoy the high-quality service of Shunfeng, and the market is full of praise.

After getting a taste of the benefits from the special e-commerce pieces, Shunfeng made up its mind to copy the operations of the Department at the end of 2020 and launched the franchise system of "Fengwang Express". As a result, it lost money.

On the one hand, it is the capital expenditure brought about by the construction of the network, on the other hand, Shunfeng has to invest more land transportation resources and more manpower to send and receive express delivery. the profitability of e-commerce is described in the 2021 newspaper as"it has not yet reached a better level of cost-effectiveness, which puts some pressure on profitability. "

To be blunt,Shunfeng is losing money to do e-commerce business. The more you do, the more you lose.So SF announced in February this year that it would not be able to do so and began to shrink its e-commerce business.

On the other hand, what SF has lost has been made up in international business.

Kerry Logistics officially merged with SF Express in the first half of this year and made a profit. This part is mainly reflected inSupply chain与International divisionThis part of the revenue increased by 440.87% over the same period last year to 47.545 billion, and the proportion of total revenue increased to 35.8%, basically becoming the second girder of SF.

Moreover, the net profit of these two businesses also reached 1.689 billion, compared with the 2.11 billion profit of the aging parts business, there is only a gap of 400 million. Shunfeng's first-half revenue rose 47.2% to 130.1 billion yuan, deducting non-return net profit by six times. It seems that Shunfeng's purchase of Kerry is indeed a good deal.

Compared with the gains of Shun Feng and Tongda in the first half of the year, JD Logistics, Inc. 's performance is lacklustre. The narrowing of losses is not an improvement in business performance, but a change in its fair value, but JD Logistics, Inc. 's financial report has a very interesting sentence:

JD Logistics, Inc. integrated supply chain business external customers reached 62566.

03、Supply chain business in its infancy

Since JD Logistics, Inc. was split and listed, the word "integrated supply chain" has basically become a slogan that executives want to bring into bed.

The so-called integrated supply chain, to put it simply and rudely, is not only to help customers deliver goods, but also what customers need, logistics companies directly help buy, help customs declaration, and even help provide loan advances, and finally give them to customers.

Logistics company UPS once received a JAL call for help: a Japanese plane crashed its engine hood when it landed at Honolulu airport in Hawaii. UPS quickly trucked the brand new hood from the factory to San Diego International Airport, shipped it to Hawaii via a chartered Boeing 747, and shipped the damaged cover to an American repair shop.

A transportation involves three modes of transportation by sea, land and air, and requires contact with engine hood manufacturers and repairers. UPS provides a complete set of solutions for Japanese aircraft, which is an integrated supply chain.

As the needs of each customer are different, the integrated supply chain business is very non-standard, and the cost remains high. The gross profit margin of DHL is maintained at about 11%, while only 7% of the supply chain. The financial report of UPS also shows that the profit rate of the supply chain business is generally lower than that of the express industry.

But it has two advantages:

1. High customer viscosity.Because the solution is customized on demand, once you change the supplier, it will often affect your own production plan and have to re-run-in with the new supplier. Once the customer is bound, there is little chance of switching suppliers.

two。 The market demand is growing rapidly.Customized, small batch production mode is more suitable for individually customized logistics solutions, especially in the clothing industry, take a look at the cross-border e-commerce term "small single quick reverse" to understand.

Now there are only two supply chain companies in China, one is Shunfeng and the other is JD.com.

SF's approach is to acquire the Chinese arm of DHL and the Chinese business of the US-based Shahui Group, but it has not improved so far, which was mediocre before Kerry joined the supply chain and international business.

JD.com chose to increase the size of the infrastructure. Due to the unique "storage and transportation" mode of JD.com e-commerce logistics-- that is, transporting goods to various local warehouses in advance through the data of e-commerce platform, to speed up the transportation efficiency-- JD.com has a large number of warehousing properties, at the same time, JD Logistics, Inc. has made a series of mergers and acquisitions, but it is still in the stage of integration.

The logistics industry in the future will still be dominated by e-commerce, but Shun Feng and JD.com have proved first-hand how difficult it is to snatch a piece of meat from Tongda.

With the contraction of Shunfeng, the exit of Beshi, and the lingering of Shentong, the number of players in the core market of the express industry has further decreased. Whether it is live e-commerce or an endless stream of new logistics demand, the demand-side pattern is changing, and this will certainly affect the downstream logistics pattern.

The complex relationship between e-commerce and express delivery and the resulting games may be staged again.