Will the express delivery industry become increasingly competitive in the second half of the year?, Behind 550 billion yuan, service war quietly kicks off revenue | express delivery | service war
As China's economy and society fully resume normal operation, the overall logistics demand in China has shown a mild recovery, with the express delivery business returning to steady growth. The National Postal Administration released the "June 2023 China Express Development Index Report", which showed that in the first half of the year, the express delivery business volume exceeded 60 billion pieces, with a year-on-year growth rate of over 17%. The express delivery business revenue is expected to exceed 550 billion yuan, with a year-on-year growth rate of about 11.5%.
In the first half of the year, SF Express Holdings continued to rank first with a revenue of 122.4 billion yuan, while YTO's market share surpassed Yunda and climbed to second place. Shentong, on the other hand, achieved a business volume of 7.731 billion votes... From the currently announced performance, major express delivery companies have their own strengths and weaknesses, but their single ticket price trends are surprisingly consistent, reflecting the price competition of the express delivery industry's undercurrents.
The growth in business volume has brought about an increase in revenue, but the single ticket revenue is still lower than the same period last year. According to the data from June, the single ticket revenue of SF Express, YTO, Yunda, and Shentong decreased by 2.44%, 9.33%, 9.73%, and 11.95% year-on-year, respectively.
According to Hong Yong, a think tank expert at the China Digital Integration 50 Person Forum, as consumer demand for express delivery services increases, companies may take some promotional measures to attract more customers, such as lowering prices or offering discounts, which will lead to a decrease in average ticket revenue. Emerging express delivery companies may use low price competition as a means to reduce the average single ticket revenue of the entire industry. In addition, the expansion of the industry scale may also lead to a decrease in single ticket revenue for express delivery, as a large number of orders can have an impact on operating costs.
Anxin Securities analyst Sun Yan pointed out that considering the pursuit of balanced development by various express delivery listed companies and the meager profits of franchisees, further significant price reductions will affect the stability of enterprises. It is expected that the off-season from July to August will see a slowdown in price competition.
In addition to price competition, service competition was also a key keyword in the express delivery industry in the first half of the year, with timeliness and door-to-door delivery becoming two major keywords.
In March, Cainiao fired its first shot and was the first to launch the "1212" half day delivery mode. Place your order before 12 noon and arrive in the afternoon; Place your order before 12 pm and arrive the next morning. Subsequently, JD Logistics launched the "Cloud Warehouse Delivery" service, further shortening the delivery time of e-commerce to "half a day delivery".
In May, Shentong and SF Express also launched an upgrade, announcing the addition of Cainiao Smart Selection and Distribution, providing real day delivery services from payment to receipt in key economic circles such as the Yangtze River Delta and Pearl River Delta. SF Express has significantly increased the next day delivery fulfillment rate and rapidly expanded the coverage of next morning delivery cities. Zhongtong immediately announced the upgrade of its Standard Express service, launching "Standard Express door-to-door delivery, promising compensation if not door-to-door" in 66 large and medium-sized cities. After Cainiao and SF Express, Zhongtong has also joined the service competition of "no visit, no compensation".
Entering the second half of the year, the express delivery industry is still continuing to provide competitive services. In early August, Cainiao Supply Chain announced that it will accelerate its half day opening pace in the second half of the year and is expected to open another seven cities within this month. On August 9th, Shandong SF Express launched the "360" local half day delivery product, and SF Express's "local half day delivery" service has expanded to more than 140 cities nationwide.
From a "price war" to a "service war", there are both regulatory reasons and market changes reflected in this. The e-commerce industry has gone from a past frenzy to encountering a "customer acquisition bottleneck". When it is difficult to find incremental users, it is necessary to do a good job in providing refined services to existing users.
"Users need surprises, not only from products, but also from services." A flagship store merchant told China News Finance reporters that when they switched from non door-to-door service providers to door-to-door service providers for express delivery, the most direct reaction was that repeat purchases by old customers increased by 8%, directly leading to business growth.
Cainiao Group also announced a case at the Global Smart Logistics Summit on June 28 this year. Dairy industry leader Yili started using Cainiao Express service in some flagship stores on Tmall last year, resulting in a 30% decrease in logistics problem complaints, a 30% reduction in logistics costs, a doubling of return rates, and a 10% increase in repeat purchases from loyal customers.
According to the analysis of Anxin Transportation Research Report, in this competitive environment, we are optimistic about the leading company Hengqiang. With stable franchise network support and operational strength, it is expected to effectively expand its market share, promote economies of scale and management effects, and fully reduce costs, bringing about performance resilience.
The key to competitive services actually lies in mode competition. Some argue that the half day delivery service launched by Cainiao this year has opened up supply chain competition with peers such as JD.com and SF Express. In the second half of the year, competition may enter a white heat, and the express delivery industry will become increasingly competitive.
The market has undergone some changes, especially in the fast-moving consumer goods industry, which is extremely sensitive to the supply chain. Since the end of last year, Cainiao's supply chain has frequently conducted high-level visits with the top ten global fast-moving consumer goods giants such as Nestle, Unilever, Budweiser, and Danone, expanding the depth and breadth of cooperation and gradually moving towards a combination of "factory+warehouse+distribution".
Zhao Xiaomin, an expert in the express logistics industry, told reporters from China News Finance that now it seems that JD and Cainiao are actually different models.
