Recently, SF Express handed over its “report card” for the first half of this year, but this “result” is not ideal. Judging from the relevant data released, SF Express's net profit decline rate in the first half of this year reached 80%, which also put the big brother in the express delivery industry at the forefront. Why did SF Express, the giant in the express delivery industry, fall to this point? What are the future development prospects of SF Express?
SF Express has always been ahead of the four links and one express. It stands out in the express delivery market with its advantages of "high speed and high quality" and has long been the number one in the express delivery industry. However, with the continuous improvement of four links and one express, SF Express's advantages are gradually weakening. Coupled with the addition of Jitu Express, the entire express delivery industry has fallen into fierce competition. Although the scale of the domestic express delivery market has been continuously expanding in recent years, the development situation of major express delivery companies is not optimistic, and the overall profits are declining. Especially since this year, SF Express has suffered particularly serious losses and has been unable to get out of its predicament.
SF Express, which suddenly fell into a loss-making situation, can’t help but worry whether it can continue to be “favorable” in the future. So what is the reason for SF Express’s losses?
The first reason is the fierce competition in the market.
After the rapid rise of the e-commerce industry, it drove the development of the express delivery industry, and then formed a huge market. In the beginning, in this market, there were both Sitongyida, which featured affordable prices and focused on the e-commerce market, and SF Express, which featured timeliness and focused on the mid- to high-end market. They all developed peacefully in their respective fields. SF Express has always had an advantage in the market with its efficient services, and has also reaped high profits. However, in recent years, with the fierce price war among major express delivery companies, profits have become lower and lower, and the overall revenue situation is not optimistic.
Since 2012, ZTO, which was already in the low-price market, actually launched the first shot of the price war. Subsequently, ZTO's low-price strategy brought him more market share, and he even became one of the giants in the express delivery industry. After ZTO, other express delivery companies also adopted low-price strategies, and a price war began. In 2010, the average unit price of the express delivery industry was 24.60 yuan. By 2020, it had dropped to 10.55 yuan, and all this was because of the price war. Amid such chaos, Pinduoduo attracted Jitu Express, making competition in the entire market more intense. As Jitu seizes a large amount of market share, ZTO has to switch from offense to defense.
Although SF Express, whose prices have always been at a high level, did not participate in the price war, it was also greatly affected. Under the pressure of this trend, high-priced and high-quality services can no longer keep up with the pace of industry development, so SF Express can only make adjustments.
Since 2019, SF Express has launched economic express delivery products. As the advantages of time-sensitive express delivery have weakened, these economic express delivery have become the main source of SF Express’ revenue. However, the profits of this type of products are relatively low for SF Express, so the overall revenue situation is not good.
From this perspective, the decline in SF Express’s performance is mainly due to the increasing competitiveness of other express delivery companies and the loss of many customers. The decline in net profit is due to the price war among major express delivery companies during the competition. And caused by the problem of economic express profit.
If Four Links and One Express is a competitor of SF Express in terms of price, then JD Logistics is a competitor of SF Express in terms of quality. In recent years, JD.com has invested a lot of money to build its own logistics. Liu Qiangdong once proposed to build underground logistics, which is enough to show JD.com’s obsession with logistics. Although JD Logistics has invested heavily in the early stage and its revenue is not ideal, it is very optimistic about the outside world. Now that JD Logistics has moved from the initial construction stage to the development stage, there will be unlimited room for development. This will undoubtedly be a big blow to SF Express.
Secondly, another factor that led to SF Express's poor revenue performance is that the new business developed in the first half of the year increased operating costs.
In the fierce market competition, SF Express also felt a sense of crisis. Seeing that its number one position was not guaranteed, SF Express also panicked. So starting from the fourth quarter of last year, SF Express has made adjustments.
The most critical one is to increase the automation construction of transfer stations, and at the same time, further optimize and upgrade time-sensitive products. While continuing to maintain its advantages, SF Express is also constantly improving its structure and striving for simultaneous horizontal and vertical development.
However, these upgrades require high investment costs, but the results will be slow. Take the automated construction of transit terminals as an example. SF Express has currently invested huge amounts of money, but it will still take a long time to truly upgrade production capacity.
So from this perspective, SF Express has made huge investments in a short period of time to optimize its structure and upgrade, and the increase in costs has also led to a decrease in profits.
Another key factor is that SF Express has not supported its own e-commerce platform. Nowadays, e-commerce platforms such as Taobao, Pinduoduo and JD.com handle the most express delivery. Sitongyida has firmly occupied the territory of Taobao and Tmall, and has become the main force in the express delivery market with its massive orders. Jitu is exclusive to Pinduoduo and has successfully entered the domestic market with the rapid rise of Pinduoduo. JD Logistics is also supported by JD Mall, but what about SF Express? There is no fixed e-commerce platform to support it. Although it focuses on the mid-to-high-end market, it is obvious that this can no longer be an advantage for SF Express's development.
Moreover, the subsidies provided by SF Express to first- and second-line employees in the first quarter of this year have also greatly increased operating costs. The first quarter coincided with the Spring Festival, and major e-commerce platforms did not close during the Spring Festival. In order to meet the needs of customers as much as possible and respond to the call to reduce personnel mobility during the epidemic, SF Express provided subsidies to some on-the-job employees. This time the subsidies hit a record high. , which is also one of the reasons why SF Express’ costs increased in the first quarter.
So when did SF Express start to fall into losses? Previously, SF Express released its 2020 annual report. From the data released, it is not difficult to see that SF Express’s performance throughout 2020 is very gratifying. The overall operating income reached 153.987 billion yuan, a year-on-year increase of 32.25%. Among them, the business volume reached 8.14 billion votes, a year-on-year increase of 68.5%. It is worth mentioning that SF Express’s net profit attributable to its parent company reached 7.33 billion yuan last year.
In other words, SF Express has just experienced a development climax in 2020 and delivered a satisfactory answer to investors. Unfortunately, less than a month after the release of this annual report, SF Express's performance suffered a sharp decline. In April this year, SF Express announced its first-quarter results, in which the data showed a net profit loss of up to 1.1 billion yuan. On the second day after the data was released, SF Express’s stock price also fell miserably.
In the second quarter, SF Express's situation improved slightly, with net profit attributable to the parent company reaching 1.749 billion yuan, of which non-net profit deducted reached 657 million yuan. Even so, SF Express is still in a state of increasing revenue without increasing profits, and its stock price has not improved at all.
From this perspective, the delivery business, which has always been regarded as a "cash cow" by SF Express, can no longer be relied upon by SF Express. To gain an advantage in the express delivery and even logistics markets, economic express delivery has become Now that we have made an inevitable choice, what will be the future development situation of SF Express’s economic express delivery?
Since May 2019, SF Express has chosen to take the initiative to "sink down" and launch the economic express business. Now, in this regard, SF Express has formed a business segment with three major products: e-commerce express, preferential transfer, and express delivery. It has made more detailed divisions in economic express delivery to improve express delivery efficiency.
Among them, the general price of e-commerce brand express is 6 to 7 yuan, which is also a product specially created by SF Express to join the e-commerce platform. E-commerce express can not only deliver goods to your door, but more importantly, it also inherits SF Express's advantage of fast delivery, which is also the biggest advantage compared to four links and one express. The second is the special offer, which is cheaper than e-brand express, with a unit price of 4 to 5 yuan, and can also be delivered to your door. Although the timeliness is not as fast as e-brand, the status of the two is comparable. Finally, there is Fengwang Express. This product is a franchise model. Compared with the first two, the price is lower, generally less than three yuan. In terms of delivery, it is somewhat similar to Four Links and One Express. It can be said that Fengwang Express is a product specially launched by SF Express for "sinking".
Although SF Express is taking a three-pronged approach in economic express delivery, it will be difficult to have an impact on the Tongda system in a short period of time. Judging from the specific revenue situation, e-commerce brand express finally ushered in positive gross profit in the second quarter of this year, while special offer standard express was still negative, and Fengwang's losses were even more serious. Judging from the current development situation, Fengwang's losses are likely to continue and will be difficult to reverse in a short period of time.
SF Express seems to have anticipated the current loss situation. In Wang Wei’s words, SF Express is using short-term losses to promote long-term competitiveness. After ushering in a short-term development climax, the domestic logistics industry is bound to enter a dilemma. If you want to continue to remain competitive in the next development process, promoting business upgrades and changes is the key. Although the current era is one in which "everything can be delivered by express delivery", this does not mean that the express delivery industry can develop flatly, but it has put forward higher requirements for major express delivery companies. With the improvement of domestic new generation information technology and infrastructure, logistics has become an important force in promoting the development of domestic manufacturing. While the logistics and express delivery industry is ushering in new development opportunities, it is also facing unprecedented challenges.
Therefore, in order to keep pace with the development of the times, SF Express has already embarked on transformation and upgrading. SF Express’s goal is no longer to win in the express delivery industry, but to build a data technology service company that is independent of third-party industry solutions. In the process of transformation and upgrading, losses are inevitable, but in order to achieve long-term competition, all these investments are worth it.
Since 2014, Shunfeng has begun diversified development. The most critical one is to take the lead in carrying out cold chain transportation business. After more than six years of development, SF Express has become a giant in cold chain logistics.
Although SF Express is currently in a loss-making predicament, it also has great advantages in the process of development. You must know that the so-called logistics is not the same as express delivery. There is an inclusive relationship between the two. In addition to express delivery, logistics can also include intra-city express delivery, cold transport, express delivery, etc. Compared with other express delivery companies, SF Express's biggest advantage is that it can provide diversified products. Especially since this year, SF Express's revenue from non-express delivery business has increased significantly, accounting for 31%. This is something that other express delivery companies cannot do. Arrived. On the other hand, the reason why the four links and one link can achieve such results is mainly because of the rise of e-commerce platforms, which has created a huge dependence on the e-commerce platforms in the process of development. Once the two are separated, I am afraid that they will face It’s not just the dilemma of losing money anymore.
It is worth mentioning that SF Express’s express business is second only to express delivery. The so-called express business is aimed at packages weighing more than 20 kilograms. Since 2015, SF Express has been making plans in heavy cargo transportation. In the first half of this year, SF Express's express business revenue reached 11.5 billion yuan, an increase of 50% compared with the same period.
In August this year, SF Express also launched a new product for the express business segment: Express Express. This product is dedicated to integrating heavy cargo parcels and standard LTL products, thereby improving transportation efficiency. Express has also become one of SF Express’s businesses with the largest room for improvement and the most promising development prospects, and is very likely to become the second curve of SF Express’s growth.
In addition to its advantages in express delivery, SF Express has also achieved good results in intra-city distribution and international logistics. In the first half of this year, SF Express's intra-city business revenue reached 2.241 billion yuan, a year-on-year increase of 77.12%, which is far higher than the average growth rate in the industry. It is worth mentioning that SF Express has a wide range of intra-city business. At present, this business segment has covered more than 1,000 cities and counties, with more than 2,000 cooperative brand merchants. From catering to fresh fruits and vegetables, to cakes, flowers, clothing and makeup, personal errands, etc., SF Express is involved in all aspects, targeting enterprises SF Express is also constantly improving its services and last-mile delivery.
In terms of international business, SF Express received 3.281 billion yuan in revenue in the first half of the year, occupying an important position in international logistics. In addition, SF Express also intends to acquire Kerry Logistics. If this transaction can be successfully completed, SF Express will also have a great improvement in international logistics, and at the same time, it will also greatly enhance SF Express's competitive advantage in this area.
Moreover, SF Express also has great advantages in comprehensive logistics capabilities.
In the first half of this year, SF Express is still promoting the construction of the SF Airlines base project at Ezhou Airport and is committed to building it into an international air cargo logistics hub. If this project can be successfully completed, it will also become the No. 1 hub in Asia. It is the fourth cargo hub airport in the world. SF Express aims to complete and launch verification flights by the end of this year.
However, this project has also cost a lot of money. So far, SF Express has invested 3.752 billion yuan, and it has no intention of stopping here. It will invest another 22 billion yuan to promote Equipment automation upgrade. From a revenue perspective, the cost of this project is indeed too high, but if we look at long-term development and improved competitiveness, it is all worth it. If these projects are ultimately successfully completed, SF Express's overall comprehensive logistics capabilities will be greatly improved. Moreover, the transformation of SF Express's logistics system will also promote the overall development of SF Express, which will greatly improve SF Express's competitiveness in the industry. It will not only defeat many domestic peers, but will also be more conducive to SF Express's attack on the international market. , which will become the key to SF Express’s future development.
Although SF Express has many advantages in the process of development, and has made certain achievements in upgrading and transformation, the future results are still unknown, and what SF Express will face next will be more severe. challenge.
Judging from the recently disclosed data, compared with the first quarter, the number of shares held by SF Express shareholders has declined. Shenzhen Merchants Investment, as the second largest shareholder of SF Express, also chose to reduce its holdings amid SF Express's continuous losses. In addition, Yinhua Fuyu still held 16 million shares of SF Express in the first quarter, and even listed SF Express as the seventh largest holding in the current period. But as SF Express suffered serious losses in the first quarter, by the second quarter, its name disappeared from the list of the fund's top ten holdings. This is undoubtedly a big blow to SF Express, which is currently trying to get out of trouble.
In addition to this problem, SF Express will also face more challenges in air cargo in the future. Recently, YTO has been increasing its investment in air cargo, and JD.com, SF Express’s biggest competitor, has also established its own air cargo company. This means that SF Express will face more severe problems in the process of logistics transformation and upgrading in the future, and will face new tests in all aspects such as time, technology and product upgrades.
Whether it is solving current problems or achieving future development goals, everything takes time to tell us the answer. Can SF Express successfully get out of the predicament and continue to maintain its number one position? Let's wait and see. Finally, do some research. Would you choose SF Express for express delivery? Why? Leave your answer in the comment area and see you next time. #SF Express# #express#