Jiefang Daily Shangguan News: SF Express’s huge losses have something to do with the express delivery not being delivered to your doorstep?
Battlefield
SF lost money.
In the first quarter of 2021, SF Holding’s net profit attributable to shareholders of listed companies was a loss of 900 million yuan to 1.1 billion yuan.
Why did you lose so much?
Shunfeng gave 5 reasons. The last point is: the company launched express and new standard express products in April this year. In addition, in terms of preferential and exclusive business volume, e-commerce demand in lower-tier markets is strong, which has led to rapid growth in economic business among existing customers, putting the company's e-commerce gross profit under pressure.
What does this mean?
Translated into vernacular, we receive a lot of e-commerce mail, but e-commerce mail is not profitable!
Take a look at the data - in 2020, SF Express achieved an overall express business volume of 8.137 billion items, a year-on-year increase of 68.46; however, the average express business ticket revenue was 17.77 yuan, a year-on-year decrease of 18.99.
In other words, SF Express received more express delivery in 2020, but made less money. Part of the reason for this is due to the small profits but quick turnover of e-commerce products.
If you don’t make money, why should you accept it?
Because SF Express needs a larger market share. For the express delivery industry, only a larger market share can dilute costs and achieve greater development.
In the minds of ordinary people, SF Express is the absolute leader in the express delivery industry. But in terms of market share, SF Express is not number one.
Judging from the data in 2020, the order of express delivery market share is ZTO (20.4), Yunda (17), YTO (15.2), STO (10.6), BEST (10.2), SF Express (9.8) ). Although SF Express has the fastest increase in market share in 2020, with an increase of 2.2%, it is still not as good as the three links and one express.
SF Express, which once focused on the high-end market, has actually been trying various methods to expand its market share in the past. But at the same time, three links and one express, Cainiao, and JD.com are also constantly impacting SF Express’s high-end customers. Under such circumstances, offense is the best defense. SF Express can only lower its posture and start attacking the e-commerce market where it has the least advantage, even if it will hurt the enemy by one thousand and lose eight hundred to itself.
The e-commerce market has always been the top priority of the express delivery industry. Three Links and One Express, which currently has the largest market share, started here.
It can be seen that the current express delivery market has actually formed four major camps - Tongda System, which is owned or controlled by Alibaba, JD.com, which integrates e-commerce and logistics and is self-operated, Jitu, which relies on Pinduoduo for rapid growth, and the relatively independent SF Express.
Among them, SF Express is the only company without e-commerce support. Although it has also tried e-commerce business, the results were not satisfactory.
Therefore, when SF Express officially enters the sinking e-commerce market, the battle is destined to be extremely difficult.
This market has long been dominated by three links and one extension, and low price is the biggest competitive advantage. When SF Express came to grab low-end shares, it had no choice but to follow the Romans and continue to use the double-edged sword of low prices to start a new round of price wars. Although it can increase business volume in the short term, it cannot control the decline in single-ticket revenue.
Therefore, losses, on such a battlefield, do not seem so difficult to understand.
Newcomer
In Yiwu, the forefront of the express delivery price war, the battle has become increasingly intense.
On the one hand, newcomers to the e-commerce market like SF Express are taking the initiative to start a new round of price wars. On the other hand, a newcomer in the domestic express delivery industry is also stirring up the war.
This is Jitu, an express delivery company from Indonesia.
This newcomer with an OPPO background is coming in force. Within a year of launching the network, he has reached a stable daily order volume of 20 million. It took Tongda System more than ten years to complete this figure.
One of the reasons for being able to seize the market so quickly is that it relies on Pinduoduo. A large part of Jitu’s rapid growth in market share comes from Pinduoduo’s e-commerce products. The second reason is the low-price strategy. There are rumors in the world that with Jitu's subsidies, the price of an e-commerce item can even be as low as 80 cents, which is far lower than the industry's common cost price of 1.4 yuan/order.
Such a price war regardless of cost has attracted regulatory attention. A warning letter issued by the Yiwu Postal Administration on April 6 showed that the bureau had notified Jitu Express and Best Express four times in succession not to dump goods at prices far below cost, because the two companies were still The rectification requirements were not met, so the Yiwu Postal Administration ordered some distribution centers of Best and Jitu to suspend operations for rectification.
Why is Jitu so cruel? Because I have money.
Not long ago, it was reported that the company had completed its own new financing of US$1.8 billion, with a post-money valuation of US$7.8 billion. This valuation has exceeded the market value of YTO, STO, and Yunda, and is second only to ZTO. How long should we wait for this fresh and hot capital now?
Once upon a time, the industry believed that the express price war was coming to an end. But now, with SF Express’s aggressive move and Jitu disrupting the situation, old players in the price war such as Tongda Series can only fight against it.
This smokeless price war looks like it will continue for a long time.
However, what is interesting is that shortly after Jitu was punished, Pinduoduo said that the news that Jitu "has an investment from Pinduoduo and the two parties have a special cooperative relationship" is untrue.
The situation in this war is very delicate again.
Backlash
Here is a question to explain.
Some people may ask, for consumers, isn’t the lower the express delivery fee, the better?
Please note that the express delivery fee mentioned here refers to the cost of large-scale e-commerce items, not the price for consumers to send ordinary express delivery alone.
So, when the price of express delivery continues to drop, where will companies find profits?
Express delivery companies will say that they rely on scale and intelligence, but the most direct thing is to deduct costs at the end.
Many people have discovered a phenomenon: some SF Express couriers no longer deliver express packages to their doorsteps. This may be an isolated phenomenon, but for SF Express, which once relied on service to win, it reflects a big problem.
The price war for express delivery has affected end-of-line services, and it can even be said to have started to backfire on the industry.
The previous Fengchao charging scandal caused people to complain. It is said to be an intelligent attempt in the express delivery industry, but consumers do not buy it.
But to this day, each express delivery company still goes its own way, and continues to throw away items that should be thrown away in the express delivery cabinet. Even the house numbers of customers who request door-to-door delivery are written on the express cabinets for public display. Gods, there is nothing you can do.
Why is this happening?
Because it is more efficient for the courier to throw it directly into the express cabinet.
Under the price war, the price of express delivery per piece has dropped, and only more pieces can maintain the profits of each terminal outlet. Therefore, if you just throw it into the express locker or post station, the courier can deliver more items in the same time, so the outlets can bear more items, and the company can take a larger share.
What? Can you please call and let me know where the express locker is? The courier doesn't have that time.
A previous data from Express 100 showed that problems such as express delivery, damage and loss of goods, excessive and arbitrary charges, and poor service attitude accounted for more than 70% of the total complaints.
No wonder some people ask the soul question: If you start a price war, do we have to bear the consequences? Isn't this bad?
From another level, almost all express delivery companies are listed companies. The money burned in price wars has a direct interest in shareholders. Moreover, once a company cannot sustain a price war, it will be the investors who end up footing the bill.
It is undeniable that price war is an effective way to integrate the market and clear the industry. The U.S. express delivery market also had a price war from 1982 to 1994, which lasted for about 12 years. In the end, the concentration ratio of the three giants reached about 70.
But this kind of price war should be rational and not substantially harm profitability. While seizing market share, express delivery companies must not get carried away and forget the essence of "service" in the express delivery industry.
After all, you should compete not only on price, but also on service to consumers.