SF's listing in the same city broke, why doesn't the errands business make money?

Text | Shenrancaijing, author | Shuai Zou, Editor, | Tang Yahua

On December 14, SF Tongcheng was officially listed on the Hong Kong Stock Exchange, with a global public offering of 131 million shares at an issue price of HK$16.42 per share.

On the first day of listing, SF Tongcheng broke down more than 7%, and the opening price was HK$15.12 per share. As of press time, SF Tongcheng closed at HK$14.8 per share, a decline of more than 10% at one point, with a total market value of HK$13.7 billion.

SF Tongcheng is located in the same city instant delivery track, with a 100 billion-level market, but this business, why not make money?

To put it simply, the same city instant delivery can be divided into four categories, namely the catering takeaway represented by Meituan takeaway and Hungry Mo, the same city retail represented by Dada, the fresh home delivery represented by daily excellent fresh and Dingdong shopping, and the errand running agency represented by Flash Delivery and SF Tongcheng.

Catering takeaway has run out of scale, fresh home delivery also has its fixed supply chain, this article we will focus on Dada, flash delivery, SF city, UU running errands and other players who both take personal errands and retail orders.

Judging from the financial report of Dada Group, consecutive years of losses are the norm, and the prospectus data of SF Tongcheng is also a loss after loss. At the same time, because the riders are flexible workers under the crowdsourcing system, the single amount is not as much as that of takeaway, and the situation of "a bowl of rice for everyone to eat" occurs from time to time.

Gao Peng, a Dada rider in Beijing, told Shen Yan that he would receive Dada's orders one day, deliver takeaways in his spare time, and sometimes cooperate with Daily Youxian. "Prepare two mobile phones, a mobile phone Kaidada, a mobile phone to open the US group, which has a single connection which, many of us also do flash delivery at the same time."

Industry insiders told Deep Burning that the same city instant delivery has a market of 100 billion, the chassis is very stable, and there is no need to worry about demand. But at the current time node, the scale is not coming, the cost is too high, the rider is unstable, and so on, which makes the market situation embarrassing.

The price catches a taxi, who is running errands?

Wang Yue, a Beijing user, has used flash delivery twice, "once to send her bag left in the office to a colleague, and once to send a gift to a friend." She recalled that she was in a hurry to send gifts to a friend's home in Beijing, first searched for flash delivery orders in the company, because it was during the evening rush hour, to pay a special period premium, she finally decided to take the subway home first, and place a flash delivery at the subway station near her home, which could save some money.

"I was only 4 subway stops away from my friend's house, and it cost 29 yuan 6 to give this small gift, and I still think it is very expensive to see this number, because I only use 21 yuan to take a taxi to her house." However, Wang Yue said that the 5-kilometer journey, the APP is estimated to be delivered in 18 minutes, "in fact, 10 minutes to arrive", the speed is still quite fast.

The morning light in Hangzhou uses flash delivery to send things needed for work. "I used it three times, I was in a hurry to shoot, and I sent these items such as eyeshadow lipstick. Thirty or forty dollars was spent on the bottom line, and once 61 dollars were spent on 25 kilometers. Another user also told Shen Yan that once a friend's key was forgotten in his bag, "She was trapped at the door and couldn't get in, I called a flash to send it over, and it took less than an hour to arrive." ”

It is not difficult to find that in life, the errands agency is mainly faced with personal orders, generally emergency help to send important documents and lost items, distribution of flowers, fresh and other special goods that need to ensure timeliness, and many idle fish sellers will use the errands APP to ship to buyers in the same city. In addition, there are errands to help buy online celebrity shop goods, help queue up, pass documents between companies, and so on.

"Fast is fast, but it's too expensive." Consumers mostly rate such services as such.

Not only flash delivery, SF same city, UU running errands, Dada's price is not low. Deep Burning tested about 15 kilometers of running errands at the same time, the price of SF in the same city was 37 yuan, the price of flash and UU running errands was 36 yuan, and the price of Dada was 23 yuan.

The price difference is mainly due to the difference in the starting price. The starting price of SF Tongcheng and Flash Is 16 yuan, which is limited to items less than 5 kilograms within 5 kilometers. The starting price of UU errands is 15 yuan for items less than 10 kilograms within 4 kilometers. The starting price of Dada Express within 1 kilometer is 12 yuan, but the increased cost by distance is cheaper than that of others, so the final accounting cost is lower.

What is the concept of 37 bucks for 15 km? For the same distance, the price of a ride-hailing car is only 10 yuan more expensive.

Gao Peng, who registered as a Dada rider 3 years ago, told Shen Yan that from the nature of Dada's orders, high-priced personal orders are indeed relatively small. "Every day, just one or two." According to him, the list he runs every day is divided into four categories, and the largest one is the Dada order from JD.com, which is also his main business. He will also pick up the daily youxian and Dingdong grocery shopping list, "Dingdong buying vegetables used us for a while before, and now it is not used, it is their own people who do it." The order that no one has taken now will still be sent to us. ”

At 9:30 p.m., Gao Peng still had two undelivered orders, one from Hungry Mo and Meituan Takeaway. "Pick up what they don't want, some orders are delayed without takeaway riders to pick up, we will take it."

Gao Peng said that Dada riders earn from 3 yuan to 100 yuan per order, and a takeaway order can earn five or six yuan. "The difference is in the distance, 3 yuan is relatively close, 100 yuan is dozens of kilometers away." Specific to the price of each order, the system is calculated according to the unit price of the customer when dispatching, "for example, a single comes, the system shows 8 yuan, and finally to my hand is 8 yuan, some platforms will also draw 20% on this basis, Dada did not draw." ”

Gao Peng began to run the list at 8 o'clock in the morning, finished work at 9 and 10 o'clock in the evening, and rested for half an hour at noon and dinner time in the evening. Counting down, he takes more than 30 orders a day and earns more than 300 yuan, but he also spends more than 20 yuan a day to refuel motorcycles, and his average monthly income is about 10,000 yuan.

Running errands for individuals can be said to be born from catering takeaways, and it is a service with higher requirements for timeliness and specificity. With demand and rider resources, the industry was naturally established.

Who's making money for running errands?

In 2014, Flash Andda went online, in 2015 UU running errands went online, and in 2016, SF entered the same city. Meituan launched the running errands function in 2017. In 2019, Dada changed its name to Dada Group, and its local instant delivery platform was renamed Dada Express, and SF Tongcheng also began to operate independently in this year.

The entry time is similar, and it grabs the same market, but there are differences in the playing style of each family.

The positioning of SF in the same city is high-end, so the unit price is also relatively high. According to the prospectus, SF Tongcheng has cooperated with some chain catering brands, including catering brands such as Heytea, McDonald's, lao niang uncle, as well as merchants such as Tianhong and Heilan Home. In the choice of cooperative merchants, it can also be seen that SF Tongcheng wants to stabilize its high-end image by cooperating with some brands that have requirements for timeliness and services.

Dada is characterized by having a stable customer list from JD.com. Logistics expert Yang Daqing believes that the most critical part of same-city distribution is to combine with business flow, so players like Dada Group who position instant retail platforms have clear goals. Like SF in the same city, Dada has also reached cooperation with Sam's Club, Sephora and other enterprises, in addition to large supermarkets such as Jingkelong and so on.

Meituan's advantages are relatively significant, because it is rooted in local life, in addition to catering takeaways, errands service is only an auxiliary. The most prominent positioning of Flash Delivery is one-on-one service, serving only one customer from pickup to delivery. "However, one-to-one delivery service emphasizes timeliness, and the unit price and cost of customers will be higher." Wei Jianhui, senior logistics industry analyst at Analysys, believes.

On November 2, startup UU Errands announced that it has received hundreds of millions of yuan of B+ round financing from 58 Industry Fund and Uduo Capital. Compared with the first few, UU running errands does not have a strong giant background and traffic entrance, and belongs to "grassroots players".

Yang Daqing said that Dada has launched the same city supply chain service with warehouse picking and matching this year, and it is expected that with the listing of SF in the same city, it will also explore the supply chain of the same city or the real supply chain. "This is the urban logistics microcirculation market, there is a lot of space, and now the Meituan distribution scale is leading, but it does not mean that you can sit back and relax, and the platform with super traffic entrance will enter in the future."

Not only are there differences in playing styles, but there are also differences in rider resources. Wei Jianhui mentioned that according to the data of Analysys Qianfan, the most active rider is flash, followed by Meituan, UU running errands, Dada and SF in the same city, but the stickiness of riders in SF city is the highest. "This is related to SF's emphasis on the resource investment of riders in the same city, and it is also related to the rider characteristics of SF's entire brand."

Deep fire to open the APP of the above companies, taking Beijing as an example, most areas in the fifth ring road have about 30 Dada riders waiting to receive orders; most of the central areas of UU errands show "there are more than 30 runners nearby"; flash delivery does not show the number of riders, most areas in Beijing are "expected to take orders in 1 minute"; in contrast, the number of SF city is more terrifying, there are about 115 riders in the bustling area like the workers' stadium, and until the North Sixth Ring Road also shows "1 rider to take orders".

At present, in the field of instant delivery in the same city, there are both Internet giants such as JD.com and Meituan, as well as head companies in the express delivery industry such as SF, as well as start-up companies. Many people may wonder, what is the charm of this track, so that so many companies have come down to grab the market?

Industry insiders to the deep combustion analysis, the same city instant delivery on the one hand connected to the C-end consumers, to provide them with immediate delivery services, and to the consumer Internet to extend the value chain, on the other hand, will gradually together with the B-end manufacturers, through precision marketing for their help, and then extend the value chain to the industrial Internet. Therefore, the same-city instant delivery business has great value space to be tapped on the C-end and B-end.

For the capital side, it is also necessary to gain a firm foothold in the same city distribution. "For example, JD.com and Dada, if consumers gradually become more sticky to JD.com's home service, coupled with the fact that consumers experience other services through JD.com, these revenues can offset some of Dada's expenditure on service costs, and ultimately make a profit." Wei Jianhui said.

On the other hand, Internet companies enter the same-city distribution track to tap potential customers. Wei Jianhui believes that customers should first stay on the platform, and then find from these customers, who are willing to deliver consumers in the same city with higher unit prices.

It is precisely because this industry needs both a strong entrance and a strong export, so the companies currently on the table either have an Internet background or a capital endorsement; some rely on a strong Internet business flow, and some cling to supply chain logistics.

Three years of loss of more than 5 billion, where is the way out of the same city distribution?

There are many players and different ways of playing, but they all face a common problem: losses.

Judging from the disclosed financial data, SF Tongcheng lost 330 million, 470 million and 760 million yuan from 2018 to 2020, and Dada lost 1.878 billion, 1.67 billion and 1.705 billion respectively. Even the two giants can not escape the loss, which shows the embarrassing situation of the instant delivery track in the same city.

There are many reasons for losses, one is that it is difficult to form a scale effect.

Yang Daqing analyzed to Deep Burn that in addition to the high-frequency just-needed services such as takeaway food delivery in the current instant delivery market, it is difficult for other categories to win economies of scale. "Because instant delivery is a point-to-point, warehousing-free and transit-free service within the same city, this is different from standardized express delivery services and different from high-frequency catering takeaways."

If it is not dependent on catering takeaways and chain supermarkets, the customer orders delivered in the same city are often scattered and not concentrated, coupled with the fact that consumers will generally use them to deal with emergencies, sending a certificate or leaving items are temporary demand, and it is difficult to form a stable customer order volume. Industry insiders told Deep Burn that Dada's loss was relatively narrowed, also because of the big tree that backed JD.com to home.

Second, the cost of performance is too high. According to the prospectus issued by SF Tongcheng, the cost of performance refers to the sum of the labor outsourcing costs and employee welfare expenses related to the rider, accounting for 97% of the operating costs.

This part of the fulfillment cost is difficult to save. In July this year, the State Administration for Market Regulation and seven other departments issued a document requiring takeaway platforms to protect the legitimate rights and interests of riders, including riders' labor income and social security. Paying social security to riders will also make the cost continue to rise. Rider costs can only rise in the future, not go down. "Moreover, same-city distribution is not like express delivery, which can improve efficiency through capital expenditure inputs such as fixed assets and reduce the cost of operating centers to save performance costs." Wei Jianhui said.

In addition, the same-city distribution companies backed by large Internet companies can obtain natural diversion, but some small startups do not have a user data base, and are bound to spend money to do promotion, which increases the pressure of marketing costs.

The third is the uncertainty from the rider.

At present, the riders of mainstream companies are divided into two categories: crowdsourcing and full-time. SF's prospectus shows that in the past three years, the number of orders fulfilled by crowdsourced riders has become higher and higher, with 19%, 57% and 88% from 2018 to 2020, respectively. SF Tongcheng said that because the average cost of performance per order for crowdsourced riders is usually lower than that of full-time riders, such a capacity pool structure can reduce costs to some extent.

However, there is another paradox here. Crowdsourcing riders have low costs of performance, but at the same time their loyalty is far higher than that of full-time riders, and the flow of personnel is large, and manpower is difficult to guarantee.

Gao Peng himself also found that such a situation existed. It is precisely because of the flexibility of the crowdsourced riders' time that some younger riders either "get 200 yuan a day and leave", or work more negatively, and work today and rest tomorrow.

Stability is important for both riders and platforms. According to Gao Peng, crowdsourcing riders often choose two ways out: changing careers and staying at the store, that is, either not doing it or not taking up the work. He explained that the resident store is to find the organization, get rid of the crowdsourcing model, put on the uniforms of yonghui supermarkets and other businesses, and the merchants pay them wages, "You can still manage a meal at noon." "Therefore, the high rate of rider attrition has also become an inevitability.

While losing, we also have to fight a price war. As a front-line practitioner, Gao Peng has a personal experience: "In the first two years, I earned an average of 10 yuan per single, and I received five or six orders in one hour, and I could earn fifty or sixty." Now the platform puts the price down again and again, and it is good to earn 20 yuan an hour. ”

Gao Peng said that the current daily salary of 300 yuan is to come to a single order, a moment of hard work to achieve, "the first two years we chatted about the day easily earned 300 yuan, even the rider will pick a list, too far, too cheap do not pick, just like this is not worried." He explained that now everyone has come in to grab this cake, and the amount of orders received has become less.

For the way out of the same-city distribution industry, Wei Jianhui believes that the first thing is to find effective customers. "Same-city distribution companies need to carry out customer stratification, first find customers, then talk about services, and then adjust the unit price appropriately, and finally make a profit."

The other side is to find the just need for business flow. Yang Daqing said that real-time logistics in the face of C-end users is panning for gold in the long-tail market, and it needs to form a super traffic; to serve merchants and cargo owners, it is necessary to build a supply chain ecology in the same city. "The weakness of small errand-running enterprises is generally that there is no high-frequency business flow support such as takeaway. In the short term, the weakness of small and medium-sized instant logistics platforms is prominent, but with the opening of the consumer Internet, including Didi, WeChat, AutoNavi, Xiaomi, etc. seeking to strengthen user stickiness and increase the instant retail entrance, it will create new opportunities for third-party instant logistics platform flash delivery. ”

In terms of riders, Yang Daqing believes that in the future, the competition is becoming more and more fierce, coupled with the slow emergence of some high value-added instant delivery, it is expected that platform companies will also seek to cooperate with stable partners, or form a self-built team, crowdsourcing is only a phased choice.

In the future of same-city distribution, it is difficult to rely on the errand agency of sending documents today and flowers tomorrow. "The platform is easy to build, but the traffic is difficult to find." Industry insiders summed it up this way.

*At the request of the interviewees, Wang Yue, ChenXi, and Gao Peng are pseudonyms.