New and old players play with each other, and errand business is splashed

@视觉中国

Recently, intra-city distribution (commonly known as "errand business") has started again.

Recently, Hello announced the official launch of the delivery errand service. There are three main forms: the first is a special spell order, the main ultra-low price, cross-city half-day delivery, a single can save 20%; the second is the special delivery, the main city, cross-city hours, the loss must be compensated; the third is a special delivery, the main special car direct delivery, an average of 30 minutes delivery, overtime must be compensated.

As a local mobility and service platform, Hello started out in the bike-sharing business. But the market has proved that whether shared bicycles are good or not to make money? Haro and Meituan Bicycle have used loss-making performance to give the answer. When ofo and Mobike completely withdrew from the attention of consumers, Haro, who survived the fierce market battle that year, was also apprehensive and kept trying to break through the single business model of shared bicycles.

Hoping to leverage more value by taking advantage of the characteristics of high-frequency demand, Hello has successively expanded its two-wheeled travel (Hello bike, Hello moped, Hello electric vehicle, Xiaoha battery swap), four-wheeled travel (Hello ride, full-network ride-hailing, Hello taxi), as well as wine tourism, in-store services and other businesses, aiming at local life in the upward market.

According to Yang Lei, CEO of Haro, Haro wants to become a platform company, "to try new businesses more boldly." "On the basis of the accumulation in the field of travel, we will further extend and explore local life services to provide possibilities for in-store and home-based services.

The errand business is also an important part of Haro's attempt to open up the closed loop of local life. Haro's errand business can be traced back to 2020. In May 2020, Hello conducted internal tests of "Hello Express" in Dongguan and Foshan, and Hello Hitch owners and online car-hailing drivers completed short- and medium-distance delivery.

At that time, HelloExpress said that Hello Express is a new business of "errands" incubated by Hello Travel's inclusive vehicle division to provide convenient services for users, and the main service scenarios are mainly short- and medium-distance scenarios in the city, with a maximum distance of no more than 500KM across the city, and the delivery of documents, samples and small items below 30KG. And the official launch time has not been determined at that time.

Now, after nearly three years, Haro is ready. It's just that there are large platforms such as Meituan and Ele.me in the past, and Dada, Flash, and SF Express in the same city, whether Haro's errand business can run smoothly is inevitable, and a fierce battle in timeliness, service and price is inevitable.

New and old players come together

This isn't a piece of cake that Hello is looking for. As an important form of ready-to-distribute logistics, the errand business has become a "sweet spot" in the eyes of many enterprises.

In November this year, AutoNavi Map APP launched the "AutoNavi Second Delivery" service in Beijing, Wuhan, Hangzhou and other places. In June, the Didi Chuxing platform launched the Didi Express delivery service, which provides instant delivery services for small-sized items such as Dada Express, Flash Delivery, UU errands, etc., providing "economic delivery" and "direct delivery by special personnel". In March, Cargo Lala also entered the game, launched two rounds of intra-city errand service, and opened the recruitment of errand riders.

Prior to this, the intra-city instant delivery industry has gathered players in different fields such as local life service players, logistics players, and travel maps, including Meituan, Hummingbird, Dada, Flash, Dianwoda, UU errands, SF intra-city delivery, etc., which is very lively. However, in detail, different players are also different because of their different delivery capabilities and methods, and their different degrees of closeness to business flows.

Intra-city delivery is a fast, local delivery service designed to meet users' needs for immediacy, efficiency, and convenience. As more and more players grow, more and more modes are derived. According to the division of capacity, it can be divided into self-built capacity and access to third-party capacity services.

As professional instant delivery platforms, Flash Delivery, SF City, UU Errands, Dada Express, etc., provide third-party instant delivery services through self-built capacity. They are more inclined to logistics systems. Taking Dada Express as an example, as a local instant delivery platform under Dada Group, it takes crowdsourcing as the core transportation capacity model, and is composed of instant distribution, landing distribution, and personal distribution, which not only serves individual users, but also serves enterprises.

AutoNavi Seconds, Didi Express, etc., prefer to directly access third-party capacity services, and do not recruit errand runners. Taking Didi Express as an example, users can call multiple express delivery service providers with one click on the Didi APP and choose according to real-time price and timeliness needs, or they can place orders with multiple service providers at the same time, and Didi Express can match the order speed of each service provider the fastest. By accessing third-party errand capacity, Didi can save costs, form an in-station ecosystem in a short period of time, and further retain users.

Meituan and Ele.me errand services are derived from their respective life service platforms. The high timeliness of the takeaway almost perfectly matches the demand for an errand system. But in addition to their own capacity, they have also begun to cooperate with third-party distribution capacity, showing the effectiveness of hybrid "operations". The Hello errand business, which has just started to explore, is more inclined to use its own resources to build errand capacity, which can be delivered one-to-one or ordered along the way.

It is worth noting that Meituan and Ele.me have been actively extending to business flow in recent years and entering the battle of "instant retail". The core difference between instant retail and simple errand business is that the business flow has formed a linkage between the supply side and the demand side of transportation capacity. From the perspective of instant retail, Dada Group is also among the three major players. However, recently Dada Group blew itself up, and the internal audit revealed that some income was suspicious, involving an amount of up to 1 billion yuan. Affected by this news, Dada Group's share price once fell by more than 40%.

On the one hand, compared with the simple errand business, intra-city retail has the characteristics of high-dimensional and low-dimensional. But on the other hand, the business model of intra-city retail is also more complex, and if it is not managed well, it can also lead to a greater corporate crisis.

Back to the perspective of capacity. The business of old players such as Meituan, Eleme, SF City, and Dada has been relatively stable and mature. New players such as Haro, Cargo Lala, and Didi Express are playing hotly. Haro's delivery errand service is accompanied by an additional delivery of property damage insurance, focusing on the use of four-wheeled cars to deliver errands cheaper than freight. When Lala launches the errand business, it also launches commission-free and multiple running order rewards. In order to attract users, Didi Express said that it will launch superimposed preferential activities on top of the promotional activities of various service providers.

Huge market temptation

As a type of instant logistics, the errand track already has many competitors. Why are new players constantly coming in?

According to iiMedia Research's "2022 China Errand Economy Market Insight Report", the development space of China's errand economy is expected to gradually expand, and the market size is expected to reach 66.4 billion yuan in 2025, with a compound annual growth rate of 75.4% from 2018 to 2025. According to the "2023 Local Instant E-commerce Development Report" released at the China New E-commerce Conference, it is expected that the order size of the instant e-commerce industry is expected to exceed 200 billion pieces by 2030, catching up with the business volume of the express delivery industry. The instant e-commerce mentioned here refers more to the instant retail business that Ele.me and Meituan are currently vigorously developing, and the errand company is often an integral part of its transportation capacity.

The high-growth market continues to attract new entrants. At the same time, another level is to find incremental markets and meet the needs of their own development strategy.

Compared with the delivery orders brought by purposeful purchase behaviors such as catering and supermarkets, errand service still has a certain degree of emergency and occasionality, so it presents the characteristics of high discrete (time and space are not concentrated), immediate, and personalized, and requires a large amount of capacity support. This also means that the special delivery mode is difficult, the customer unit price is high, and the entry threshold is higher, but the market capacity is small; As an extension of logistics in specific scenarios, errands can not only improve "non-standardized services", but also dig new increments in subdivided fields.

As consumers' demand for immediacy grows, the market is far from saturated. As the relevant person in charge of Lala once stated, in the post-epidemic period, the demand for instant delivery of small items has increased unabated. The purpose of running errands is to make more reasonable use of transportation capacity resources and meet the diverse needs of users.

For Didi, the demand for online car-hailing is too saturated, and running errands is undoubtedly an incremental track, while increasing drivers' income.

Haro is based on the direction of life services to extend, and the errand is regarded as an exploration of local life services. Yang Lei said that sooner or later Harrow will face more fierce competition, but hopes that Haro will become one of the three mainstream apps for Chinese in the future - this is a very big ambition and seems a little out of reach.

Players from all walks of life followed each other and tried to get a piece of the pie, but the money from running errands was not so easy to make.

Dada's net losses from 2020 to 2022 were 1.7 billion yuan, 2.5 billion yuan, and 2 billion yuan respectively, and SF City's net losses from 2020 to 2022 were 760 million yuan, 890 million yuan, and 290 million yuan. It is not until the first half of 2023 that Dada and SF Express have achieved the first turnaround. In the first half of 2023, SF's intra-city revenue increased by 28.8% year-on-year, gross profit margin increased to 6.7%, gross profit was about 383 million yuan, and net profit was 30 million yuan. Dada Group's net profit attributable to the parent company under non-US GAAP in Q2 was 8.4 million yuan. As can be seen from the profit and loss of the top players, it takes an extremely long time for the errand business to achieve profitability.

As a third-party instant delivery service provider, SF Express has successively connected to multiple cooperative platforms such as Douyin, Tmall, WeChat, and Didi Express. Under the trend of multi-polarization of traffic, errand business must rely on multiple e-commerce and local life service platforms.

Dada's errand business backed by JD.com, Meituan, Ele.me, Haro, Didi, AutoNavi Map and even Cargo Lala relies on and derives from its own platform, while UU errands, flash delivery, and Dianwoda need to continuously expand the number of service platforms to obtain more orders.

From bike-sharing to local life services, the business lines of Haro, Didi, and Meituan continue to overlap, and the errand business may be just the beginning, and the battle of dark rubbing is still to come.

With the continuous addition of new players, the number of players in the errand business has exceeded ten enterprises. With the release of the consumption potential of "everything at home", as an important part of local life services, the competition in the future of intra-city errands is destined to be fierce and cruel.

(This article was first published on the Titanium Media App, author | Yang Xiujuan, editor - Fang Yu)