JiTu took over the hundred world, and the express delivery industry has reached a turning point?

[Blue Technology Observation] Perhaps the wind evaluation of Jitu is not good, but this does not affect the ambition of Jitu in the acceleration of the express delivery industry.

During the Double Eleven period, the major express delivery companies are working hard, and Jitu Express took the lead in launching a "big order". On the evening of October 29, Best Group issued an announcement that Best Group transferred its domestic express delivery business to Jitu Express for 6.8 billion yuan.

Many people will wonder, what kind of strength does this Jitu Express have, can it receive the Bestway Express in the "four links and one reach"?

Jitu Express is an "uninvited guest" who breaks into the domestic express delivery market from overseas. With low prices, it takes only one year to enter the Chinese market to complete the road traveled by the domestic veteran express delivery for more than ten years.

For the domestic express delivery industry, after landing in the market successively, in addition to some mergers and acquisitions to supplement their respective businesses, there have been no large-scale mergers and acquisitions between competitors in the industry for a long time. This large-scale operation of Jitu Express has undoubtedly completely changed the balanced pattern of China's express delivery industry for many years.

Why is it said that the acquisition of Best by Jitu may be a watershed moment for China Express?

First of all, the competition in China's express delivery industry is fierce, and the express delivery industry will inevitably seek stop losses and new business models after continuous losses.

According to data from the State Post Bureau, in 2020, the domestic express delivery business volume has accumulated 83.36 billion pieces, compared with only 3.67 billion pieces 10 years ago. However, the unit price of express tickets in the industry has dropped from 20.65 yuan 10 years ago to 10.55 yuan in 2020, almost waist-cutting. It can be seen that the decline in overall profitability has become a common problem facing the express delivery industry.

Due to the fierce competition, the express industry volume leads to a decrease in market share and a decrease in profits. According to data released by the State Post Bureau, yunda's market share has dropped from 17.0% to 16.7% so far last year; Shentong has dropped from 10.6% to 9.8%,; and Yuantong has dropped from 15.2% to 15.0%. It can be seen that the arrival of Jitu Express has seized the market share of many peers.

Infighting in the express delivery industry, although there are government departments involved, but the trend of declining single ticket prices caused by price wars in the past two years has not been suppressed.

In the general environment, Best Express is stuck in the quagmire of losses and cannot extricate itself. According to the data, the losses of Best Express from 2016 to 2020 were 1.363 billion yuan, 1.228 billion yuan, 508 million yuan, 120 million yuan and 2.051 billion yuan, respectively, with a cumulative loss of 5.369 billion yuan in five years.

In particular, 2020 has become a turning point in the century, and the state has taken a sharp turn. According to the 2020 financial report of Best Group, its annual revenue was 30 billion yuan, but the annual huge loss was 2.05 billion yuan, and the business volume of Best Express was 4.05 billion pieces, and its market share fell to 8.2%.

Therefore, seeking restructuring is a shortcut for Best Express to stop losses and even rebirth. From the perspective of the industry, taking a step back, even if there is no Jitu to take over The Hundred World, it may be other companies that become the takeover. In the circle of friends, it will definitely be the most loss-making enterprises to take the lead in finding a way out, and Jitu may be the most suitable receiver.

Secondly, Jitu Express's entry into China has been squeezed, and it is urgent to expand the market to win the trust of users and merchants.

Since entering China, Jitu has quickly occupied the market with cost performance. In terms of price, Jitu does have advantages, but the price advantage means that there may be shortcomings in service. No one will do a loss-making business, and Jitu can't do better service at the same time at a low price.

Therefore, Jitu will have various problems in the service and be complained about by users. In order to win more merchants, the only means that Jitu must grab food in all directions is low prices.

In April this year, the Postal Administration of Yiwu, Zhejiang Province, issued a warning letter to Jitu, pointing out that its express delivery business was "dumped at a low price".

If you do not use low-cost means, it will be more difficult for Jitu to get more orders from merchants, and at the same time face the crisis of "blocking" by peers. In this context, jitu through mergers and acquisitions and restructuring, in the form of defense + attack to expand the market is the best path.

The merger and acquisition of Baishi can indeed bring new life to Jitu. As of the end of June 2021, Best Express has been able to cover 20,000+ sites in the world, 100% of the coverage of provinces and cities, 98% of the coverage of districts and counties, its market share is about 8%, the share of Jitu is between 7% and 8%, after the merger and acquisition between the two, basically reach the market share of Yuantong or Yunda and surpass Shentong, and are fully capable of competing with the express members of the first echelon. For the pole rabbit, this is what they want most.

Third, the express delivery industry may be revived by the merger and acquisition of Baishi by Jitu, and the industry or integration will accelerate.

The time model of China's express delivery industry in the past two decades is relatively solidified, and it is more necessary to continue to grow in a new model.

Judging from the current situation, the pressure on the express delivery industry is diluting the profits of industry giants. Taking SF as an example, SF's business volume is expanding, from Pinduoduo, Suning to Taobao, etc., all have more or less cooperation with SF, which has long broken the original model of SF.

In addition, SF intends to get involved in the takeaway business, into low-cost logistics, etc., all of which show that SF simply relies on its own logistics or it is difficult to maintain steady growth, and it must rely on a variety of business models to maintain a certain volume, in order to stop losses or find new profit points.

According to the financial report, in the first three quarters of this year, the net profit of SF Holdings is expected to be 1.76-1.86 billion yuan, down 67%-69% year-on-year. In the first half of the year, SF's operating costs reached a record high, an increase of 37.26% year-on-year, reaching 79.4 billion yuan, which can be imagined as the pressure on SF.

"The volume of express delivery orders has surged, but the courier company has suffered serious losses, why? The article reads: From the average data from January to July 2021, basically the single ticket revenue of express delivery companies has declined, like SF Express's single ticket revenue of 15.95 yuan, down 12.9% year-on-year; Shentong is 2.21 yuan, down 9.7% year-on-year, Yuantong Express is 2.18 yuan, down 6.4% year-on-year and so on.

The latest financial report shows that in the first three quarters of 2021, the net loss of Shentong Express was 238 million yuan, and the net profit of YTO was 954 million yuan, down 31.16% year-on-year.

The internal volume is serious, the cost is rising, the operating expenses are increasing, and the impact of the external environment on the express delivery industry is self-evident. Taking a step back, the integration of the express delivery industry will come sooner or later, but after the merger and acquisition of Baishi by Jitu, it may accelerate the changes in the industry.

It is not how big the energy of the pole rabbit is, but the express delivery industry has reached a turning point. In the past two decades, the development of China's express delivery industry has attracted worldwide attention, but when the development of e-commerce is gradually stabilizing, this has also put forward new issues for the express delivery industry.

If the early express delivery industry quickly helped e-commerce to complete the transformation of China's retail industry, now the express delivery industry must make new changes in the face of new retail, community consumption, and O2O models. The single function of the past will be weakened more and more, which is bound to force a new model for the express delivery industry.

Overall, today's Jitu Express has changed the pattern of the domestic express delivery market. With the current strategy of Jitu, for a long time in the future, we will adopt the strategy of exchanging price for space and exchanging losses for the market. This is bound to trigger resonance and change in the industry.

Reference: "The volume of express delivery orders has soared, but the courier company has lost a lot of money, why?" 》

(Image source: Daisaku)