Comparing domestic and foreign express delivery services, from the perspective of timeliness, price and other dimensions, China’s express delivery is really fast and cheap. Timeliness and cost-effectiveness are among the best in the world. It can be delivered in three to five days at a price of a few yuan. This is achieved Service, nothing to say. The development of the express delivery industry is of great significance in stimulating residents’ consumption and facilitating residents’ lives. The express delivery of tens of billions of packages and the massive warehousing, sorting, and transportation activities behind them not only lubricate the social economy but also create a large number of jobs.
At the same time, express delivery also embodies important social value in public areas such as charity, emergency response, environmental protection and rescue. Compared with the “new normal” environment of weak trends, the express delivery industry has shown absolute anti-cyclicality. According to statistics from the State Post Bureau, the compound growth rate of my country’s express delivery business reached 50% in the 10 years from 2006 to 2016. The business volume increased from 1 billion pieces in 2006 to 31.35 billion pieces in 2016, an increase of 30 times. Employees in the national express delivery industry It has a population of 2 million and its business revenue exceeds 400 billion yuan. It surpassed the United States for the first time in 2014 and ranks first in the world.
The explosive increase in the total volume of express delivery business is the result of a variety of factors, such as the normalization of online shopping consumption, the effect of urban population agglomeration, the development of socialized warehousing and distribution, and the shortening of transportation and distribution distances… In the 20th century In the 1990s, the highly concentrated processing trade model (front shops and back factories) in the Yangtze River Delta and the Pearl River Delta generated intensive and strong express delivery demand in their respective regions; in 2009, the new “Postal Law” was implemented, and private express delivery was officially recognized by law. , industry supervision and price mechanisms have been loosened, and China Express’s franchise model creatively solves the problem of cross-regional services, and also solves the endogenous and exogenous financing difficulties of small and medium-sized private enterprises. Nowadays, the express delivery market is still in a period of rapid growth, and the new stage has presented a new normal, as detailed below.
1. Scale and small profits. In order to compete for the market, the express delivery industry has fallen into the “price-for-volume” development model and has fallen into the dangerous situation of “whoever raises prices first will die first, and whoever doesn’t raise prices will die first.” The express delivery industry is a typical labor-intensive industry with a relatively high labor cost. Labor costs account for 45% of general express delivery operating income, transportation fees account for 25%, and industry profits do not exceed 10%.
According to calculations by the Postal Administration, the industry’s profit-loss balance point before 2011 was 300,000 pieces per day. As the average price of a single piece has shrunk, the balance point has increased to 1 million pieces/day, and express delivery competition ” “Increasing scale, controlling costs, and exploring value-added content” can no longer be neglected. From 2005 to 2015, the unit price of express delivery dropped by more than 70%, and the industry was at a meager profit and loss. With the shortage of labor and the upgrading of service consumption, it has reached its limit. This is also a forced choice for centralized listing.
Every company is increasing investment in technology to increase per capita labor productivity in terms of processing automation and informatization. Although the market structure has not yet been finalized, profit margins continue to decline, and barriers to industry entry have been greatly increased, making it difficult for new entrants to gain a foothold. Tiantian Express, ranked eighth or ninth, has received 4 million orders per day in 2016. New entrants will be in the short term. Not only does it require a lot of capital expenditure and personnel investment, but it also requires an extremely fast learning curve.
As large express delivery companies go public for financing, they have overwhelming capital and scale advantages compared to other small and medium-sized express delivery companies, and will become the main body promoting mergers and acquisitions in the industry in the future. The actual industry net profit rate is about 3%-4%. Under the franchise system, the headquarters roughly divides 60% of the net profit, causing the end franchisees to be in an increasingly difficult situation.
2. Market concentration. Market fragmentation and homogeneous competition are the main characteristics of the express delivery growth period. Nowadays, several companies are listed together to gain the support of capital, creating a “cartel” monopoly competition in the industry. On the one hand, the growth rate of express delivery has been higher than the growth rate of e-commerce in the past two years. The growth rate of e-commerce has declined. Omni-channel retail is becoming a reality. Consumption is becoming more fragmented. Express services based on social networks and offline transactions are The industry brings new growth points.
The market is fully open. Cold chain logistics, express delivery to rural areas, cross-border logistics, supply chain finance, etc. have opened up new battlefields for express delivery. Cross-border cooperation has made express delivery transform into integrated logistics eager to try. On the other hand, outside the industry, e-commerce companies such as Alibaba, JD.com, and Suning are involved in express delivery, which has forced general express delivery to transform and upgrade. Once existing players are eliminated, new entrants will be blocked, and industry concentration will definitely increase.
At present, the CR8 concentration rate in the industry is only 70%~80%. There will still be some players with differentiated or localized competitiveness, but the market share is generally small, becoming a low-end “parasite” The overall scale and value will ultimately be “combined” by the leading enterprise. The grade differentiation after capital intervention is considered from the perspective of business volume. At the same time, in cross-border business and aviation business, the gap with the first tier is gradually widening.
3. Operation network. From the perspective of operations management, the physical network of express delivery can be summarized into three dimensions: “point, line, and surface”: “node” represents the sorting and processing center, “line” represents transportation circulation, and “coverage” is what is commonly called the end service “final” one kilometer”. The business model previously debated in the domestic express delivery market: direct operation and franchise have actually moved towards integration. The operating characteristics of the express delivery industry determine that its core is a two-wheel drive strategic vehicle of “organizational structure and performance system”.
The “tongda system” between brothers has taken over the mainstream. The core difference between franchising and direct operation is the openness and closedness of network organizations, and the use of people instead of nurturing people. Franchise is a contract that imposes requirements on franchisees in terms of brand use, network access, service standards, and market guidance prices. Franchisees carry out other business activities and their own capacity building independently, bear their own costs, and are responsible for their own profits and losses.
For direct operation, the company headquarters is in charge of ownership and operation rights. Human, financial and material resources are centralized led and planned by the headquarters, and a unified accounting system is implemented. Each directly operated store implements standardized operation and management, including trunk transportation, hubs Transshipment centers, feeder transportation and landing distribution. The franchise system can achieve rapid expansion of outlets with less investment, improve network density and the flexibility of instant business volume. The number of outlets of major franchise enterprises is very large, basically covering all cities at the county level and above across the country. Some number as many as tens of thousands.
The good flexibility of the franchise model has well adapted to the explosion of express delivery business in my country in recent years. However, this expansion relies heavily on market growth, and the service quality demanded by customers has been difficult to control. Nowadays, franchise companies All control nodes and lines except terminal outlets are removed as much as possible to strengthen operational control.
Scale is the basic requirement for express delivery competition, while direct operation is subject to end-end cost pressure and the flexibility of the performance mechanism. It has been exploring end-end authorized operations or employee entrepreneurship plans similar to franchising. At the same time, in order to avoid single business risks and have combined service capabilities, industry leaders are accelerating diversification. The network is a routing track for the flow of goods, which also makes the “warehousing, transportation, and distribution” networking model more complex. Cold chain, New businesses such as warehouse distribution, LTL, supply chain, and international require new organizational structures.
4. Innovation and development. In the past 10 years, the compound growth rate of the online shopping market has reached 71%. E-commerce has directly driven the express delivery business to achieve leapfrog growth, such as flash sales, group purchases, single product customization, large sales, cross-border and other e-commerce operating models have directly led to centralized and distributed, Various networking models such as point-to-point, grid, integration of warehouse and distribution, cloud warehouse/micro warehouse, regional distribution, dedicated vehicle line, alliance, cross-border logistics, etc. have been implemented. Building a super network Supergrid, a stable and flexible “point, line, surface” full-featured scale-free network is the primary condition for large-scale express delivery competition. Under omni-channel commercial retail, express delivery companies are further required to provide comprehensive supply chain solutions. and innovation in a full-coverage logistics network.
In 2016, Tmall’s “Double 11” full-day transaction volume totaled 650 million logistics orders. The early collection pressure was more concentrated than in previous years. Shipments were concentrated in some key cities, and imported cross-border e-commerce directly contributed. increased the volume of domestic express delivery business. “Only fast but not broken” is the primary strategy of B2C e-commerce delivery, but to some extent, compared with timeliness, consumers may be more concerned about certainty. This is part of the grading of express delivery services. The industry’s T+2 delivery rate has reached over 65%, but bottlenecks still exist.
Warehousing and distribution networks that are in line with e-commerce are an irresistible trend. Intelligent transportation, warehousing and sorting centers relying on technological investment are key breakthroughs in the future. Resource sharing and social logistics based on the platform model have also been widely explored. With the current operating level, my country’s logistics has reached or exceeded that of developed countries. The unit price is low and the scale is huge. Compared with the unit price of Taobao customers, the freight cost is only 5% to 7% of the logistics cost.
According to calculations by Ali Research Institute, by 2020, the entire online retail sales will exceed 10 trillion yuan, the annual package volume will exceed 100 billion pieces, and the number of e-commerce logistics employees will exceed 5 million by then , the operating income of the express delivery industry is expected to reach 820 billion yuan, which is an innovation stage with sufficient capacity.