The average unit price of express delivery in the first quarter hit a record low for the same period
How far can the express delivery industry go by price-for-quantity
Our reporter Ji Leilei
Free shipping is an important factor that attracts many consumers to shop online.
Behind the postal package, it is actually a rivalry between the courier companies.
In recent years, the annual business volume of express delivery in my country has continued to grow at a high rate at a rate of 10 billion pieces per year.
The State Post Bureau predicts that the express business volume in 2021 will exceed 95 billion pieces.
In order to seize market share, price-for-quantity has become the main method of express delivery companies.
In the face of increasingly fierce competition, what else can the express industry fight for besides price?
How should the industry develop?
Average unit price continues to decline
Recently, the postal industry operation report for the first quarter of 2021 released by the State Post Bureau shows that in the first quarter, the total business volume of express service companies across the country completed 21.93 billion pieces, a year-on-year increase of 75.0%; business revenues totaled 223.77 billion yuan, a year-on-year increase of 45.9%.
“The postal express industry is off to a good start and its growth far exceeds expectations.” The relevant person in charge of the State Post Bureau said that the reason why the express industry continues to operate in the high growth range is not only due to my country’s economic success in getting rid of the impact of the epidemic, but also from my country’s strong domestic market. Consumption power and consumer markets are accelerating the integration of online and offline development, and sinking markets such as urban and rural areas are growing rapidly.
Many factors have allowed the express market to gain new scale expansion.
It is worth noting that in the first quarter, the difference between express business volume and revenue growth rate reached 29.1 percentage points, the largest in the past five years; the price of single express delivery continued to decline, and the average unit price of express delivery in the industry dropped rapidly from 28.50 yuan/piece in 2007 to 2020. The average unit price in the first quarter was 10.55 yuan/piece, and the average unit price in the first quarter was only 10.2 yuan/piece.
"The main reason for the continuous decline in the price of express delivery is the intensified competition in the express delivery industry in recent years." Zhao Guojun, director of the Post Development Research Center of Beijing University of Posts and Telecommunications, analyzed that express delivery companies are in a passive and weak position for the upstream and downstream of the supply chain. On the one hand, the current demand for express delivery in China is huge, but the supply is relatively homogeneous. The upstream and downstream of the supply chain are squeezing the express delivery industry. E-commerce merchants and e-commerce platforms take advantage of the large number of subjects and fierce competition in the express industry itself. Has relatively high bargaining power; on the other hand, downstream consumers do not have a higher sense of quality difference in express services, especially for e-commerce parts, consumers mostly buy and refund at will, and the cost is low.
In addition, e-commerce express delivery, which accounts for a large proportion of express delivery business, has grown rapidly, and e-commerce express competition has become more homogeneous. Price competition has become the main means for e-commerce express delivery to expand its share.
The result of fierce competition is the continuous decline of single ticket revenue.
YTO Express, SF Holdings and Yunda shares successively released March performance briefings also showed that although business volume has maintained a good growth trend, single ticket revenue has declined, respectively 2.25 yuan, a year-on-year decrease of 11.03%; 15.74 yuan, A year-on-year decrease of 12.12%; 2.19 yuan, a year-on-year decrease of 13.44%.
Low-cost benefits are difficult to sustain
Yiwu is a signpost for the express delivery industry.
According to data released by the State Post Bureau, in the first quarter, Jinhua (Yiwu) express service companies completed more than 2.365 billion business volumes, ranking first in the country.
In order to compete for market share in the country's largest source of goods, major express companies have thrown out low-cost benefits one after another, in exchange for price.
Not long ago, the Yiwu Post Administration took action to regulate market competition.
Therefore, the previous charging standards of Best Express and Extreme Rabbit Express are far lower than the common cost price of 1.4 yuan per order in the industry, and they are subject to rectification.
Low-price competition has always been a common method for express companies to compete for market share.
Long-term low-price competition will not only cause the express delivery companies to be overwhelmed, but the entire industry will also fall into a vicious circle.
On April 22, SF Holdings issued an announcement showing that it reported a net loss of 989 million yuan in the first quarter.
One of the important reasons for the loss is the rapid growth of the ultra-low-price "special special distribution" business volume, and the gross profit of e-commerce parts is under pressure.
For merchants and consumers, in the short term, low-price competition by express delivery companies will reduce express delivery costs. However, since express companies and outlets must ensure certain profits, they will inevitably find other growth points to make up for the reduced revenue due to price wars. It is the consumers who receive and send express delivery to bear this cost.
"The low-price competition of express companies regardless of cost or even loss is undoubtedly a drinking poison to quench thirst for the industry and enterprises, and it will not last long." Zhao Guojun pointed out that the premise of low-price competition of express companies should be based on management optimization and technological innovation to achieve overall reduction. Based on this increase in efficiency, the price will be used to transfer profits to users in exchange for economies of scale. This kind of competition should be encouraged.
If the company lacks the above support, simply trading a low price for the market is not advisable.
Zhao Guojun believes that price competitive advantage should be established on the basis of cost reduction and efficiency enhancement.
For example, express delivery distances are relatively short, unit weight and volume are small, and regions are concentrated. Lower prices of such express items are beneficial and feasible for enterprises; enterprises use intelligence, automation and other means to reduce costs and increase efficiency, so that single items can be reduced in cost and efficiency. The reduction of operating costs and the formation of a competitive advantage for the enterprise are not only feasible, but should also be the direction for the future development of the enterprise.
The launch of price adjustments by the Yiwu Post Administration has also sounded a wake-up call to the express delivery industry.
Ma Junsheng, director of the State Post Bureau, said frankly: "For malicious market disruptors, we must be merciless, strengthen supervision, and standardize the market order of fair competition. At present, we must target and strive to correct unfair competition in some regions."
Where is the future of the industry
It is understood that after my country's express delivery industry entered the "ten billion" era in 2014, the annual express delivery business volume has continued to grow at a rate of 10 billion pieces per year.
Even in the special year of 2020, the annual volume of express delivery across the country has historically reached 83 billion pieces, a year-on-year increase of 30.8%.
As the market scale continues to expand and the strength of the express delivery industry enterprises increases, they must seize opportunities and accelerate high-quality development.
At present, with the increase in volume and price, the express delivery industry is still improving user experience and improving service quality and efficiency.
In the first quarter, the express user complaint rate, time limit punctuality rate, and user satisfaction rate all improved in the same direction. The user complaint rate was 2.37 per million, the 72-hour punctuality rate was 71.4%, and the express service satisfaction rate was 78.8 points. The service quality improved rapidly.
The epidemic has changed the way of life of many people. From the resumption of work and production to the first time this year that the whole industry did not close during the Spring Festival, the role of the express logistics industry in serving people's livelihood has become more prominent.
People have also put forward higher requirements for the timeliness and service experience of express delivery.
"Scale and efficiency are crucial to the operation of express delivery services." Lai Meisong, chairman of ZTO Express, said that the price war is temporary. He wants to outperform the market for a long time. Investment in infrastructure and intelligent equipment and an excellent management team , Stable cash flow and healthy franchisees are indispensable, and the market will also transform from a single express competition to a full-link integrated logistics.
In the face of fierce market competition, how can the express delivery industry achieve long-term development by improving quality and efficiency?
Zhao Guojun believes that the industry should expand more space, segment the market, and form an industry service system with complementary advantages based on market demand, so as to prevent low-end homogenization and vicious competition.
At the same time, resources in the industry should form a trend of intensive development, change the current weak position and operating mode in the supply chain system, do a good job of basic services, and innovate to launch more value-added services.
"We cannot wait for the future. We must focus on innovation and creation, and plan ahead." Ma Junsheng said that the more the industry develops to the end, the weaker it becomes. Regarding the protection of the rights of express delivery brothers and the protection of user rights under the fierce market competition, it is necessary to To safeguard the legitimate rights and interests of employees and handle consumer service demands, all parties must pay attention to form a joint force, and the legitimate rights and interests of grassroots employees must be safeguarded in a scientific, institutionalized, and standardized manner. At the same time, we must abandon impetuous mentality and short-sighted behavior, earnestly follow the essential laws of corporate growth, and accelerate high-quality development. This is the truly desirable way of operation and development.