天天熱推薦：China’s Express Delivery Firms Get Ready for Double Eleven Shopping Festival

2022-10-30 05:33:33來源：鈦媒體

China Visual

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BEIJING, October 27 (TMTPOST) – China’s logistics and express delivery companies are gearing up for the annual Double Eleven Festival, the world’s largest online shopping event, by hiring thousands of temporary workers and using most advanced digital technologies.

November 11, an once ordinary day in November, was designated as an online shopping festival in the 2010s by Alibaba, China’s largest e-commerce platform. It was originally known as Singles’ Day because it was targeting young unmarried consumers who used a spending spree as a way to love themselves. The festival has evolved into a multiple-day shopping event after many more e-commerce platforms joined the bandwagon. It is now the ultimate shopping season for a majority of Chinese consumers as merchants offer hefty discounts and promotions.

During the shopping event of 2021, the State Post Bureau of China and express delivery companies collected 6.8 billion parcels, up 18.2% year over year. About 6.3 billion parcels were delivered, representing a year-over-year increase of 16.2%. That means a Chinese consumer bought nearly five items online on average. The event now is bigger than Black Friday and Cyber Monday in the United States combined.

Chinese consumers have largely switched from buying in a brick and mortar store to e-commerce partially because online return and refund terms are consumer-friendly. It is typically a big hassle or a very unpleasant experience to return any purchase after a consumer pays for it. Very often physical stores do not accept any return. By contrast, it is guaranteed for a consumer to return the stuff he or she bought online within seven days of the receipt of the goods. Besides, the stuff goes to Chinese buyers, instead of they going to a physical store, buying it and taking it home.

A Test for Logistics Firms

Fanfare for this year’s festival started on Monday evening. As of Tuesday, presales in the live-streaming room of Li Jiaqi, one of China’s most famous online celebrities or influencers, hit 21.5 billion yuan (about US$2.9 billion) on Tuesday, about two times as much as the figure in 2021.

While the shopping event is at the finger’s tip of a consumer, it is a test for logistics companies in terms of truck fleets, sorting equipment, information technology system and personnel.

Major Chinese logistics companies include Cainiao, JD Logistics, SF Express, STO Express, ZTO Express and Suning Logistics. While Cainiao and JD Logistics handle primarily orders from their e-commerce parent company, other express delivery companies provide third-party transportation and distribution services.

“The annual Double Eleven event is a big test for a logistics company,” a Cainiao executive told TMTPost.

Prior to 2021, there were massive backlogs and delays due to a sudden influx of parcels. In 2020 and 2021, delays were rarely seen. It often took about a day or half a day for merchandise to arrive at the doorstep of online buyers, sweetening their shopping experience.

Big logistics companies are making efforts to ensure a purchase can be delivered within a few hours. Warehouses are scattered in many cities across China and goods are stocked up in advance. As warehouses are closer to consumers, delivery time is cut and the peak of the shipping is shaved.

While JD Logistics, a Hong Kong-listed company and a subsidiary of JD.com, delivers merchandise to the doorstep of a buyer, Cainiao aims tol increase the volume of merchandise to be sent to the doorstep. “Our past goal was to ship more and ship fast. Now we aim for quality delivery,” said Li Wuchang, who is in charge of Cainiao"s logistics during this year’s shopping event.

ZTO Express overhauled its transfer centers in Ezhou, Jingzhou of Hubei province, Hefei of Anhui province and Yinchuan of Ningxia, providing standardized distribution services.

Suning Logistics expanded its coverage of doorstep delivery services from 331 cities to all prefecture-level cities and over 90% of county seats.

STO Express set up a new batch of transfer centers and warehouses in Shenyang city of Liaoning province, Langfang city of Hebei province, Chongqing city, Zhengzhou city of Henan province, Jinan city and Qingdao city of Shandong province, and put them in operation before the Double Eleven Festival. The company also improved its services in 30 big cities, where online shoppers are concentrated.

In order to improve services during last mile delivery, Cainiao hired about 100,000 temporary workers in its dispatch centers, distribution hubs and outlets and STO Express recruited over 3,000 dispatchers. STO Express will also hand out special monetary subsidies to incentivize 10,000 dispatchers who meet service standards.

High Volumes but Low Profits

Logistics companies offer delivery fee discounts to attract more consignors during the Double Eleven Festival. The peak season for logistics firms last from early early November to the Chinese New Year, which usually falls in late January to early February in the following year, according to China Express Association.

However, before 2021, logistics companies had high volumes of orders in the fourth quarter but posted lower profits than that in any other quarter because they offered too hefty discounts in delivery fees as a means to acquire new customers, according to some analysts.

It changed last year. The net profit margin of Deppon Express, Yunda Express and YTO Express improved significantly in the fourth quarter of 2021, according to their financial reports. An increase in average order value is the reason behind the rising profit margin.

In 2019, J&T Express, an Indonesian logistics and delivery company, entered China markets. A price war was immediately staged. In Yiwu, China’s manufacturing center of consumer goods, the average country-wide delivery fee was as low as 80 fen (about 10 U.S. cents). In 2020, China’s logistics order volume went up by 5.9% but revenues fell by 6.9%. The average fee per order in the logistics industry fell from 24.6 yuan in 2010 to 10.55 yuan in 2020. Many logistics companies reported high order volumes but negative net profits.

In April of 2021, J&T Express was penalized by Yiwu Post Bureau in Zhejiang province for “dumping.” In early 2022, the State Post Bureau of China, the supervisor of the postal services and express delivery industry, issued the Administration Measures for Express Delivery Markets, explicitly banning unfair competition by offering a price lower than the cost.

On March 16, the State Postal Bureau pledged to maintain fair competition in the logistics and express delivery market, defend the legitimate rights of dispatchers and ensure the stable operations of outlets. The entire industry should try to avoid a price war, said the industry regulator.

In the second half of 2022, the average transaction value in the industry jumped. The average transaction value of YTO Express, STO Express and Yunda Express was 2.52 yuan, 2.42 yuan and 2.62 yuan, respectively, up 20% from a year earlier. In September, YTO Express, STO Express,ZTO Express and Yunda Express raised their last-mile delivery fee by 0.1 yuan per order. It brought about an increase in net profits.

During this year’s Double Eleven Festival, there will be a slight price increase. The fee for delivering a kilogram of merchandise will go up by 0.1 yuan.

Suning Logistics told TMTPost that the express delivery price will not change markedly. Caixiao argued that consumers care about their shopping experience than the price.

Smart Logistics

The competition among express delivery companies this year is about digital logistics, smart logistics and green logistics. “The Double Eleven Festival is a time to test the performance of logistics companies,” said an industry insider.

All logistics companies have used digital systems in merchandise handling. JD Logistics has applied a smart flexible warehousing model -- Beidou New Warehousing, which is capable of reducing backlogs through precise parcel volume prediction and real-time analysis by tapping into machine learning and artificial intelligence. During the online shopping event in November, driverless trucks of JD Logistics will appear on the roads in Beijing, Hainan, Wuxi, Guiyang and Nanning.

Cainiao will make precise supply chain plans for merchants based on big data algorithm, order volume prediction, goods shortage pre-warning, packing materials prediction and goods replenishment suggestions.

In addition, smart night equipment, smart logistics parks and new energy vehicles are in place.

關鍵詞： Chinas Express Delivery Firms Ready Double Eleven Shopping Festival