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「Core Tips」
Faced with the internal competition led by major Internet companies, the ongoing price war in the express delivery industry, and consumers becoming increasingly cautious about their spending, what are the chances of success for Shunfeng Express, which is characterized by "fast speed but high price", to go public at this time?

Author | Chen Fashan

Editor | Liu Yang

The express delivery service got up early but ended up arriving late.

Recently, information released by the China Securities Regulatory Commission showed that BingEx Limited (hereinafter referred to as "BingEx") has obtained US stock IPO registration and plans to issue no more than 57.5 million common shares on the Nasdaq Stock Exchange in the United States.

Shansong was expected to become the first listed company in the field of instant delivery. As early as 2020, Shansong Vice President Du Shangbiao said in an interview with "Blue Whale TMT" that the company might go public soon. At that time, the sudden outbreak of the epidemic made instant delivery popular and became an important force in protecting people's livelihood.

But in the end, Dada Group took the lead and successfully landed on Nasdaq in the same year. Then, at the end of 2021, SF Express also landed on the Hong Kong Stock Exchange. The listing plan of Shansong was temporarily shelved.

Shansong, founded in 2014, was once regarded as a pioneer in one-to-one express delivery services in the same city. As early as 2016, it had achieved a small profit, which also allowed its executives to confidently declare: "Shansong is in a state of having no competitors."

But the market is changing rapidly.As Meituan, Alibaba, Dada, SF Express and other express delivery giants have increased their investments, competition in the entire industry has become extremely fierce, and Shunfeng's market dominance has gradually been challenged.

Faced with the ever-changing competitive landscape, Shan Song's pace seems a bit slow. Can Shan Song regain its leading position in the market through this IPO?

1. Late listing

After missing the opportunity to become the first stock in the industry, Shunfeng began to catch up.

After filing with the China Securities Regulatory Commission, Shan Song has almost opened the door to the US stock market. According to the "Supplementary Materials Requirements for Overseas Issuance and Listing Filing", Shan Song needs to further explain the compliance of building an overseas structure and return mergers and acquisitions, including explaining the company's domestic natural person shareholders and domestic institutional shareholders' performance of overseas investment and foreign exchange registration; whether the acquisition of equity in domestic entities such as Hainan Tongcheng Bing Technology Co., Ltd. is compliant, etc.

Shansong, founded in 2014, caught up with the entrepreneurial boom of "Internet +". Although there were many express delivery companies and third-party independent delivery platforms in the market at that time, Shansong established its own industry position by entering the niche track of one-to-one express delivery. Since then, Shansong has gone through more than ten rounds of financing and has become a darling of the capital market. The financial backers behind it include well-known institutions such as Matrix Partners, CDH Investments, JD Capital, and Shunwei Capital.

However, with the arrival of the capital winter, Shansong's financing pace slowed down in 2021. In March of that year, Shansong completed a $125 million D2 round of financing, which was also the last round of financing before its IPO. In this round of financing, Cheng Tian, ​​a partner of Shunwei Capital who continued to invest, said that the value of Shansong lies in solving users' practical problems, improving social efficiency and shouldering social responsibilities.

Shansong's official website shows that as of June 2024, Shansong's services have covered 290 cities across the country, with nearly 3 million riders and more than 100 million users. However, according to Qichacha data, Shansong's 2023 annual report shows that the number of insured employees is only 313.

With the rise of takeout and instant retail, competition in the instant delivery market is becoming increasingly fierce. Among them, Meituan's "Minions" and Ele.me's "Blue Friends" mainly serve their own platforms; Dada, backed by JD.com, not only serves individual users, but also connects with a large number of B-end customers such as supermarkets; other platforms such as Dingdong focus on the delivery of specific categories such as supermarkets and vegetables.

B2C players such as Meituan, Dada, and Fengniao focus more on the delivery of takeout and supermarkets, and have a higher order concentration.Shunfeng Express focuses more on the C2C market, where it is more difficult to predict the time and location of user demand. In order to respond quickly, it needs to have a city-wide presence, which results in higher labor costs.

In addition, when users place an order on Meituan, Dada, and SF Express, they can choose between "normal express delivery" or "one-to-one special delivery." The former is slower, and the rider may go back along the way to pick up other items, so the price is more favorable; the latter has a shorter delivery time and a higher price. However, users of Shansong Express do not have the right to choose, and the default is one-to-one special delivery, so the cost is relatively high.

The logic behind Flash Express is that in the field of same-city instant delivery, when users urgently need delivery, price is no longer the primary consideration, and speed and reliability are the key.

A new media practitioner told Leopard Change that in June this year, he wanted to learn about the operation status of a factory in the south, but going there in person would be time-consuming and costly. In this case, he chose Shansong's errand service, and the Shansong guy quickly arrived at the factory and helped him understand the situation on site.

However, compared with the stable order volume of Meituan and Dada, can a personalized service like Shansong support an IPO? According to Photon Planet, the entry of "new forces" has made the already slightly surplus transportation capacity even more saturated. A transportation dispatcher in the southeast region confirmed that due to the reduction in the number of orders per person for special delivery, nearly three-fifths of his riders have been turned to crowdsourcing services.

Especially in the context of strict control of IPO access thresholds in the A-share market, more than 300 companies planning to go public have voluntarily withdrawn their applications in 2024. In contrast, listing in the United States or Hong Kong has become a more realistic option.

2. Can’t Douyin support Flash Express?

With the development of food delivery and near-field e-commerce, the instant delivery industry has gone through a process from scratch and gradually expanded to comprehensive services covering various application scenarios.

Especially since the establishment of Ele.me in 2008 and Meituan Waimai in 2013, instant delivery and food delivery have been integrated on a large scale, giving rise to vertical companies such as Dada and Shunfeng.

Since then, with the rapid development of the O2O (online to offline) market, platforms such as Meituan Express, Fengniao Express, and SF Express have been launched, and JD Daojia has merged with Dada. Instant retail has gradually expanded to fresh food retail, errand running and other fields, and business scenarios have become more diverse. With the entry of major express delivery companies and the catalysis of the epidemic, the penetration rate of instant delivery has continued to increase.

In January this year, the State Council Executive Meeting reviewed and approved the "Guiding Opinions on Promoting the High-Quality Development of the Instant Delivery Industry", encouraging the instant delivery industry to play a greater role in promoting consumption, expanding employment, and ensuring people's livelihood, pressing the "accelerator" for the development of the entire industry.

Compared with Meituan Running Errands, Dada, and SF Express, which all have big partners to support them, Flash Express's ecosystem is relatively weak.Shansong Vice President Du Shangbiao once admitted that Shansong also has B2C business, but in the fields of catering takeaway and supermarket delivery, "it cannot compete with others". Therefore, when Douyin got involved in the takeaway business but lacked its own delivery capabilities, the two sides naturally had the possibility of cooperation. In December 2022, Douyin Takeaway officially announced that it would cooperate with Shansong.

Douyin's advantage lies in online traffic, but in 2023, Meituan will be far ahead in terms of transportation capacity with its team of more than 7.4 million riders. Therefore, the competition between Douyin and Meituan in food delivery and instant retail has been vividly described as a contest between "billions of traffic" and "millions of riders."

However, according to public information, Shunfeng has not announced how many orders it has received from Douyin. In the 2023 Life Service Annual Report released by Douyin, the focus is on GMV growth, performance covering more than 370 cities, and helping 4.5 million stores develop their businesses, but no specific progress of the food delivery business is mentioned.

In December 2023, there was a rumor in the market that Douyin was interested in acquiring Ele.me to build its own delivery team, but the rumor was immediately denied by Yu Yongfu, then chairman of Alibaba Local Life and CEO of Ele.me, who made it clear that "fake is fake after all."

A senior practitioner in the food delivery industry told Leopard Change that the cooperation between Shansong and Douyin seems to complement each other's strengths and can provide Douyin with millions of transport capacity, but the additional coordination link makes scheduling more difficult, making it difficult for Douyin and Shansong to cooperate as smoothly as they should. Secondly, Shansong's customer unit price is high, which will bring more cost pressure and limit the choices of merchants.

That is to say,The one-to-one delivery model is like a double-edged sword. It not only builds a moat for Shunfeng Express, but also becomes a wall that restricts its development.

3. Price war, "sinking"

Shunfeng's attempts at B2C business seem to have encountered obstacles, while at the same time, instant delivery has welcomed new competitors.

In 2023 alone, companies such as Huolala, Didi, AutoNavi, Hello, and Dongfang Zhenxuan announced the launch of instant delivery services, and the tension in the instant delivery industry is growing. In 2024, major companies such as JD.com and Douyin are constantly increasing their confrontational intensity in frequent battles. Among them, JD.com has integrated hourly delivery and home delivery services, and upgraded its original instant retail business to "JD.com Second Delivery", promising to deliver in as fast as 9 minutes.

For a time, the industry was extremely bustling. Express giants such as "Three Links and One Delivery" and SF Express used their deep logistics foundation to compete for market share, while Internet giants such as Meituan, JD.com, and Ele.me led the fierce competition. There were also many players in the segmented tracks that eroded the market. In comparison, Shunfeng Express seemed much more low-key. In the competitive environment of many giants, its market share was constantly diluted.

Leopard Change conducted a survey on multiple users to understand their criteria for choosing instant delivery services. The results showed thatCompared to the time difference of a few minutes, people generally pay more attention to the price.

Taking a 5kg package of fresh food as an example, Leopard Change simulated a delivery mission from Wenzhou Mixc to 5050 City Plaza, 12 kilometers away. In horizontal comparison, the price quoted by Shansong Express was the highest, about 1.6 times that of Meituan Express, but there was no significant difference in timeliness between the two.

The impact of price differences is particularly prominent in the context of express delivery price wars. Judging from the June performance announced by SF Express, Yunda Express, STO Express, and YTO Express, the price of a single ticket has dropped significantly, with Yunda Express's price drop as high as 13.79%. Users are more cautious in choosing express delivery. A business manager in Beijing who often deals with companies said that many business emails used SF Express before, but now many companies have switched to the more affordable JD Express.

The trend of price cuts has also spread to the field of instant delivery.On July 11, Cainiao Express announced the upgrade of its same-city express delivery service, providing half-day delivery service in the same city. The first weight price was reduced to 6 yuan, and the additional weight price was only 1 yuan per kilogram, which is half of the original price.

In the past, Shunfeng Express relied on its differentiated competitive strategy of one-to-one delivery to carve out a niche in a market full of strong competitors. However, in the current market environment, this strategy is unlikely to be its talisman.

According to the 2022 China Instant Delivery Industry Research Report released by TouBao Research Institute, from the perspectives of the number of riders, delivery orders, and coverage areas, Shansong has fallen behind leading companies such as Meituan, SF Express, and Fengniao. Although instant delivery startups such as Fengxiansheng, eKuaisong, and Jimaisong were once favored by capital, they failed to have the last laugh in the industry reshuffle.

TouBao Research Institute predicts that by 2026, the market size of China's instant delivery industry is expected to reach 99.45 billion orders, with an annual compound growth rate of 26.9% from 2021 to 2026.The growth potential mainly comes from the hot sales of popular products such as sinking markets, near-field business scenarios and tea drinks, and these areas are more sensitive to prices.

Therefore, if Shunfeng wants to gain popularity, in addition to ensuring speed, it also needs to satisfy more users in terms of price.