dingjiaoone original

author | zheng haojun

editor | wei jia

shanfeng express, which has been established for ten years, has finally reached the critical moment of listing.

on september 13, eastern time, bingex limited (hereinafter referred to as bingex) officially submitted its prospectus and plans to be listed on the nasdaq. prior to this, on july 4, the china securities regulatory commission’s official website disclosed the filing notice regarding bingex’s overseas issuance and listing.

shunfeng express was founded in 2014. in order to avoid competition with domestic and foreign express giants, it chose to provide "one-to-one special delivery service" for individual and corporate customers, specifically solving the needs of "delivering keys" and "delivering documents" with high requirements for timeliness and security. it is a pioneer in this niche field.

at the beginning of its establishment, shansong grew rapidly and was favored by many investment institutions, including matrix partners, tiantu investment, shunwei capital, etc. this time, with the submission of the prospectus, shansong's financial data was also made public.

shansong's business model is relatively simple. its revenue comes from charging customers for on-demand special express delivery services. the salary and rewards paid to riders are the largest part of its revenue costs. since it earns "hard-earned money", shansong's gross profit margin has not been high, at around 10%. it was in a loss-making state in 2021 and 2022, and it did not achieve a profit of 110 million yuan until 2023.

shunfeng express was once a star startup project, but a decade later, the instant delivery industry it operates in has become a red ocean of competition. there are meituan express and fengniao express, which are backed by food delivery platforms, as well as dada, an e-commerce company, and sf express, an express delivery company. shunfeng express, which lacks the background of a giant and a stable traffic entrance, faces challenges in the future in maintaining the growth of order volume and continued profitability.

after 11 rounds of financing, shansong is finally going public

the long-silent unicorn shunsong has made new moves.

shansong was founded in 2014 during the venture capital boom. its founder xue peng is a veteran in the logistics industry. according to public information, he graduated from north china university of technology with a degree in computer science in 2005. after graduating from the university of london with a master's degree, he founded the express logistics integration service platform yiyoudi in 2008. shansong's co-founder yu hongjian, who was once the project director of yiyoudi, is an old partner who has worked with xue peng for many years. before the ipo, xue peng held 22.7% of the company's shares and 74.6% of the voting rights.

shansong defines itself as a pioneer in the same-city instant express delivery industry, and pioneered the "one-to-one express delivery" service standard and service efficiency. the characteristic is that only one shansong courier is responsible for the entire process from picking up the item from the sender to delivering the item to the recipient, and one shansong courier can only take one order at a time.

initially, the main scenarios for flash express can be understood as "emergency rescue", such as forgetting to bring keys, needing to urgently send business documents, etc. because it is faster and safer, the fees users need to pay are also higher than ordinary express delivery.

later, in addition to the "one-to-one express delivery" for individual users, shansong gradually expanded its business scope, such as providing expedited delivery services for customers of local restaurants, flower shops, and bakeries; delivering legal documents to customers such as real estate agencies and law firms; and delivering valuable electronic products to consumers.

in the early days of its business, shansong caught up with the good time when the venture capital market was active and received a lot of financing. tianyancha shows that shansong has raised a total of 11 rounds of financing in the 10 years since its establishment. it completed the angel round and a round of financing in the first year of its business, and the investors came from matrix partners china and cdh investments. in 2017, it even raised funds four times a year. in 2018, the capital winter came, and shansong's financing speed also slowed down. its last round of financing was the d++ round of financing completed in march 2021, with a financing amount of us$125 million.

precisely because there are a number of investment institutions behind it, the listing schedule of shunfeng has always been a focus of attention from the outside world.

as early as 2020, shansong executives said in an interview with the media that the company might go public soon. unexpectedly, its peers got ahead of it. dada group and sf express entered the capital market in mid-2020 and december 2021 respectively, while shansong has been dragging its feet until now to submit its prospectus.

according to the information in the prospectus, shunfeng's revenue in 2021, 2022, 2023 and the first half of 2024 will be 3.04 billion yuan, 4.003 billion yuan, 4.529 billion yuan and 2.285 billion yuan, respectively.

media reports show that shansong achieved profitability in 2016, two years after its establishment, and maintained a high annual growth rate of 300%, which is very rare for a start-up in the logistics industry.shansong will be in the red in 2021 and 2022, with net losses of 291 million yuan and 180 million yuan respectively, and it was not until 2023 that it turned losses into profits, with a net profit of 110 million yuan. it continued to make profits in the first half of 2024, with a net profit of 124 million yuan.

however, shunfeng explained that the profit in 2023 was mainly due to the increase in government subsidies, which increased other income from 9.2 million yuan in 2022 to 74.32 million yuan, and the operating profit related to operating conditions was only 11 million yuan.

as of june 30, 2024, shunfeng has approximately 2.7 million registered riders and approximately 88.9 million registered users; the service scope covers 295 cities in china, the number of orders per active rider is 9.3 per day, and the average delivery time is 27 minutes.

the “bitter business” of making money

the prospectus shows that all of shansong’s revenue comes fromcharges for providing on-demand dedicated courier services to customers.in other words, the money earned is hard-earned, and it all depends on the accumulation of one order at a time.

in the past three years, the number of orders for shan song has been on the rise. in 2021, 2022, 2023 and the first half of 2024, shan song completed 159 million, 213 million, 271 million and 138 million orders respectively.

during the same period, the corresponding revenues were rmb 3.04 billion, rmb 4.003 billion, rmb 4.529 billion and rmb 2.285 billion respectively.

if we do a simple calculation and divide the revenue by the number of orders, we can find that the average revenue per order during the same period was rmb 19.1, rmb 18.8, rmb 16.7 and rmb 16.6 respectively.

so,although the number of orders is increasing, the revenue per order is on a downward trend.this is not good news for shanfeng express. the reason for the decline in average revenue per order may be that users are less willing to pay, or that shanfeng express has to lower prices to maintain order growth in the face of fierce competition.

in today’s environment,will users continue to pay higher delivery fees in the future?, is a major challenge that shunfeng will face.

in addition, shunfeng's operating results are subject to seasonal fluctuations. for example, during the lunar new year, customer and rider activity is low, resulting in lower order volumes in the first quarter than in the fourth quarter.

looking at the cost, in 2021, 2022, 2023 and the first half of 2024, the revenue cost (cost related to revenue) of flash express was rmb 2.851 billion, rmb 3.744 billion, rmb 4.134 billion and rmb 2.027 billion, respectively.

in,salaries and bonuses given to riders account for the bulk of the revenue.during the same period, the salaries and rewards paid by shunfeng to riders were rmb 2.751 billion, rmb 3.614 billion, rmb 3.975 billion and rmb 1.951 billion, respectively, accounting for 90.5%, 90.3%, 87.8% and 85.4% of the revenue, respectively.

this part of the cost is difficult to compress.

shansong stated in its prospectus that there is no employment relationship between riders and shansong, but a crowdsourcing model is adopted. according to practitioners, the fulfillment cost of crowdsourcing riders is lower than that of hiring full-time riders, but they are often not very loyal and often accept orders from multiple platforms at the same time, and the staff turnover is high. in order to ensure sufficient transportation capacity, shansong needs to offer competitive salaries, otherwise the riders will switch to other places. according to iresearch data, shansong riders’ income per order is higher than the average income of other riders in china’s on-demand delivery service market.

the high proportion of revenue costs has also caused shan song's gross profit margin to hover around 10% in recent years. in 2021, 2022, 2023 and the first half of 2024, its gross profit margin was 6.2%, 6.5%, 8.7% and 11.3% respectively, and its gross profit was 189 million yuan, 259 million yuan, 395 million yuan and 257 million yuan respectively.

the main reason for the increase in gross profit margin is that in the past three years, the growth rate of shunfeng's revenue has been higher than the growth rate of its revenue costs. the reason behind this may be that with the continuous increase in order data, the efficiency of shunfeng's algorithm distribution has gradually improved.

however, compared with didi, which also provides instant transportation services and relies on big data and algorithms to improve efficiency, the gross profit margin of shansong is still relatively low. in q1 2024 and q2 2024, didi's gross profit margin was 17.1% and 18.6% respectively.

the level of gross profit determines how much room there is for monetization of this business. in general, the independent on-demand full-time express delivery service provided by shansong is not an easy business. while the gross profit margin is not high, the average revenue per order is also declining.

going public, the challenge has just begun

shunfeng defines the market it operates in as the "independent on-demand dedicated express delivery market", adding the two adjectives "independent" and "dedicated line".

"dedicated line" means that flash express will deliver each package to a dedicated deliveryman, who will be responsible for the fulfillment process from start to finish and will no longer merge orders. it is more timely and secure than traditional same-city express delivery.

“independent” means that shunfeng is an independent service provider that allocates resources according to market demand, rather than an “exclusive dedicated express service provider” that relies on the needs of associated e-commerce platforms.

with these two adjectives, shunfeng's market share in the "independent on-demand dedicated express delivery market" segment is 33.9%, ranking first.

but,in the entire on-demand delivery market, shunfeng's market share is not outstanding.

according to iresearch consulting, from 2019 to 2023, the total market size of china's on-demand delivery market increased from 164.1 billion yuan to 338.5 billion yuan, with a compound annual growth rate of 19.8%. it is expected that by 2028, the market size will grow to 809.6 billion yuan, with a compound annual growth rate of 19.1%.

the independent on-demand dedicated express delivery market to which shunfeng express belongs is expected to grow from 15.6 billion yuan in 2023 to 53.2 billion yuan in 2028, with a compound annual growth rate of 27.8%, exceeding the growth of china's overall on-demand delivery market.

although the growth is rapid, it can also be seen that independent on-demand dedicated lines account for a relatively low proportion of the overall on-demand delivery market.in 2023, the proportion will be only 4.6%.

from the perspective of timeliness, the business carried out by shunfeng belongs to the category of instant delivery in the logistics industry.this industry is home to many competitors.

according to the demand scenarios, same-city instant delivery can be simply divided into four categories, namely food delivery represented by meituan waimai and ele.me, new e-commerce retail represented by dada (fresh food home delivery, supermarkets), errand running represented by flash express and uu running, and same-city logistics such as sf express.

a 2022 mob research institute research report shows that food delivery is the most important scenario in instant delivery services, with meituan delivery and fengniao express competing as the two leading companies. flash express focuses on "one-to-one" delivery, which occupies a relatively small market share.

"instant delivery: a blue ocean market empowered by the digital economy" released by cicc in 2020 also shows that in 2019, among the application scenarios of instant delivery, catering takeaway orders accounted for 70%, fresh food home delivery accounted for 12%, supermarkets and convenience stores accounted for 10%, flowers and cakes accounted for 5%, and c2c delivery ("one-to-one" delivery) accounted for 3%.

according to industry insiders, high-frequency rigid demand such as catering can bring steady cash flow, while demand for other categories is often low-frequency and difficult to form economies of scale. this is because users often use it to deal with emergencies, and demand is scattered, making it difficult to form a stable customer order volume.

in comparison, sf express has cooperation with some chain restaurant brands, dada has the customer order volume of jd.com, meituan is rooted in local life, and shunfeng express does not have a strong giant background and traffic entrance.

also,although dada group and sf express went public before shunfeng express, their stock prices and performance are still unsatisfactory.

in june 2020, dada group went public in the united states, becoming the "first stock in instant retail", but it is still in a loss-making state. on september 13, 2024, dada group's us stock price was $1.07, a 93% drop from its ipo price of $16, and its market value was only $283 million.

in december 2021, sf express successfully went public in hong kong after only three years of "independent and corporatized operation", becoming the first hong kong stock in instant delivery. however, it also suffered losses for several years and did not make a profit until 2023. however, its net profit margin in 2023 and the first half of 2024 was less than 1%. at present, its stock price has also fallen from the issue price of hk$16.42 to hk$11.3, a drop of more than 30%.

the poor performance of its peers after listing will inevitably cast a shadow on the listing path of the "latecomer" shunfeng express, and further improving profitability may be the best way for shunfeng express to get rid of the shadow.

*the title image comes from the flash express weibo.