In the express delivery industry, the stable pattern of “four links and one delivery” has remained unchanged for many years. However, the news that Jitu Express, which was established less than two years ago, invested 6.8 billion yuan to acquire the 14-year-old Best Express, like a heavy nuclear bomb, was suddenly detonated in an industry that is as quiet as a water stop. Although there were many rumors and speculations in the market before the official announcement of this acquisition, until the boots landed, the industry still sighed that the acquisition of Extreme Rabbit was a bold venture.
According to the acquisition agreement, Best will transfer the equity, assets, outlets, transshipment centers, personnel, technology, systems, etc. of related domestic express companies to Extreme Rabbit Express.
IiMedia data shows that as of January 2021, the market shares of SF Express, Yunda, YTO, Shentong, Best, and Jitu are 10.64%, 16.33%, 14.94%, 9.93%, 10.2%, and 8%, respectively. According to the 25 million recently disclosed by Best Express and the 22 million or so daily orders disclosed by Jitu, after the completion of the business merger, the two will have a market share of 14%, which is expected to rise to the third place in China, surpassing Shentong and entering the first echelon.
In March 2020, after relying on the express delivery business of mainstream e-commerce platforms in Indonesia and Southeast Asia to achieve a counterattack, Jitu Express launched a low-key domestic network. At first, it did not get much attention from the market, but in less than a year, this fierce “rabbit” has been known to everyone.
In April this year, Extreme Rabbit secured a new round of financing of US$1.8 billion. In addition to the US$580 million investment led by Boyu Capital, Sequoia Capital and Hillhouse are also on the list, and the lineup of the capital can be described as luxurious. After the investment, the valuation of US$7.8 billion has surpassed established express companies such as YTO, Shentong and Yunda, and is second only to SF Express,JingdongLogistics and Zhongtong.
Although the blessing of capital has made Jitu’s growth even more rapid, in the domestic market, the express delivery industry still occupies an insurmountable mountain in front of Jitu. As far as the domestic express delivery industry is concerned, Jitu’s upper position and Best Group’s withdrawal from the “four links and one delivery” are only the beginning of the rewriting of the domestic express delivery pattern.
Achievement in Southeast Asia
When Jitu Express enters the Chinese market in 2020 and energizes industry players, its parent company J&T Express has ranked first in the comprehensive strength of the e-commerce express market in the Southeast Asian market.
In August 2015, fromOPPOLi Jie, who stepped down as CEO in Indonesia, aimed at the express delivery market in Southeast Asia and founded Express. Three months ago, at the OPPO R7 Jakarta press conference, Li Jie informed the media and cooperative dealers that he would bid farewell to OPPO and be the express company J&T Express.
In the past five years or so, Li Jie has stepped on multiple opportunities. On the one hand, the e-commerce market in Indonesia and Southeast Asia has entered a stage of vigorous development. On the other hand, the early advantages of OPPO’s Indonesian distributors and team have opened up the local express network beyond expectations. In an interview with the media, he said frankly that Jitu’s today has nothing to do with the two.
At that time, the logistics industry in Southeast Asia was in a stage of slow development for a long time, and lost parts and poor timeliness were common problems. In Indonesia, sellers usually choose the express company “JNE”. As a local veteran express company founded in 1990, JNE relied on the franchise model to realize the rapid expansion of terminal distribution outlets. According to data released by Moton Ventures, JNE has approximately 5,000 express delivery outlets in Indonesia. At the same time, relying on multiple factors such as market and user reviews, JNE has long been in the top echelon of express delivery companies in Southeast Asia.
While the franchise model helps JNE achieve rapid expansion, the management system of franchise is looser, which also leads to JNE’s weak control over terminal outlets, which affects the end users’ experience in delivery timeliness and other aspects. Therefore, while gaining the market, it also Has been criticized by users.
From the first day J&T settled in Southeast Asia, it has given local businesses and consumers a new choice outside of JNE. Compared with JNE’s extensive operation, J&T’s advantage is to ensure delivery efficiency and service through the direct operation model. In addition, it has opened up OPPO’s distributor network resources in Southeast Asia. Jitu quickly harvested its own express orders and relied on 24 hours. Perfect services such as customer service and package monitoring have been recognized by the market.
The direct play style is undoubtedly a success for J&T. Relevant data shows that from the perspective of business volume, Jitu has already ranked first in the Indonesian market share and the second largest express delivery company in Southeast Asia.
In October 2016, Indonesian President Joko Widodo proposed to vigorously develop e-commerce and proposed relatively loose investment conditions. Since then, the prologue of the vigorous development of Indonesian e-commerce has continued to this day. According to the “2021 According to the “Indonesian E-commerce Report”, Indonesia, the largest e-commerce market in Southeast Asia, has an e-commerce GMV of US$40.1 billion in 2020, a year-on-year increase of 91%.
The prosperity of e-commerce has naturally contributed to the rapid development of J&T. J&T has successively reached cooperation with Southeast Asian e-commerce platforms such as Lazada and Shopee, quickly occupying the Southeast Asian market and becoming a leading player in the express delivery industry in Southeast Asia.
After successfully winning the Southeast Asian market, Jitu turned its attention to the domestic express delivery market. After all, “If Polar Rabbit stays in Southeast Asia, sooner or later there will be other companies attacking and grabbing the market.” Li Jie once said in an internal open letter.
Subsequently, Yunlu Supply Chain Technology, a subsidiary of J&T Group, was renamed “Extreme Rabbit Express” in 2020 to start the operation of express delivery business.
When the money-burning rabbit meets the lost hundred generations
In China, Jitu’s style of play still continues its expansion style in overseas markets. After the establishment of Shenzhen Yunlu Supply Chain Technology Co., Ltd. in China in 2018, in the second half of 2019, it acquired Longbang, a long-established logistics and express company in Shanghai. Express. At that time, although Longbang Express was in the second and third-tier companies in the express delivery echelon, the postal-level license obtained through the acquisition was undoubtedly a stepping stone to the domestic express market for Jitu.
Soon after the acquisition, Jitu began to accelerate its deployment in the domestic market, and officially launched the network in March 2020. Since then, it has set off a parallel competition between digging and price wars in the domestic market.
Since the domestic express delivery market has long been entrenched by four links, the price of delivery fees has always been hovering at 0.7-0.8 yuan per order, and the first thing Jitu will do in 2020 is to increase the delivery fees of couriers.
According to media reports at the time, the delivery fee of Extreme Rabbit was much higher than that of the Tongda system, and the delivery fee in individual areas could even reach more than 1 yuan. Such a high delivery fee was rare in the industry at that time. Driven by the high delivery fee, the courier From time to time, the phenomenon of changing jobs from the Tongda Department to the Extreme Rabbit has occurred.
After catching the delivery staff in the express delivery industry, Jitu set its sights on the increase in order volume. In terms of the increase in order volume, Jitu took a price war. Take Yiwu, which has always enjoyed the “weathervane of the express industry” as an example, according to previous media reports. , The cost price of express single ticket is about 1.4 yuan, the lowest price of Best single ticket is 1.1 yuan, followed by Jitu, Yuantong, and Shentong, the price is about 1.15 yuan, far lower than the cost price.
Under the strategy of parallel price wars and digging people, Jitu has achieved explosive growth, and within 10 months, Jitu’s domestic daily orders have gone from zero to 20 million. Although there is still a gap between the number of votes in a single day and the old players, it took a full 10 years to reach this business volume compared to the “Tongda Department”, which is evident in the growth rate of Extreme Rabbit.
According to analysis by industry insiders, in addition to relying on the original OPPO outlets, the reason why Jitu can quickly ramp up its domestic business under the help of domestic accessibility systems, Pinduoduo’s traffic and subsidies are also one of its rising factors.
Li Jie is the disciple of the head Duan Yongping and joined Backgammon after graduation. Another protégé of Duan Yongping is Huang Zheng, the founder of Pinduoduo. Therefore, the outside world once believed that Jitu’s rapid rise in China was largely due to Pinduoduo. Earlier, media reports said that 90% of Jitu’s domestic business comes from Pinduoduo.
However, on April 8 this year, Pinduoduo issued a statement through the merchant version of the app, stating that there is no special partnership or investment relationship with Jitu.
Regardless of whether it is backed by Pinduoduo channels, when Jitu chooses to enter the domestic market, whether it can surpass the old players such as Tongda, JD Logistics and SF Express in the landing of outlets is a question that it will face directly. For this new player, the old players are not welcome.
On October 19 last year, Yunda’s “Notice on Prohibition of Acting for Jitu Business in the Entire Network” published by Yunda on the intranet mentioned that the affiliated companies of Yunda Express (including the contracting area) shall not join the Jitu Network and contract for any reason or in any form. District; both ends of Lanpai shall not act as an agent for extremely rabbit express service for any reason or in any form. In addition, at that time, many Tongda franchisees broke the news to the media that Shentong and YTO had also issued similar notices.
According to previous media reports, one of the more important reasons why the “Tongda system” is so sensitive to Jitu is that Jitu has introduced a price war into the express delivery industry with meager net profits by burning money, which greatly intensified the collective resistance of the industry.
Just when the “Tongda Department” and Jitu were fighting vigorously over prices, the regulatory level also penalized the express delivery industry for relying on burning money for the market.
On April 6 this year, the Yiwu Post Administration issued a warning letter stating that the bureau had repeatedly notified Gitu Express and Best Express not to dump at prices far below the cost, but the company did not rectify as required and requested the above The company will complete the rectification before April 9, otherwise it will order the company’s distribution center to suspend business for rectification in accordance with the relevant requirements of Article 41 of the “Express Delivery Regulations”.
The naming by the supervised layer means that the routine of relying on price for market is not feasible in China, but for Jitu, it is still more urgent to increase business volume and network coverage density.
It is worth noting that the other express company mentioned in the warning letter of Yiwu Post Administration, the Best Group behind Best Express, has not developed smoothly in China in recent years.
As a veteran express company, Best Express has also ushered in a bright moment. In September 2017, Best Group was listed on the New York Stock Exchange. In addition to being the second logistics company to go public in the United States, Best Group issued a total of 45 million American Depositary Shares (ADS) at a price per share. 10 US dollars, the total financing amount is as high as 450 million US dollars, it is also known as the largest fundraising of Chinese companies listed in the United States that year.
However, the Best Group has not achieved sustained growth after its listing. In recent years, it has been in a state of continuous loss. According to public information, from 2016 to 2021, the loss of Best Group was 1.363 billion yuan and 12.28 respectively. 100 million yuan, 508 million yuan, 219 million yuan, 2.051 billion yuan.
In terms of market share, according to previous data released by iiMedia, as of January 2021, SF Express accounted for 10.64%, Yunda accounted for 16.33%, Yuantong accounted for 14.94%, Shentong accounted for 9.93%, and Best and Extreme Rabbit’s market The shares are 10.2% and 8%. It can be seen that in terms of market share, Best Group is gradually widening its gap with the leading SF Express.
At the same time, Best Express has gradually fallen behind in terms of average daily order volume. Taking this year as an example, according to related reports, the average daily order volume of Best Express is about 25 million orders, while the average daily order volume of Shentong is 63 million. , Yuantong has 42.49 million orders, and Polar Rabbit has 20-30 million orders.
Therefore, after Jitu announced its acquisition of Best, industry insiders pointed out that for Jitu, what is needed most is to quickly roll out domestic outlets to stabilize its position in the domestic express market, and Best’s outlet system is for Jitu. There is a shortcut, and after the acquisition, Polar Rabbit will also increase its market share. For Best Group, selling its domestic express delivery business will also help the group reduce financial pressure.
Inside and outside at the same time
If the entry of Extreme Rabbit adds uncertainty to the seemingly stable express delivery industry, then after Extreme Rabbit acquires Best Group’s domestic express delivery business, the industry structure may be rewritten.
On the day when Polar Rabbit officially announced its acquisition of Best, Fan Suzhou, CEO of Polar Rabbit, said that the acquisition was made to complement each other’s advantages, optimize the terminal network layout of both parties in the Chinese market, promote refined network operations, provide customers with better services, and promote industry development. Healthy growth.
It is worth noting that in the previous exploration of the domestic market, Jitu failed to obtain the order flow from the Ali system, and at the end of the rookie station, the two parties did not cooperate. Obviously losing Ali’s order means Jitu will lose a larger share of the e-commerce market.
Earlier, some insiders analyzed that the acquisition of Best Express by Jitu could not only win some of Best’s daily orders. Together, Jitu’s daily orders are expected to exceed 40 million tickets, which will further enhance its market position. This is the biggest advantage. Yes, “Jitu can finally embrace Ali’s traffic.”
“Ali is the largest shareholder of Best Group, holding 33% of the shares. Before, Jitu failed to enter the Taobao order system for some reasons. This may change after the acquisition.” The above-mentioned industry insiders analyzed.
Facing the acquisition, Zhou Shaoning, the founder, chairman and CEO of Best Group, pointed out that Best will focus on energy and resources to further promote the deep integration of supply chain, express transportation and international business, accelerate business development, and create an international integration. Smart supply chain services.
It is worth noting that in the new layout of internationalization, in recent years, both Jitu and Best Group, which have emerged in Southeast Asia, have been constantly seeking new increments.
Previously, according to media reports, Jitu started a new round of financing after the Spring Festival with a planned amount of US$250 million. Recently this financing has been completed. Jitu will expand its express network to the Middle East and Latin America, focusing on Egypt, Brazil and Mexico are three populous countries and the United Arab Emirates and Saudi Arabia are two countries with higher per capita incomes.
From the perspective of Jitu’s plan, such a layout is also well versed in the development trend of overseas e-commerce. With the popularization of mobile devices and the catalysis of the epidemic, the Middle East and Latin AmericabeautifulThe scale of e-commerce is growing rapidly. Take the UAE as an example. According to a data from Statista, the UAE’s e-commerce market revenue is expected to reach 5.746 billion U.S. dollars in 2020. Previously, according to information released by the Dubai Customs Administration, UAE e-commerce in 2022 The scale is expected to reach 27 billion US dollars.
In addition, in the above regions, some representative e-commerce platforms have also run out, such as the Middle East e-commerce platform giant Noon, the Latin American e-commerce giant Mercado Libre, etc., and the emergence of new e-commerce platforms is for the logistics industry Naturally, it is a new increment. Obviously, Jitu, which once accompanied the rise of overseas e-commerce dividends, has seen this trend.
And Best Group’s overseas attempts in recent years have also achieved certain results. First, it opened its express delivery business in Thailand and Vietnam in Southeast Asia in 2019, and then launched its network in Malaysia, Singapore, and Cambodia last year. According to previous reports, Best plans for the future. Build 7 transshipment centers and 270 express delivery stations in Malaysia in three years.
“E-commerce in Southeast Asia has a weak foundation but has developed rapidly. It is inherently a relatively good emerging market that can be entered.” Zhou Shaoning, Chairman and CEO of Best Group, previously mentioned in an interview with the media, as the “first place in Best’s international layout.” “One stop”, Best will make simultaneous efforts in express delivery, supply chain overseas warehouses and express business, etc., to build a more complete supply chain system in Southeast Asia.