By BAI Fan
Shipping for Singles Day shopping spree that falls on November 11 will be more expensive this year. Almost all express companies have raised prices in the run-up to possibly the biggest sales of the year. Increases range from 5 to 50 cents per parcel.
That may not sound like a lot, but some sellers dispatch thousands of parcels each day, and the extra costs add up quickly. Someone has to pay, and chances are it won’t be shareholders of any businesses involved. Most likely, it’ll be customers.
Couriers simply charge franchisees more. They can take it or leave it. Generally, they take it and pass it on to the customers. Franchisees are concerned about losing customers but have no choice in the matter.
Many lost money during lockdowns and haven’t recovered. E-commerce sales, a barometer for the courier industry, haven’t bounced back as expected. Consumers, already tight-fisted, will be even more reluctant to splash the cash with expensive shipping to consider.
Arguably, the situation may not be as gloomy as many think.
Shoppers may shift their spending from big-ticket items to inexpensive goods such as food and clothes, which, combined with a longer promotion period, will boost shipping volume.
That’s OK for the platforms, but as profit margins vanish, higher volumes can easily translate into bigger losses.
Express companies like to paint themselves as the victims in e-commerce price wars – price per parcel has fallen from 25 yuan per parcel in 2009 to 10 yuan last year. But there are millions, billions even, more parcels today.
Customers who value service quality are not so cost-sensitive, but those who used to shop around are less likely to do so as the price differences among couriers is close to nonexistent.
Regulators have also put their oars in. The State Post Bureau summoned five budget couriers this month and told them to improve customer service and treat their employees better. The authorities in Jinhua, an e-commerce hub, have banned couriers from lowering prices below costs.
Things will not be getting any better for courier franchisees any time soon. There is no sign that market-share-obsessed boardrooms plan to stop assigning absurd targets.
The industry has grown by 16 percent this year, but 30 percent of sales targets were common. To avoid penalties, some franchisees have resorted to faking sales.
There is an uptick in franchise closures and sales this year. Those staying in business are looking for new revenue sources to make up for the thinning margins or even losses.
