By BAI Fan
Mr Shan sells snacks online. Business took a hit during this year’s lockdowns, and Shan must save on costs. He recently ditched the shipping company he has used for years. He ships 30,000 packages a day. A saving of a few jiao (0.1 yuan) per package means millions of yuan each year.
Small business owners are shopping around as low demand and high capacity push the industry to the edge of another price war.
Based in Shanghai, Shan has switched couriers. The new deal is not only cheaper, he said, but now he dictates when packages are picked up each morning and by what time they must be shipped. But delays are more frequent. The solution is to juggle two carriers, J&T and Yunda.
“We track our packages very closely. If J&T delivers only 90 percent of what we expect in one area, we take a note and use Yunda in that area next time,” Shan said
E-commerce sales are falling. “Merchants are selling 40 percent less than usual. Some have had their sales halved,” said GONG Fuzhao, of Shuangyi Consulting. Clothes and cosmetics sales are down the most because people are working from home. Even without lockdowns, consumer spending is down due to economic uncertainties.
Package volumes fell 12 percent in April, the worst monthly drop since 2007. Some of the biggest couriers saw their volumes shrink by up to 20 percent. A handful of big couriers make up more than 90 percent of the market. Since last spring’s price war ended with enormous losses, enormous fines, J&T and Best Inc merger, and excess capacity due to over-expansion.
Prices have been falling since January, ticking up slightly in June because of shopping days, but in most places not enough to offset the January-May drops. July and August are the slowest months and labor and fuel are the highest costs for couriers.
Industry insiders are doubtful whether price cuts boost demand. Service and reliability are valued more now given the lockdown risks. Moreover, the industry is more restrained since SF shocked the market and regulators by losing 1 billion yuan in a single quarter last year.
“The industry thinks differently from two years ago. Competition won’t be as nasty as before,” said Gong Fuzhao.
