Text |Xiao Tian.
Just over two months after it was listed, J&T Express (01519.HK) was interviewed.
On January 26, the Market Supervision Department of the State Post Bureau issued a notice that it was found that the container bags used by J&T were detected with heavy metals exceeding the standard, and an administrative interview was conducted on the issue of continuous use of unqualified container bags for random inspection.
In fact, this is not the first time J&T has been interviewed. On October 27 last year, J&T was also administratively interviewed for mechanical operation and loading and unloading accidents in the treatment site.
Behind the two interviews, J&T's "shortcomings" were directly exposed, but the capital market didn't seem to care.
2023 is the historical low point of the market value of express delivery companies, and the total market value of the express delivery industry has evaporated by more than 200 billion yuan, of which SF, Zhongtong and Shentong have fallen by 3% compared with the market value high of the year, YTO has fallen by 4%, and Yunda has fallen by 5%.
On the other hand, the market value of J&T once surpassed that of Zhongtong, the most profitable private express delivery, second only to SF, as of February 7**, the stock price was 1500 Hong Kong dollars shares, with a total market capitalization of 132.2 billion.
Many investors who are optimistic about J&T compare it with Pinduoduo, an e-commerce platform that is gaining momentum in China, on the grounds that both companies have similar "genes".Culturally, Duan Yongping is "inherited", strategically pursues "the ultimate cost performance", and has created a growth myth in terms of performance.
Obviously, judging from the current market value performance of J&T, this voice occupies the mainstream.
However, when we dismantle J&T, we find that in the domestic express delivery market, which is extremely involuted and oversupplied, in addition to burning money subsidies, J&T's core advantages are not obvious; At the same time, in the international market, J&T is also facing challenges from other express delivery companies and "new express delivery forces". When it comes to investment opportunities, investors still need to be cautiously optimistic in a weak market environment.
For a long time, J&T has a title that makes other domestic express delivery industries "frightened" - "the rabbit that spoils the situation".
The reason for this title comes from the fact that in August 2019, J&T officially entered China, relying on the route of vigorously producing miracles and holding high, tearing out a hole from the relatively stable express delivery industry and sitting on the table of China's express delivery rivers and lakes.
As we all know, in just a few years, J&T has achieved the scale that its domestic counterparts have operated for more than ten years, and it is inseparable** wars and mergers and acquisitions wars.
Taking the acquisition war as an example, the first is the acquisition of Longbang Express, which helped J&T solve its business qualification in China; The second acquisition of the Tiantian Express site, which was on the verge of bankruptcy, helped J&T solve the basic site problem; The third acquisition was 7The $1.5 billion acquisition of Best Express allowed J&T to truly stabilize the market, supplement infrastructure, obtain the order volume of Tao e-commerce, and successfully entered the top five in the private express delivery industry; The fourth is to eat SF's Fengwang, which is engaged in e-commerce parts business, and its power has further expanded.
In 2020, J&T processed 32300 million parcels, including 20 in China800 million pieces, and in 2022, that number rises to 145300 million parcels, 120 in China200 million pieces. The market share is 109%, close to the head express brand.
J&T has achieved a sharp increase in revenue and a rapid increase in market position through cash burning and mergers and acquisitions, and the growth rate of this young express company is eye-catching.
But whether it is a first-class war or a merger and acquisition war, for an express company like J&T that started from scratch, the key to quickly building a nationwide pickup and delivery network across the country is ——"Regional ** system".
What is the regional ** system? Different from SF's unique two-tier franchise system (headquarters and franchisees) commonly adopted by SF Express and three-way one-reach, J&T adopts a unique three-tier franchise system, that is, the terminal franchise stores are joined by regional partners of the national headquarters, and the main difference is that J&T has more regional partners.
Under the traditional franchise model of three links and one reach, the express company is responsible for investing in and operating the country's transshipment and sorting centers, trunk transportation and middle and back office management, and attracting investment to join the outlets to achieve customer collection, acquiring and dispatching, thus constituting a complete distribution network.
Under the J&T model, it signs a cooperative relationship with regional partners, and regional partners are mainly responsible for the operation and investment of terminal outlets in the region. Regional partners in the construction of transshipment centers and trunk transport will also participate and share.
This means that a considerable part of J&T's management pressure on terminal outlets and the financial pressure on building a logistics network has been transferred to regional franchisees.
Therefore, J&T's business model is naturally suitable for the rapid expansion of the "horse racing" category.
Source: There are several dat**ision
When J&T returned to China in 2020, the system helped it complete the nationwide launch in less than two months. It is reported that the J&T headquarters initially planned to cover the eastern provinces of China in the first batch in three months, and then promote the second and third batches, but in the actual promotion, it only took half a year to cover the whole country.
However, the "regional ** system" is not the original creation of J&T, nor is it the mysterious "backgammon model" rumored by the outside world.
Combing the historical context of China's express delivery rivers and lakes, more than 20 years ago, in order to seize more market share, the express delivery companies at that time adopted this "regional system".
It wasn't until 2003 that a serious rebellion among executives and franchisees broke out in Yunda, an incident that made the entire express delivery industry aware of itIf the express headquarters does not have control over the first-line outlets, the entire express network will be scattered after allSince then, all express delivery companies have coincidentally opened the direct operation of the transit center, and the power of the headquarters has been withdrawn and concentrated, which has the current two-tier franchise system.
In other words, the unique regional partner system brings flexibility that is easy to expand, but when the scale expansion is completed, J&T's control over terminal outlets and some non-self-operated sorting centers is weak, and the management efficiency is low.
And so it turned out. At present, consumers can not only see J&T many times in the official interview documents, but also frequent visitors on many complaint lists.
Objectively speaking, domestic express delivery is not a "good business".
On the one hand, this is because of the online retail industry, which is the most advanced in the express delivery industry, since 2015, the penetration rate has gradually become saturated and the growth rate has slowed down, and the growth rate of express delivery volume has also continued to decline from about 50% in 15 years to a growth rate of 10%;
On the other hand, the expansion of the scale of the express delivery industry has brought about the scale effect and management, and the efficiency brought by the improvement of technology, in addition, the domestic head express delivery providers include three links and one reach, J&T, SF, Jingdong and postal EMS, rookie and other nine major players, and there is serious overcapacity in the express delivery industry.
In this context, although J&T can quickly achieve scale in the way of first-class warfare, it is only "glamorous" on the surfaceOne indicator to measure the real internal force of J&T Express is - single ticket income. The results were not as good as they could have been.
According to last year's prospectus, from 2020 to 2022, J&T China's single-ticket express delivery** was 0$23, 0$26, 0$34 and a cost of 0$5, 0$41, 0$4.
In other words, although J&T will have an annual order volume of more than 12 billion in 2022, it ranks 6th in China. However, after deducting the fulfillment costs, trunk costs, direct staff and labor costs, as well as various depreciation and amortization, it will be a loss of 0 for each express delivery in China$4. The more you send, the more you lose.
In contrast, Yunda, which is currently the most likely to lag behind in the industry, has an average gross profit of 2 cents. Visible,J&T still has a big gap with its domestic predecessors in terms of operational efficiency and cost control of "internal strength".
Looking back on 2023, due to the pressure of the external economic situation, the first battle in China's express delivery market will start again. The revenue of Tongda Department has all declined, and some companies have dropped by as much as 20%.
Specifically, a few families are happy and a few are sad.
Zhongtong and Yuantong have always been the balance masters of the express delivery industry. Respond quickly to the first war, invest cautiously, seek a relatively balanced development of business volume and quality, and at the same time improve internal operating efficiency and maintain stable growth in revenue and profit.
On December 29, 2023, the business volume of ZTO Express exceeded 30 billion pieces. According to rough estimates, the growth rate of business volume last year reached at least 23%; YTO Express, last year's express business volume of 212400 million pieces, a year-on-year increase of 2131%, officially surpassing Yunda shares, becoming the "second" in express delivery business.
Shentong Express, which once lagged behind, also reached 1750.7 billion pieces, a year-on-year increase of 3521%, becoming the king of industry growth.
According to the current trend, Shentong will directly charge Yunda in terms of business volume, and Yunda will not sit still in the battle for the top three in the industry. This means that this round of ** battles, which started in 2023, will be more intense in 2024.
What's more, there may also be some "gaps" between J&T and Pinduoduo, once an important partner.
According to statistics, 80%-90% of J&T's domestic orders in 2020-21 came from the Pinduoduo platform. In the same period, Pinduoduo's total order volume also increased from less than 20 billion in 2019 to nearly 70 billion in 2022, an increase of nearly 25 times.
However, since 2021, with the acquisition of Best by J&T and its entry into the Tao system, Pinduoduo has gradually connected to SF Express, Santong Yida and JD Logistics, which are the most selectable express delivery providers for merchants.
The bonus period of Pinduoduo, which once relied on binding high-speed growth, has basically ended. J&T is bound to return to the competition of hard power in the future.
As we all know, the competition in the express delivery industry ultimately falls on how to make the most efficient use of transportation capacity and manpower to achieve the lowest average cost per unit. So as to obtain the most profit under the same price, or provide the lowest price under the same profit, to achieve a positive cycle of scale effect and profitability.
For J&T, on the one hand, it needs to continue to scale, and on the other hand, it is possible to lose more money. The only way to find a balance between scale and efficiency is to make up for the effectiveness and efficiency of operation and management.
However, as mentioned above, the "regional system" may be the threshold that J&T has to cross, and there is still great uncertainty about whether J&T can bypass the old road that the predecessors of domestic express delivery have traveled and open up a high-efficiency business model of its own. After all, this means opening up the knife to the "brothers" who once helped him expand his territory.
As a multinational express delivery company that started in Southeast Asia, the overseas market has always been the "ballast stone" of J&T Express.
For a long time in the past, J&T was able to fight in the domestic market, in addition to financing and regional systems, another money came from its own profits.
According to the revenue structure data of J&T, in 2020, the southeast will account for 7 percent and the domestic will account for 3 percent; By 2022, it will account for nearly 6 percent of domestic accounts, 3 percent of Southeast Asia, and about 1 percent of cross-border and overseas. It can be seen that although J&T's business in China started later, it has been "anti-customer-oriented" and is the main place of J&T's revenue.
However, in terms of profit contribution, among the three major regional sectors of J&T, as of 2020, only the "home base" of Southeast Asia has achieved stable profits, while China and new markets are actually still losing money year after year.
In other words,J&T belongs to the "face" of "losing money and making money" in the Chinese market, doing scale and reputation, while the Southeast Asian market is the "lining" of J&T's real profit and market position.
What is less well known is,In China, J&T is positioned like Pinduoduo, pursuing the ultimate cost performance, but in the Southeast Asian market, J&T is "SF".
This is because 2015, when J&T was established, was also the first year of e-commerce in Southeast Asia, and Shopee and Lazada frantically burned money to subsidize in order to compete with each other. J&T has the same business philosophy as the domestic express delivery leaders (Zhongtong and SF) based on the business philosophy of "fast delivery, good service and strict management", as well as the "dimensionality reduction" operation model of China's express delivery industry, and finally became the first in Southeast Asia.
According to the prospectus, J&T's market share in Southeast Asia reached 225%, the market share is the first and more than 3 times that of the second place. Nearly crushed the original couriers in Southeast Asia.
However, in recent years, due to the growth of domestic express delivery profits, it has peaked. In 2023, the national express delivery business volume has reached 132.1 billion pieces, a year-on-year increase of 194%；Business income amounted to 12 trillion yuan, a year-on-year increase of 143%。Although the growth is still strong, the increase in unit volume has not brought profits of the same scale.
This makes express delivery companies have to accept a reality: domestic express logistics, profits have little room for growth. If you only do the domestic market, you can only be reduced to the situation of "passively guarding the country".
In contrast,Express delivery to the sea is imperative.
Among the emerging markets, Southeast Asia and China are geographically close and culturally connected, with a young demographic dividend and considerable potential for the digital economy. Since 2013, the e-commerce market in Southeast Asia has begun to flourish, and the business layout in Southeast Asia has also become the focus of the overseas strategy of domestic express companies such as SF Express, Zhongtong and Yuantong.
Although the outsiders who have really "eaten" this cake in the Southeast Asian market have not yet appeared, as more and more domestic express delivery companies enter, J&T will also enter a state of guarding.
In addition, in Southeast Asia, the Middle East, North America, Latin America, Australia and other markets, a group of Chinese entrepreneurs are using China's express delivery model to combine the characteristics of the regional market and grow into a new global logistics force.
Like J&T, imile, a logistics company with a global Chinese background, took advantage of the booming e-commerce market in the Middle East and came into being in Dubai. It has also stepped on the first year of growth of e-commerce in the Middle East, and is organically combining the mature solutions of China's logistics industry with the regional characteristics of the Middle East;
Uniuni, founded in Vancouver, Canada in 2019, aims at the North American logistics terminal distribution market with crowdsourcing model + digital intelligence technology. In December last year, Uniuni also announced the completion of a $20 million B2 round of financing.
There are also international logistics giants such as UPS, DHL and Aramax Express, which are potential competitors who have the potential to leverage J&T ballast.
For J&T, the territory covered by the wild run is not stable. Excellent companies have never spread the game all over the world, but step by step, gradually narrowing the gap with the world's top enterprises, and finally becoming a truly global enterprise. So, can J&T become Pinduoduo? For now, at least, it has encountered many more challenges than Pinduoduo at the beginning.