Industries that rely heavily on manpower are always hovering on the verge of losses. But now, this "tradition" is ushering in a breaker. Recently, SF Express released the performance forecast for the first half of 2023. It is expected that the interim performance ending June 2023 will turn losses into profits, and become the first company in the instant logistics field to achieve profitability.
In the announcement, SF Express specifically mentioned that the reason for the turnaround in performance was that revenue growth was accompanied by an increase in order density, a better business structure, and higher input-output ratios. Although it is just a few words, if these indicators are substituted into the business model of intra-city instant delivery, SF Express has actually achieved a comprehensive improvement in both quality and quality.
After passing the break-even threshold, SF Express is still looking for new targets on the fast-growing real-time delivery track. As the key factors of market competition begin to shift, SF Express is opening up a new situation in the same city.
SF intra-city profits, the potential to "giant fist"
In the 2022 performance report released by SF Express on March 28 this year, its annual revenue exceeded 10 billion yuan for the first time, which became a major milestone for the company. Therefore, the turnaround forecasted in this semi-annual report basically indicates that the company's business model has been further optimized. Especially under the background that the scale of the instant delivery market is still expanding, the growth of profit margins deserves to be called a "surprise".
This achievement has two possible potential meanings. One is that SF Express has found a suitable starting point in comprehensive operations and achieved a balance between scale expansion and cost reduction and efficiency increase. Market share increases and raw infrastructure begins to unlock more compounding value.
No matter which direction you look at, it means that SF Express's understanding and layout of real-time delivery has reached an industry-leading level. Because real-time retail and delivery revolve around the business core of "local demand + local supply", forming a unique business model. This means that in each region, the basic investment that SF Express needs to pay in the same city tends to be fixed or periodic expenditures, such as human capital and so on. But as long as aggregate demand is growing, the growth rate of this part of expenditure cannot keep up with the growth rate of income.
For example, in the 2022 performance, SF intra-city 2C intra-city delivery revenue increased by 57.3% year-on-year, and total revenue increased by 25.6% year-on-year, but correspondingly, the year-on-year growth rate of performance costs fell to 21.5%. Only the R&D expense ratio increased by 2.5%, while the rest showed a downward trend. In short, SF Express can not only maintain the growth of market size and user share, but also successfully undertake these needs and successfully fulfill the contract without greatly increasing investment.
Combined with the performance forecast of the semi-annual report of SF Express - "The company's overall revenue has achieved good growth, while the order density has increased and the business structure has improved, further enhancing the economies of scale of the business network, and through the improvement of technological empowerment efficiency, driving more efficient Operating the chassis, improving the efficiency of resource input and output, and finally making the gross profit margin and expense ratio continue to improve", this trend is continuing. Once a positive cycle is formed, the upward resistance will be greatly reduced.
Of course, the most critical factor is that compared with traditional warehousing and transit logistics such as e-commerce express delivery, the localized business model of instant delivery requires instant delivery companies to release greater initiative in actual combat, go deep into consumption scenarios, and pay attention to contract performance Multi-link, providing multiple services. The important opportunity hidden in this is that in the early stage, only the transportation capacity is provided, that is, the point-to-point distribution service. But in the middle and later stages, with the consolidation and display of SF Express’s capabilities, it gradually established the ability to provide solutions, mainly to solve the problems between the two ends-this is a major leap forward, because it can enter the customer system and create a greater value.
For example, at this stage, what SF Express can "deliver" has far exceeded the imagination of many people. Especially in the medium-to-long-distance and stratified markets, SF Express has a lot of experience backed by SF Express, and the ability to organize diversified transportation capacity and contract performance methods. Compared with a large number of peers who only rely on manpower-intensive construction of service networks, they have formed a Differentiation advantage.
Similar examples include SF Express’s Safe Delivery for C-end valuables, which provides services such as full-process monitoring of insured products and full-price claims settlement; for cold-chain consumer products and pharmaceutical products, SF’s cold-chain infrastructure and service capabilities To be ahead of the industry.
Therefore, returning to the essence of the industry, instant delivery companies have actually been in a unique ecology for a long time: the supply of transportation capacity is easy to obtain in the early stage, which reduces the threshold for establishing a basic network, and then spawns a large number of distribution "taxes" lying on the human dividend. enterprise. However, as the demand side adapts to the mode of instant delivery, more cross-industry and cross-field non-standard demands are booming, and the original thinking is no longer applicable.
At this time, SF Express is taking the lead in updating service capabilities and undertaking complex demands. Therefore, when the business model further verifies the potential of benign operations, SF Express has the ability to make the next attack with a fuller offensive.
Instant delivery, entering the era of high-quality development
In the industry environment of instant delivery, there are several characteristics worthy of attention.
First of all, compared with traditional long-distance express logistics services, the demand logic and business value logic of the local last mile instant delivery are different. Secondly, the full-scenario business model in which the B-end and C-end operate simultaneously poses different challenges to the capabilities of enterprises. Finally, there are obvious differences in the development stage of instant delivery and express delivery, as well as the policy support received and the strategic position within the enterprise.
When various factors are mixed, we can see that there were many players of different scales in different levels of market for instant delivery, but now the competitiveness of leading companies such as SF Express continues to increase. Subtext As mentioned above, the competitiveness of simply providing transportation resources is gradually weakening, and the competitiveness of providing customized solutions and industrialization capabilities is gradually increasing. Behind it is the evolution of demand: merchants are less sensitive to the supply of transportation capacity, and more sensitive to the differentiated characteristics of the platform. In addition to "being able to deliver", consumers also need to deliver quickly, safely and at ease.
All this requires the platform to be able to write a big strategy and do a good job in small operations. Whether it is basic point-to-point services or more comprehensive end-to-end services, SF Express can make a snowball in the same city.
On the one hand, based on the expansion of non-meal and non-standard multiple needs, SF Express has established differentiated strategic advantages in terms of transportation capacity, solutions, and technology.
For example, for live broadcast e-commerce, SF Express has launched a comprehensive logistics solution for merchants, which can follow up logistics operations with one click. For KA customers, SF Express can build a delivery plan with them and provide considerate services. In the face of the overall commercial space in the city, the urban logistics system of SF Express will provide the best scheduling based on the comprehensive calculation of industry needs, scene complexity, human capacity and other factors - and all this will be accompanied by SF Express's cooperation with riders. Long-term care and training, on the basis of ensuring the income and safety needs of riders, try to improve the efficiency of single riders in the way of technology + system, that is, give the right people the right tasks to ensure the rider's rights, platform services, etc. balance.
On the other hand, just-in-time logistics has become an indispensable catalyst for current consumption. Prior to this, 13 departments including the Ministry of Commerce officially released the "Three-Year Action Plan for Comprehensively Promoting the Construction of a Quarter-of-a-Day City Convenience Living Circle (2023-2025)", which received positive responses from all over the country.
For example, the "Changsha Quarter-hour Convenience Living Circle Pilot City Construction Implementation Plan" jointly formulated by relevant departments in Changsha proposes that "by the end of 2025, no less than 100 high-quality quarter-hour convenience living circles will be created, and new and transformed businesses will be realized. There are 2,500 outlets, serving 3 million residents and driving 200,000 jobs." Looking at its direction, it is still consistent with the basic concept of SF Express to expand the business radius of merchants and increase the radius of consumers' access to services, but the term "high quality" is particularly prominent.
For the merchant side, high quality means extending the service chain and improving service quality; for consumers, high quality means adapting measures to local conditions to meet consumption needs conveniently, and making the life circle more down-to-earth; for the platform, high quality means maintaining effective costs Control and healthy business model, and drive employment and consumption, forming a virtuous circle. The answer leads to the same goal by different routes. SF Express is on the road of high-quality development hand in hand with the real-time delivery industry chain.
Looking back at the turning point of SF Express’s turnaround into profit, it seems that the change in numbers is only a trivial matter, because it only firmly implemented its own strategy and gradually completed a leap forward. But if we put SF Express back into the industry observation, what we can see is that instant delivery has gradually drifted away from the reckless era-there are no longer stories of miracles in the rivers and lakes, refinement has become the new standard, and the industry is getting more and more tested The enterprise's strategic vision and high-quality development awareness give full play to the deep value of logistics.
SF Express City is closely related to the high-quality development of SF Express Holdings as a whole. Its neutral third-party capability advantages and ecological advantages still have huge room for development. Just at the moment when this transformation just happened, SF Express took the lead in completing the improvement of providing resources-solving problems-mining needs. On this long road, SF Express's ability and awareness make people have to give it a high praise.
Source: Hong Kong Stock Research Institute