Crowd Deliveries in China. A Go or Not?
Pick your target market wisely. Then you shall prosper. We at Shipit aim to spread our network of travelers all around the globe starting in Asia-Pacific first. However, why don’t we take a minute or so to explore how feasible the idea is and start with China.
Hands down, China is one of the most attractive markets when it comes to its volume. In particular, parcel delivery industry is expected to grow by between 25 and 30 per cent in several years, according to Huachuang Securities.
However, local delivery market is a difficult one to survive in. Parcel delivery companies have been in constant price wars in China for more than ten years. According to data from Askci Consulting, based in Shenzhen, the average price of a delivery of one parcel was as low as 13.4 yuan or 1,96 USD in 2015. The numbers have rebounded a little bit since then but are still low (from 12 yuan or 1,76 USD — within one province and from 23 yuan or 3,37 USD within the country in October, 2017).
As a result, all parcel delivery companies face the same challenge: ‘They are not able to increase pricing to offset higher operating costs,’ claims Alex Werno, Shanghai-based executive vice general manager at Fortune SG Fund Management.
Add to that the statement made by Jerry Hsu, Asia-Pacific head of DHL Express, to Reuters that shipping a pound of pork from Shenzhen to Guangzhou (730 km or 454 miles) can cost as low as 2 or 3 yuan (0,47 USD) and the picture seems to be as grim as it gets. Compared to that, the US seems to be a lot more friendly market with its Postal Service charge of 45 cent to mail a letter domestically and $10 for an express package.
However, according to local industry watchers people start to ship and order more and they want their stuff shipped and delivered more safely. A significant shift towards reliable and HQ delivery services is expected to take place. “As people’s incomes increase, so will their demands. We are already getting a sense that people in Shanghai want better-quality products and services,” said Minoru Noda, chairman of Yamato (China) Transport Co Ltd.
As a result, many of the smaller local companies will cease to exist and benefit the larger ones; foreign players won’t be an exception as well. Shipit could be one of them.
As we offer both domestic and international deliveries, we can compete with the local due to the following:
Internationally speaking, we offer a faster solution. Currently it takes logistic companies from 2 to 6 days to deliver a package to China. With Shipit, a delivery of your package can be made a same-day one.
As to domestic deliveries, Shipit offers a more personal way to send parcels. Every sender and traveler have a direct communication and every courier is personally responsible for every parcel. We believe our blockchain-powered review system will fit in the mianzi concept perfectly.
Notwithstanding, we at Shipit understand the brutal nature of China’s parcel delivery market and given that positive changes are expected to take place only within the following several years — and this is not exactly guaranteed- we defined China as the last milestone in our Road Map. Thus, we will not rush to China’s market risking financial losses but will wait till the opportunity presents.
