Economic Observer Network reporter Zhou YingmeiJitu’s acquisition of Best Express became a reality. On October 29, Best Group (BEST.N) announced that it had agreed to sell its domestic express delivery business to J&T Jitu Express for a price of 6.8 billion yuan (approximately US$1.1 billion). The sale does not include Best Group’s supply chain management, freight, Ucargo (Best Premium) and Global (international business). The transaction is expected to be completed in the first quarter of 2022.
Wu Lin (pseudonym), who has been in the express delivery industry for 10 years, believes that Best Express has orders, but it has not been profitable. If we can absorb the extremely rabbit management model and improve the quality, the integration of the two parties can “kill” the market.
“After the acquisition of Best Express, Gitu’s express order volume should rank second, second only to Zhongtong. One of Gitu’s acquisition of Best is to open Taobao and Tmall channels.” Wu Lin said that many customers are also willing Go Extreme Rabbit, but Taobao and Tmall do not have open channels.
Earlier, an express company was asked whether it would acquire Best Express. As a domestic express company that has been cultivating for many years, Best Express has a place. Before this, its market share has been around 10%. No matter which express brand acquires Best Express, its market share must be re-ranked.
In the end, this acquirer was Jitu Express, which played a role in disturbing the entire express market after entering the Chinese market last year.
Best Express does not make money
Wu Lin, a franchisee of Best Express, believes that the acquisition is a good thing for Best Group. Best’s logistics services are somewhat dragged down by express delivery. Express, supply chain and international business are relatively healthy businesses. Wu Lin said that Best Express’s freight service is ranked first in the country.
In Wu Lin’s view, express delivery only contributed to Best Group’s turnover, but it affected Best’s reputation. Compared with Zhongtong, YTO Express, and Yunda, Best Express entered the bureau later. The others are profitable, and Best Express, which has never been profitable, also needs to change.
In 2010, Best Network formally acquired Huitong Express and entered the express delivery industry under the brand of Best Huitong. At that time, the express brands Zhongtong, YTO and Yunda on the market had been working for nearly 10 years. Different from other express companies, Best Express chooses to enrich its business lines, including inbound freight since 2012, and to do Best Express, of course, it is also through acquisition.
Today, losses have become the norm for Best Express.
Best Group’s financial report for the second quarter of 2021 showed that revenue was 7.375 billion yuan, down 5% year-on-year, with a net loss of 468 million yuan and a profit of 42.7 million yuan in the same period last year. The net loss of Best Group in the previous quarter also reached 618 million yuan.
On September 20, 2017, Best Group was listed on the New York Stock Exchange. It was at a loss before the listing. In 2016, it lost 1.36 billion yuan. After the listing, the loss narrowed. From 2017 to 2019, Best Group lost 920 million yuan, 50 million yuan, 200 million yuan. However, by 2020, PepsiCo’s losses will suddenly increase to 2 billion yuan.
In the second quarter financial report, Best Group also mentioned that the decline in revenue was mainly due to price wars. Best also participated in the “Yiwu Price War”. On April 9, 2021, Best Express and Extreme Rabbit Express were punished by the Zhejiang Yiwu Post Administration Bureau for dumping at low prices.
In 2020, the gross profit of a single ticket of Best Express has become negative 0.01 yuan. On the one hand, it is a loss and a price war. Express delivery has no money to make. As of the second quarter of 2021, Best Group’s total liabilities reached 17.5 billion yuan, and the debt-to-asset ratio reached 95.21%.
The Best Group has also opened a convenience store Best Plus before, and has joined the financial market. Its subsidiary Best Financial provides vehicle financing services. At the same time, it also started international business. In November 2020, Best Group will make another strategic adjustment, focusing on the four core core businesses of express delivery, express delivery, supply chain, and international business.
Express service is its main source of income. According to the second quarter financial report, express service revenue was 4.281 billion yuan, accounting for 58% of total revenue. After the sale of this business, Best Group will also change its face. Judging from the data in the second quarter, its international business has grown significantly, with an increase of 63.4%.
Zhou Shaoning, founder and chairman of Best Group, stated that Best Group will focus on supply chain-based logistics solutions and provide integrated supply chain, freight and global logistics services. This will strengthen the balance sheet and provide a better way to profit.
Acquirer Extreme Rabbit
Jitu Express was established in Indonesia in August 2015. Its founder, Li Jie, was the former founder of OPPO Indonesia. Its official website shows that the market has successively covered Indonesia, Vietnam, Malaysia, the Philippines, and Thailand, occupying a leading position in the Southeast Asian market.
Gitu Express entered China in March 2020, and the cooperation with Pinduoduo allowed Gitu Express to quickly occupy the market. In less than two years, the market has caught up with several major domestic express brands. According to the information disclosed by Jitu, its coverage rate in provinces and cities across the country has reached 100%, and 74 transshipment centers have been put into operation across the country.
According to a report by Haitong Securities in September, Jitu’s market share reached 14%, second only to Zhongtong, Yunda and YTO, and became the fourth largest e-commerce express company in China. According to late reports, in April this year, Jitu also completed a round of US$1.8 billion in financing.
Wu Lin had visited Jitu’s sorting center before. “Unloading is all unloaded one by one.” “We learned that there are several express companies that unload the goods after they arrive at the transit yard.” “It’s also not ruled out that the reason for the lack of orders in Jitu. If we can maintain this original intention after the acquisition of Best Express, Jitu will be able to fight ahead sooner or later.”
However, Wu Lin believes that if Taobao and Tmall channels are not available, Jitu still cannot be the largest parity express delivery market, and may still not be able to surpass Zhongtong.
According to the data released by the companies in the second quarter, ZTO Express delivered 5.772 billion parcels in the second quarter, an increase of 25.6% year-on-year, with an average daily business volume of close to 63 million tickets and a market share of 21%. In addition, Yunda has a market share of 16.73% and Yuantong has a market share of 15%.
Best Express occupies a place in the domestic express market. From 2017 to 2020, Best Express will maintain a market share of about 10%. In the second quarter of 2021, the market share declined to 8.4%. After the merger of Jitu and Best Express, the express market share will further increase.
Prior to this, Alibaba had always been the majority shareholder of Best Group. Before Best Group was listed, Alibaba held 23.4% of its shares and then increased its holdings. According to Best Group’s 2020 annual report, Alibaba holds 37% of Best Group’s shares and 46.7% of the vote. right.
Express future “looks at quality”
Wu Lin has been engaged in the express delivery industry for more than 10 years. He started as a franchisee of Best Express, and now is also a franchisee of Zhongtong Express and Yunda Express.
“It needs to be integrated. Just do one business and each has its own advantages. Now many people also do all kinds of express delivery. If they don’t do this, they can’t continue.” Wu Lin said, Best Express headquarters is losing money, and franchisees can still make money, but If you earn less, you can’t do it if you lose. At present, Zhongtong has the most orders, and the price is a little higher than that of other companies. “Zhongtong can rise to a higher level than others. One advantage is that it will give franchisees some profits, but the requirements for franchisees will be higher.”
“Which one should do well now depends on the quality.” Wu Lin emphasized this sentence many times. In Wu Lin’s view, the quality is good, even if it is more expensive, but the service is good, the experience is good, and it doesn’t matter how expensive others are.
Now Wu Lin is also in the process of restructuring and doing large-scale logistics. “Bulky logistics is relatively stable, and express delivery is also done, but the profit is too low. Now there are two companies that only ship but not deliver.”
“The delivery fee is low, generally around 80 cents to one piece, and 4 cents to the courier cabinet, and 4 cents to get the hand. In the future, it will be up to who can increase the treatment of their couriers.” Wu Lin said.
Now Wu Lin’s orders are still from Tmall and Taobao, and Pinduoduo has also done it. “But Pinduoduo’s continuity is not good enough, and many shops have a short lifespan.” Therefore, Wu Lin believes that Jitu will continue to grow bigger. To get through Taobao and Tmall.
Wu Lin said that many customers are still willing to go to Jitu. After the opening of Taobao and Tmall, Jitu may surpass Zhongtong in the cheap express market. In other words, in the entire express market, Jitu may rush to the second place after SF Express and JD.com. The top three. “If the two companies can’t get along, then others will run away again.”Return to Sohu to see more
Editor:
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