The personal delivery market in China is experiencing notable growth, fueled by the country’s expansive labor force and an evolving internet ecosystem. As demand for on-demand delivery services rises, companies are implementing innovative strategies to capture consumer interest and drive profitability. However, while many are vying for market share, only a handful are managing to turn a profit.
The Rise of Individual Courier Services
Among the leaders in this space is BingEx, which has strategically positioned itself by offering a dedicated delivery person for each order. This approach has garnered attention and praise, with Deutsche Bank analyst Jessie Xu noting in a recent report that BingEx is "pioneering the dedicated courier service industry." Using their app, consumers can arrange for various items to be delivered quickly—whether it’s a suitcase transported across town or a specially ordered cake for an event.
Operating under the brand "FlashEx" or "Shan Song" (which translates to "delivery in a flash"), the service has gained substantial local recognition, akin to how "Kleenex" is associated with facial tissues in the West. Noteworthy is the fact that FlashEx began to report a positive operational profit in 3Q23 and has sustained profitability since then, contrasting sharply with the majority of its competitors still struggling with losses in the one-on-one courier sector.
Competitive Landscape
The on-demand delivery market in China has grown fiercely competitive, with not only logistics companies but also e-commerce platforms entering the fray. Many of these firms initially attracted customers with heavy subsidies, often consolidating multiple orders for single couriers. Despite this competitive pressure, even industry giants like Alibaba acknowledge the shifting consumer desires for immediate, on-demand shopping experiences. Recently, Alibaba has launched a dedicated channel on its e-commerce platform, Taobao, enabling consumers to receive a range of products—from food to clothing—within a mere 30 minutes.
Interestingly, many of FlashEx’s competitors are subsidiaries of larger firms, such as Dada—which was once a standalone supermarket delivery service backed by Walmart but has since been absorbed into JD.com. Dada has seen its operational losses deepen, rising to 2.16 billion yuan in 2024, a slight increase from the previous year. JD.com itself has also ventured into the on-demand delivery space to compete with food delivery giant Meituan, resulting in reported operational losses due to its new initiatives.
Market Growth and Projections
While the on-demand delivery sector in China is projected to grow by an average of 13% annually through 2028, this represents a notable deceleration compared to the 20% growth seen from 2019 to 2023. Xu’s report attributes this continued expansion to the rapid rise of Online-to-Offline (O2O) retail, enhanced food delivery services, and a growing appetite for personalized delivery options.
Nevertheless, personal courier services like FlashEx still account for only 4% to 5% of the overall delivery market. Xu forecasts a potential 10% growth in this niche over the next three years, which signals promising opportunities for dedicated courier businesses. As of late 2024, FlashEx has expanded significantly, boasting 2.8 million riders serving over 100 million registered customers across 295 cities.
Despite recent setbacks, including a more than 50% decline in BingEx’s stock value this year—primarily due to intense competition and softer consumer spending—analysts maintain a positive outlook for the company’s future. Credits to the strategic moves made in exiting non-core businesses, FlashEx is focusing on improving unit economics rather than solely chasing market share. This shift underscores a dedication to sustainable growth and profitability—a welcome change in a realm often characterized by aggressive volume-driven strategies.
Navigating Challenges
The road ahead is not without its challenges. As the market evolves, incumbents must navigate through various obstacles, including shifts in consumer behavior and heightened competition from both new and established players. The combination of external market pressures, such as fluctuations in Chinese consumer spending and regulatory environments, creates a complex landscape for these companies to operate in.
It’s essential for firms in the personal delivery sector to constantly adapt and innovate. Those who can blend rapid service with sustainable business practices may emerge as winners in this fast-evolving market.
Conclusion
The evolution of China’s personal delivery market reflects broader trends in consumer behavior, technological advancements, and business strategy. While many companies chase the allure of rapid growth, only a few are successfully establishing profitable operations. As exemplified by FlashEx and BingEx, the dedication to creating sustainable income streams while meeting the demands of modern consumers could very well define the future of on-demand services in China. As this sector continues to mature, the focus will likely shift from mere expansion to finding the balance between efficiency and profitability, ensuring that the players who remain standing are those capable of navigating the complexities of both market demands and operational constraints.
