Reporter Chen Ting
Our daily delivery volume is about 500 to 800 tickets, and the collection volume is about 7000 to 8000 tickets, "Kieu Viet Dong, a franchisee of Best Vietnam, told the Daily Economic News reporter.
In October 2020, Kieu Viet Dong established its own express delivery station in Bavi, Vietnam. Currently, the station has over 50 staff members, including customer service and delivery personnel. In the years since becoming a franchisee of Best Vietnam, the order volume of Kieu Viet Dong site has steadily increased, from a few thousand orders per month to tens of thousands, and now to nearly 300000 orders per month.
In Southeast Asia, franchisees of rapidly growing Chinese express delivery companies are not uncommon.
Zhang Wei, the person in charge of Zhongtong in Cambodia, told the Daily Economic News reporter that Zhongtong's daily package volume in Cambodia is generally over 20000 orders. "During e-commerce festivals, there may be a little more, at most 40000 to 50000 orders per day," he said. Zhongtong's market share in the local market in Cambodia is about 20%, ranking second in order volume, and "the first in market share is a bus company.
As the starting point for many express delivery players going global, whoever can dominate the Southeast Asian market has already taken the lead in the competition of global express logistics. Whether it's Baishi, Zhongtong, Jitu, or Cainiao, they all started laying out in Southeast Asia many years ago.
What kind of market are they facing in Southeast Asia? How did it take root? Why is it developing rapidly, franchise or direct sales? In the future, how many possibilities are there? Recently, a reporter from the Daily Economic News had an in-depth conversation with several express delivery companies competing in overseas markets.
Consumer cash on delivery and low acceptance of employee overtime
Southeast Asia has become the first choice for Chinese companies to go global due to its close geographical location and rapid market development. Especially Vietnam, the Philippines, and Indonesia, due to their incomplete infrastructure and commercial facilities, have enormous development potential, "said Wang Xiaoqing, Vice President of Best Group and General Manager of Best International, in a recent interview with media including the Daily Economic News.
Compared to China, the situation in Southeast Asian countries is different.
Kieu Viet Dong, a franchisee of Best Vietnam, told reporters that 99% of express delivery in Vietnam requires door-to-door delivery. "Unlike Chinese consumers, Vietnamese consumers require to see the goods on site, and if they are satisfied, they will receive them. If they are not satisfied, they will directly return them.
At the same time, the reporter learned that in Vietnam, consumers are more accustomed to "cash on delivery", which is different from the majority of online shopping consumption in China that follows the principle of "payment before delivery".
Zhang Wei told reporters that local couriers in Cambodia need to deliver goods to their doorstep, and there are no relay stations or delivery lockers here. Therefore, local couriers in Cambodia deliver 50 to 100 packages per day, which is slightly different from the delivery volume of domestic couriers. "In Cambodia, couriers need to deliver goods to customers and receive payment, which takes longer time.
In Southeast Asia, courier companies have also adopted more localized business strategies and hired a large number of local employees.
Zhang Wei revealed that Zhongtong mainly relies on franchising in Cambodia, with 10% being direct sales points and 90% being franchisees. There are about 1200 employees in the local area, and the proportion of locals is about 95%.
He said that local employees are more suitable for communicating with local consumers, and the labor cost will also be much lower. Zhang Wei also mentioned that the local people have a low acceptance of overtime and the pace is relatively slow.
Wang Xiaoqing said that many employees in Southeast Asia are different from Chinese employees. Many people work by the hour and do not have bank cards or save money.
After taking over (local) Best International, I quickly realized these differences. Therefore, we divided the personnel into full-time, part-time, half day, temporary, and full day positions, drew a matrix, and then slowly worked on the personnel structure. At the same time, we tried to break down the work as finely as possible to reduce our dependence on people. This is the work that we spend the most energy on, "said Wang Xiaoqing.
It is worth mentioning that in Southeast Asian countries, the income of couriers is not low.
According to Zhang Wei, in Cambodia Zhongtong, the monthly income of ordinary employees is around $300 to $500, while the monthly income of management personnel is around $800 to $1000. Employees who can speak Chinese will have higher incomes. According to the website of the Ministry of Commerce, the draft of the "2024 Financial Management Law" released by the Cambodian Ministry of Finance and Economics predicts that Cambodia's per capita GDP will increase from 1917 US dollars in 2023 to 2071 US dollars in 2024.
Kieu Viet Dong also stated that in Vietnam, the income of a courier ranges from 10 trillion to 15 trillion Vietnamese dong per month (10 trillion Vietnamese dong is equivalent to approximately 2843 yuan). The reporter also learned from a franchisee of Best Logistics that in Malaysia, couriers can earn as little as 2000 ringgit per month and as much as 6000 ringgit per month (approximately 9929 yuan).
Whether in terms of delivery methods or labor costs, in Southeast Asian countries, players of express delivery going abroad face a different battlefield than in China.
Jia Shi Consulting partner Li Yingtao told the Daily Economic News reporter that the Southeast Asian express delivery market presents characteristics such as good prospects, large gaps, high difficulty, low efficiency, and diverse participants.
Li Yingtao said that there are many countries in the Southeast Asian express delivery market, including developed countries and developing countries, with some countries having a large population and others having a small population, resulting in a large gap. Also, due to the large number of islands in Southeast Asia and the different cultures and work habits of each country, the difficulty is high. Many express delivery companies over there do not work on Saturdays and Sundays, which leads to 'low efficiency'. However, he also stated that under the promotion of various forces such as e-commerce and industrial chains, the progress of the Southeast Asian express delivery market is very fast.
Entering Southeast Asia: Players with Different Strategies for Going Global
Various signs indicate that the Southeast Asian express delivery market has both challenges and prospects. Chinese express delivery companies have long been eyeing this battlefield and have gradually accumulated a certain scale.
Since 2019, Best regards Southeast Asia as its most important overseas market, based on local express delivery services, gradually stacking warehouse networks, large-scale express delivery networks, cross-border logistics networks, etc., to provide global supply chain services for Chinese brands going global, as well as local brands in Southeast Asia and North America.
Wang Xiaoqing revealed that the local delivery of Best in Southeast Asia is basically completed by franchisees. "As long as we are open and transparent, try to eliminate personal interference, break down everything as much as possible, and make the scene rules public, franchisees will have expectations for the company and are willing to work with you.
According to the financial report, in the first quarter of 2024, Best International's business revenue reached 281 million yuan. The total volume of cross-border business increased by 256.4% year-on-year, and the package volume in Southeast Asia increased by 39.4% year-on-year.
In addition, the reporter learned from YTO Express that YTO Express International has established branches in multiple Southeast Asian and South Asian countries such as Thailand, Vietnam, Singapore, the Philippines, India, and Bangladesh, and provides cross-border logistics services such as international express delivery and freight.
As of now, YTO Express has opened more than 50 routes to Southeast Asia and South Asia, with over 40 flights per week to and from Southeast and South Asian countries, providing a transportation capacity of over 3000 tons.
In Southeast Asia, Jitu is also an undeniable market force.
According to the business data disclosed by Jitu for the first three quarters of 2024, its Southeast Asian parcel volume was 3.16 billion, a year-on-year increase of 33.0%.
And Cainiao has invested more in logistics hubs in Southeast Asia. The reporter learned from Cainiao that Cainiao has set up cHub overseas local warehouse networks in Thailand, Vietnam and other places. It is understood that the Jakarta project in Indonesia is Cainiao's largest cHub in Southeast Asia. The overall area of the project is about 32 hectares, with a planned high standard warehouse of 170000 square meters.
In addition, Cainiao launched its first batch of E-hubs as early as 2018. Among them, Cainiao Malaysia Kuala Lumpur eHub is the largest logistics infrastructure project in the country's e-commerce sector and also the largest digital free trade zone in Malaysia.
It can be observed that various courier companies have different strategies in Southeast Asia.
According to Zhang Yi, CEO and Chief Analyst of iMedia Consulting, in terms of assets, express delivery companies' overseas models are generally divided into light asset models and heavy asset models. The light asset model is mainly characterized by setting up local branches or cooperating with local agency companies, with a wide network coverage.
Zhang Yi stated that the corresponding heavy asset model mainly relies on the large-scale construction of automated warehousing systems and logistics networks, with the main goal of improving logistics efficiency. This model has strong control and overall high service quality, but requires huge initial investment and high risks, and requires stable and determined business support.
The main representative of the heavy asset model is Cainiao, while the main representative of the light asset model is Baishi, "said Zhang Yi.
Li Yingtao believes that the strategy of light assets relies more on third-party cooperative networks and is relatively more flexible. Especially in the early stages, it can reduce capital expenditures, quickly seize the Southeast Asian market, and gain scale advantages. In his opinion, the heavy asset strategy, although having a larger initial investment in the early stages, can yield more stable service quality and higher long-term operational efficiency.
As for how to choose between these two modes, it depends on the company's strategic positioning and funding situation, as well as its expectations for the market, "said Li Yingtao.
The key role of e-commerce and express delivery in the story of going global
In addition to differences in tactics, there are also differences in the main clients. E-commerce platforms are a crucial role that cannot be avoided in the story of express delivery going global.
According to the 2023 financial report of Jitu, it has supported the growth of e-commerce partners such as Shopee and TikTok by providing express delivery services in countries such as Indonesia, Malaysia, Vietnam, the Philippines, and Thailand.
In Southeast Asia, many express delivery companies have developed by leveraging the expansion of e-commerce platforms.
Zhang Wei told reporters that the development of Cambodia's e-commerce industry is relatively lagging behind. "They like to shop on Taobao and AliExpress in China, and also purchase some products similar to WeChat on Facebook." According to him, after Cambodian consumers shop on Taobao, the fast delivery purchased by customers will be directly transported to Zhongtong's transit warehouse. Taobao offers free shipping for the domestic segment, while Zhongtong charges for the international segment.
Wang Xiaoqing stated that in the Southeast Asian market, Best maintains cooperative relationships with major e-commerce platforms and is also expanding its business areas. "Although platforms such as Shopee and Lazada have their own logistics services and most orders are processed through their own systems, we still maintain cooperation with the platforms in multiple regions.
He also mentioned that Baishi has established a strategic partnership with Tiktok. At the same time, Baishi is also working hard to develop WeChat small seller business, and actively promoting cross-border business to achieve diversification and health of business structure.
It is worth mentioning that Shopee has its own logistics, while Lazada relies on Alibaba, which also leads to differences in the business of different courier companies.
E-commerce platforms will choose to keep the logistics business with the best service and highest cost-effectiveness for themselves, while outsourcing logistics in remote areas to third parties because logistics costs in these areas are higher. The platform will consider costs comprehensively and choose to use its own logistics or third-party logistics. Wang Xiaoqing believes that the construction of its own logistics is one of the competitive advantages of the platform, but when each platform has its own logistics, it becomes a cost center rather than a profit center.
It can be seen that with the further development of cross-border e-commerce, there may still be a lot of incremental space for express delivery players to go abroad in Southeast Asia. According to a report by Moteng Venture Capital, the total GMV (transaction volume) of the eight major e-commerce platforms in Southeast Asia will rise to $114.6 billion in 2023, a year-on-year increase of 15%.
In addition, the wave of express delivery going global is closely related to the demand for Chinese brands to go global.
Wei Yongqiang, Vice President of Best Group and Deputy General Manager of Best Supply Chain, stated that the majority of customers served by Best in China are private enterprises, which are characterized by their speed. "In order to adapt to market changes, they constantly think about how to catch up with their competitors, and are constantly changing rapidly every day. Correspondingly, they require logistics service providers to keep up with these changes.
Nowadays, the trend of express delivery going global has become significant, and overseas markets have become an extremely important development direction for express delivery companies. Southeast Asia may only be the initial stop for Chinese express delivery companies to conquer the world.
Cross border e-commerce has accelerated the export of express delivery, but without cross-border e-commerce, express delivery must also go global. "Express delivery expert Zhao Xiaomin told the Daily Economic News reporter that many Chinese companies need to go global and require express delivery support.
Zhao Xiaomin mentioned that in the domestic market, if express delivery companies want to have stronger competitiveness, they need to invest more. In this context, if they can replicate the domestic model overseas, it can also enhance their competitiveness. "Some (express delivery) companies must also go global if they want to become global enterprises.