Single’s Day is still weeks away, but the heat surrounding the shopping frenzy is starting to rise. China’s four major courier services YTO Express, ZTO Express, STO Express, and Yunda Express announced that they are raising prices, local media is reporting.
ZTO Express posted an announcement which suggests that the company is adjusting the delivery fees due to the arrival of the peak season. Three other leading courier services in the country, YTO Express, STO Express, Yunda Express all raised their fee for packages delivered to Shanghai from any other cities in the country by RMB 0.5.
It’s worth noting that China’s courier services only operate backbone delivery networks, while customer-facing parcel pickup and delivery are run by their franchise partners. Therefore, courier companies raising delivery fees is more of a price surge for franchise partners and does not necessarily suggest a higher price for individual users.
A Beijing employee of STO Express confirmed to local media that the courier has raised the delivery fee for franchise partners. He added that they didn’t receive the announcement for price adjustment targeting individual users, although he didn’t exclude such a possibility.
On the other hand, use of self-service parcel delivery machine, a popular alternative to the human delivery, are already feeling the pressure. A Fujian resident told local media that he has to pay for using parcel cabinets while they are free previously.
Chinese e-commerce-related industry has come up with a full coping mechanism for the peak online shopping hours brought by China’s Double Eleven Single’s Day shopping spree, which is entering its tenth anniversary this year. Price surge in delivery services serves as a prelude to China’s equivalent to Black Friday. China’s major courier services posted similar price adjustment announcements over the same period of last year.
Single’s Day might be the most direct trigger for price adjustment, it’s not the only reason. Both stagnating market growth and lower profit contributed to the shift. China has delivered 40.1 billion parcels in 2017. Although the number is still impressive, the YoY growth rate slowed to 28%, down from around something around 50% YoY growth from 2012 to 2016.
What’s more, the profit rate is dropping too. The average profit rate for the delivery industry dropped from around 30% in 2007 to 5-10% now, according to statistics from CICC.