China’s large labor and internet ecosystem supports a fleet of courier services that provide a growing range of products on demand. Deutsche Bank analyst Jessie Xu took on a unique strategy by dedicating one delivery person per order to “pioneer in the dedicated courier services industry” and one delivery person per order. By using the Chinese company’s app, someone in China can transport suitcases all over town, or buy certain cakes to courier and deliver them to the party. The business operates under the brands “Flashex” or “Shan Song.” The brand name, like Kleenex, has become a local way of describing the service. Flashex “We started recording positive unit operating profits from 3Q23 and have been making profits ever since,” said XU of Deutsche Bank, noting that most of our competitors are still operating in the one-on-one courier business. On-demand distribution has become a competitive market where logistics companies and e-commerce platforms have expanded, and heavy subsidies have often expanded, posting several orders to one courier. But even Alibaba expects consumers to want to buy on demand, and in the past few weeks, people have launched channels where they buy food, clothing and other products on the e-commerce platform Taobao, delivering about 30 minutes earlier. Most of Flashex’s competitors are subsidiaries of large companies with other business lines. US-listed Dada, previously a Walmart-backed supermarket delivery business separate from JD.com, has been absorbed by the Chinese e-commerce giant in recent years. Dada reported that it rose to 2.16 billion yuan in 2024, up from 21.1 billion yuan the previous year. Earlier this year, JD.com launched a campaign on demand delivery to compete with food delivery giant Meituan. The companies reported operating losses from their “new” initiatives in the first quarter. Chinese logistics giant SF Holdings contributed only 3% of its total revenue last year due to the lack of on-demand delivery units within the city. Segment revenues have increased 22% from a year ago, but net profits have reached 132 million yuan. The delivery market in demand is expected to increase by an average annual rate of 13% by 2028, a slowdown from annual growth of 2019-2023, Xu said in its report. “This growth should be supported by the rapid expansion of online two-offline (O2O) retail, food delivery services, and the increased demand for personalized delivery options.” However, the personal one-to-one courier service represents only 4% to 5% of its delivery market, and Xu said it expects an annual growth of 10% over the next three years. She noted that as of the end of 2024, Flashex has 2.8 million riders serving more than 100 million registered customers in 295 cities. Bingex’s US trading stock closed at $3.87 per piece on Friday. DeutscheBank’s price target is $4.70. However, after tackling more competition and lukewarm Chinese consumer spending in the past few months, stock prices have plummeted more than 50% so far this year. “Flashex has strategically left the 2B business since 2H24. As the company focuses on “Unit Economics,” “management teams have revealed that pure volume market share does not chase profits at the expense of profitability. …This sets a positive tone for the company’s sustainable growth and profitability on moderate driving.” – CNBC’s Michael Bloom contributed to this report.
