Thanks Yu Bin for posting
After rising for seven consecutive trading days, the share price of SF Holdings exceeded the 90 yuan mark for the first time. At the close of the market the day before yesterday, SF’s stock price rose again by 4.58%, reaching 91.3 yuan per share at one time, and its total market value reached 416.03 billion yuan, a record high. Since its backdoor listing on February 24, 2017, the share price of SF Holdings has risen 85.2%.
Currently, founder and actual controller Wang Wei holds 60.74% of the shares. Based on this calculation, Wang Wei’s net worth has reached 252.68 billion yuan.
On the “Forbes” global real-time rich list, Wang Wei ranked 33rd with US$33.6 billion (226.2 billion yuan), surpassing Sun Zhengyi and Xu Jiayin. The latter two ranked 34th and 35th with 33.5 billion USD and 32.8 billion USD respectively.
Before August 28, Wang Wei also sent red envelopes to all SF employees at 888 yuan per person. Relevant calculation data show that according to SF’s current staff size, Wang Wei needs to “pay out of his pocket” 500 million yuan.
Unlike successful people who often show up in front of the media and the public, Wang Wei rarely shows up and rarely talks with the outside world. The impression of him from the outside world seems to have stayed on a photo accidentally released many years ago.
Even if it occasionally appears in the news, it is to send red envelopes to the courier brother or to speak for the little brother.
Wang Wei is exactly 50 years old this year. At the age of knowing the fate, SF Express, which he founded in 1993, is almost 30 years old. SF Express has experienced many “booms and decays”, of which three changes are the most widely known. It is in this way that every self-correction at the fork in the road has enabled SF Express to gradually consolidate its leading position. After the three barriers, what about SF Express?
The competition in the large-scale logistics field is becoming more and more fierce. Facing the competition between Cainiao Logistics and JD Logistics, can SF Express break through with its strong delivery capability and the scale effect brought by the structure of leading chassis function modules?
30 square meters, what can be done?
In the context of the strong commercial atmosphere in Hong Kong and Guangdong at that time, entrepreneurial ambitions began to sprout in the heart of the young Wang Wei.
Entrepreneurship is risky, but Wang Wei actually had nothing to lose at the time. In the early 1990s, more than 80,000 manufacturing plants in Hong Kong moved north to the mainland, of which more than 53,000 were located in the Pearl River Delta region of Guangdong.
The young Wang Wei works in a printing and dyeing factory in Shunde. At that time, many Hong Kong clothing and printing and dyeing companies moved most of their factories to the mainland in order to save costs, and only opened stores in Hong Kong. Many factories will send people to the wharf to find someone to help transport printing and dyeing samples to Hong Kong.
In the Shunde Printing and Dyeing Factory, it is difficult to send samples to Hong Kong for customers to check. Since customs clearance takes time, many people will ask for help at the terminal to ship the samples to Hong Kong. These people carried backpacks and luggage to and from Hong Kong and Guangdong every day. Those who helped people carry goods were called “parallel importers” at the time. Wang Wei is one of these “parallel importers”.
Since everyone needs to send something, why not treat it as a business?
Wang Wei shared his thoughts with some friends who often deliver goods, and all received affirmative answers. Subsequently, a small shop of just 30 square meters in Portland Street, Hong Kong, was rented by Wang Wei. Wang Wei contacted his better friends and put forward his own ideas. Five of his friends were very interested.
On March 26, 1993, a company with only 6 employees was officially registered in Shunde, Guangdong. The company’s name is SF Express.
“Social Man” born in Kochi Family
Wang Wei, who just started his business, relied on a low-price strategy that was completely opposite to the current high-end. At that time, other people charged 70 yuan for the same weight of goods, while SF Express only charged 40 yuan.
Relying on such a low-price strategy, SF Express took a small part of its business from its competitors from the beginning and grew rapidly, thus monopolizing 70% of the land freight from Guangdong to Hong Kong.
In 1996, SF Express took Shunde as a starting point to expand its tentacles beyond Guangdong Province and began to enter the inland market. Around 1999, SF Express opened the franchise, which is commonly known as the franchise model. This move enables SF Express to rapidly expand its “Express Kingdom” field.
In less than five years, SF Express has eaten most of the express delivery from the mainland to Hong Kong. At that time, seven of the ten trucks on the highway to Hong Kong were printed with the SF logo.
The franchise model has undoubtedly played a big role in promoting the rapid development of SF Express, but problems have also arisen from this. The extensive management inherent in joining has led to non-standard brand services and a large number of user complaints.
Franchisees often carry private goods in the cargo. Some franchisees even use the SF Express brand to solicit business for themselves, using public and private interests to harm the company’s interests.
It can be said that the problems faced by other express companies are all experienced by SF at that time. Coupled with the unique environment of that era, the situation is even worse. Due to this extremely irregular environment, SF Express was once called the “rat club” by its peers. Wang Wei’s comment on this is: “Although the franchise model has greatly stimulated the enthusiasm of branches to open up the market, it also puts all customer resources in the hands of branches, poor management and coordination, and imbalanced service levels and capabilities. More importantly, no matter what happened to the branch, the head office must take full responsibility.” Finally, he made up his mind.
In 1999, Wang Wei, who gradually withdrew from the company’s management, returned to SF Express to solve the franchisee problem. Wang Wei gave the franchisee two choices: either leave with the money or stay as a manager. This toughness makes franchisees feel threatened.
To cut people’s wealth is better than any hatred. The logistics industry is a mixed bag, and many people have very complicated social backgrounds. In the process of taking power, Wang Wei encountered great resistance and was often threatened and intimidated. There are even rumors that someone offered a huge bounty for Wang Wei’s life.
After experiencing these threats, Wang Wei thought about it for a long time. Wang Wei, who was originally from a Kochi family, looked more like a social man when faced with the threat: don’t want to take my life, but I still Will receive your rights.
Wang Wei began to reduce travel, shifted most of the cooperation negotiations to his home, reduced dining out, only took a RV, was always a group of bodyguards, rarely accepted media interviews, and even his company’s internal magazine did not appear.
In 2002, the three-year entitlement ended. SF Express has completed a comprehensive rectification from franchising to direct sales, and established a headquarters in Shenzhen, positioning itself as a high-end domestic express service brand. SF Express began to truly become a logistics giant. Today, wherever Wang Wei goes, there are always many bodyguards by his side. Perhaps it was the scar left to him by that era.
Wang Wei has never been a person satisfied with the status quo. After 2010, “Double Eleven” triggered a huge demand for e-commerce. Wang Wei believes that he can also rely on the comprehensive SF Express network to build an offline retail network.
In 2010, the e-commerce platform “SF E Business Circle” was launched for the first time. In 2012, SF Premium Mall opened. In 2013, the distribution scope of fresh food and room temperature products covered the whole country. In 2014, the offline physical store “Hey Store” officially opened with more than 500 stores.
SF Express is not within its ability to do offline retail, so many places actually violate the essence of retail. For example, the shopping experience is relatively poor. Initially, SF’s offline stores could only place orders on the spot by scanning the QR code and then deliver them to the door. Consumers could not pick up the goods on the spot. This also caused SF Express to lose nearly 1.6 billion yuan in this business in the next two years.
After 2017, SF Express reduced its investment in offline retail and other non-main business areas. Instead, it focuses more on the main logistics industry. For example, it invested in the construction of SF Ezhou Airport and added heavy cargo, cold chain and intra-city distribution. Logistics people make money in logistics. In the long run, these investments have increased competition barriers for SF Express.
LostExpress e-commerce parts，Are all caused by high costs
Wang Wei’s last wealth moment was in 2017. In February of that year, SF Holdings backdoor Dingtai New Materials and completed the listing within 7 months. The revaluation effect of the capital market increased Wang Wei’s net asset value from 30 billion yuan to 150.45 billion yuan, ranking third in the “New Fortune” 500 list, second only to Wang Jianlin and Ma Yun, and even higher than Ma Huateng’s 141.1 billion. yuan.
After a short stay at the peak, SF’s stock price began to fall in September 2017, and Wang Wei’s net asset value also fell all the way, approaching half of its lowest point. SF Express missed the trend of e-commerce, and its gross profit margin continued to decline. At this time, Cainiao Network and JD Logistics continued to seize the city in the logistics industry, causing capital to vote of no confidence in it.
However, in 2020, when many companies are under pressure due to the epidemic, SF Express launched a counterattack. In the first half of 2020, operating income was 71.13 billion yuan, a year-on-year increase of more than 40%, and the growth rate was almost twice that of previous years; gross profit margin also bottomed out, rising from 13% at the end of 2019 to 16% in the first quarter 18.65% in the second quarter.
In recent years, in the face of the continued shrinking of the basic business of commercial items, SF Express has been hoping to rapidly develop its e-commerce express business, but the progress is not satisfactory. According to the calculations of CICC Securities, in 2019, in the e-commerce express market, the Tongda system consisting of Zhongtong, YTO, Shentong, Best, and Yunda is the absolute overlord, accounting for 88% of the total, and Zhongtong with 22% share Leading, while SF Express only 3%.
Why has SF Express failed to make a breakthrough in the explosive growth of e-commerce express delivery? The reason is price. The high cost makes it a discount on e-commerce items. Compared with Tongda, the unit price of SF Express for end customers is extremely high.
For example, in long-distance (such as Shenzhen-Beijing) express delivery, the single ticket revenue of SF Express products has remained at 22-23 yuan/kg in the past four years, which is higher than the second tier Jingdong Express, Zhongtong, Yunda and EMS. Yuantong is about 5 yuan higher than the third echelon YTO; in medium and long-distance transportation (such as Shenzhen-Shanghai), SF Express is 7-8 yuan higher than the second echelon on average; and for intra-provincial express, SF Express standard express products are priced at 12 -13 yuan, Tongda is between 7-9 yuan, and SF Express is about 5 yuan higher.
The high price of SF Express comes from its extremely fast speed and high quality. However, the timeliness requirements of e-commerce parts are not high, and the delivery delay of Tongda is still within the scope of customer acceptance. At the same time, the value of the goods of e-commerce is usually not high, the median is about 200 yuan, and the high price of each order of SF Express accounts for almost 11% of the value of the goods, which will obviously affect the choice of stores. Therefore, SF Express can only obtain large B-end orders with higher cargo value.
Can the sinking market be restored?
The high cost made SF Express miss the e-commerce boom promoted by the rise of Taobao, Weishang and Pinduoduo. Especially in 2018, Pinduoduo has become a major business growth point in the express industry. However, because Pinduoduo mainly targets low-end cities and focuses on a cost-effective C2M model, the delivery costs for platform merchants have been minimized. On the Pinduoduo platform, Tongda series price merchants in the range of 5-5.5 yuan/kg, and the high-priced SF Express is more difficult to compete.
On the other hand, through the expansion of fixed asset investment in trunk and transit lines, and continuous management improvement, Tongda Department has become closer and closer to SF Express in terms of service quality. From the perspective of the complaint rate, it is close to or even surpassing SF Express. In addition to not as fast as SF Express, its stability has been recognized by customers. This has further weakened SF’s pricing power. SF’s terminal charges and gross profit margin have been reduced year by year. Its gross profit margin has dropped from 19.5% at the end of 2016 to 13% at the end of 2019, which is higher than the Tongda series.
In November 2013, SF Express launched the “e-commerce special offer” for the first time in the low-end e-commerce market. The price is 40-50% cheaper than standard fast products, and the annual average price is about 15 yuan. However, compared with the Tongda series, this price is still not competitive. At the same time, due to the low loading rate, the company’s overall gross profit margin was dragged down, resulting in a decline in the company’s performance in 2014, and the net profit attributable to the parent company fell by 850 million yuan from the same period last year. Subsequently, SF Express reduced its support for the business and gradually stopped.
In 2018, social e-commerce companies represented by Pinduoduo rose, and SF Express once again launched “e-commerce special offers.” The business also achieved a growth rate of 54% in the first half of 2018, but its gross profit margin was dragged down by the low loading rate and began to control the growth of the business in the second half of the year.
The reason for these two efforts and stops was the contradiction between cost and revenue mismatch: SF Express’s labor and transportation costs were too high, and e-commerce companies delivered frequent but insufficient goods, which led to a decline in SF’s freight loading rate. On the contrary, the cost of a single ticket has risen, putting tremendous pressure on operations. The core of the logistics business is the best match between manpower, capacity and price. An attempt that fails to meet expectations will ultimately be unsustainable.
As e-commerce continues to penetrate low-tier cities and rural areas, e-commerce products will continue to grow at a high speed, and the main growth will come from low-end markets. According to statistics from the State Post Bureau, the growth rate of express delivery services in third-, fourth and fifth-tier cities is significantly higher than that in first- and second-tier cities. If SF Express still fails to find an effective solution in time, the splendor of fireworks will once again pass by SF Express.
The road of express delivery has never been smooth sailing. With strong capital betting, FedEx is still struggling with death many times. DHL has suffered from indigestion during several mergers and acquisitions.
The king of Wen played Zhouyi while he played Zhouyi, and Zhong Nieu wrote the Spring and Autumn Period. Every crisis in SF’s history is an opportunity. The previous “three overs and three reforms” have been completed. What about the future? Those who become kings must first bear the burden on their shoulders. Rome was not built in a day. SF Express’s market value growth road is destined to be bumpy.
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