May 31st, Thursday.
Magic City, Shengrun Express Group Headquarters.
Shengrun Express Group was currently the leading company in China’s express delivery industry, occupying half of the market share.
It basically covered all cities at prefecture level and above nationwide, as well as developed counties, especially in the Magic City surrounding areas, where it had basically achieved the goal of delivery with no blind spots, and had even begun internal testing of overseas purchasing transfer services.
However, Shengrun Express’s reputation wasn’t particularly good.
The company had been established for nearly twenty years, and its rapid growth and expansion were mainly due to its franchise strategy. When the entire express delivery industry maintained high growth rates, this provided a huge advantage for rapidly acquiring market share.
But as the industry’s growth slowed down and the company’s development stage progressed, after the end of the extensive growth era and the arrival of the refined management era, the drawbacks of this franchise system gradually became apparent.
On one hand, there were multiple network levels and management difficulties. Many franchisees had strong influence, making it difficult for headquarters directives to be effectively implemented, and the uneven quality of service might affect terminal service evaluations.
On the other hand, the self-operated proportion of transfer centers was relatively low, which would also reduce efficiency to some extent, extending the time for package delivery.
Shengrun Express Group was a behemoth, even within the company it was divided into three or four different express delivery business brands, with some competitive relationships existing between them.
How to solve these problems had been Shengrun Express’s biggest headache in recent years.
At this moment, several executives of Shengrun Express were in a meeting, discussing some issues regarding Shengrun Express’s development planning.
The chairman of Shengrun Express was Nie Yunsheng, but he couldn’t maintain complete control over the entire group. Several major shareholders and company executives who were his fellow townsmen or friends would support him in most cases, but they often had different opinions as well.
Therefore, to guide the entire group company toward his envisioned direction, numerous meetings were needed to unify internal thinking.
At this point, the meeting was entering its final stage, and the major proposals had been mostly discussed.
A company vice president said: “Chairman Nie, everyone, regarding Tenda’s Headwind Logistics preparing to establish air transport routes, I’ve compiled some materials that have been distributed to everyone.”
“Chairman Nie, how should we respond to this?”
Although Headwind Logistics would officially prepare air transport routes two months later, Lü Mingliang had already been doing some simple groundwork and promotion.
For example, distributing flyers when delivering packages, setting up display boards at Headwind Stations for promotion, and so on.
Because the express delivery business, unlike other businesses, doesn’t allow for wasted time. If they waited until all air transport services were fully prepared before promoting and guiding customers to use them, it would be too late, and the first few planes would definitely not carry much cargo.
They needed to promote in advance in areas covered by Headwind Stations, so that when the intercity express delivery service was launched, they could receive a large number of orders.
So naturally, this news had reached Shengrun Express.
This vice president had summarized all the relevant information into a report.
Headwind Logistics currently focused on handling the “last mile” of express delivery service, and Shengrun Express had been maintaining close cooperation with them.
Currently, Headwind Stations were rapidly expanding in four cities—Jingzhou, Imperial Capital, Magic City, Sheep City—and their surrounding areas, with the number of stores growing rapidly.
Although in terms of overall scale, it still couldn’t compare with industry leaders like Shengrun Express, once Headwind Logistics launched its intercity express delivery service, it would inevitably pose a certain threat to Shengrun Express.
That’s why Shengrun Express needed to react quickly and consider countermeasures.
Nie Yunsheng had already read the report, and his expression was slightly serious: “This is completely within our expectations. Headwind Logistics has been operating at a huge loss, doing our dirty and hard work. It’s impossible to say they have no ulterior motives.”
“Now they want to do intercity logistics, which is also reasonable.”
“With the backing of Tenda Group, their goal is definitely to use the advantages of Headwind Stations, centered on these four cities, to first open the market with high-quality service among high-end populations in major cities, forming differentiated competition with us.”
“I have to say, this business model does pose a certain threat to us.”
“And we don’t have many options. The density of Headwind Stations in these cities is already very high, and their delivery experience is completely superior to ours. This was achieved by burning real money, and it’s unlikely that we could adopt a similar model.”
“What are your thoughts, everyone?”
A vice president said: “Should we join with other courier companies to boycott them? Just like we did with Chilu Express before.”
Obviously, this was the simplest and most brutal, but also the most effective method.
Shengrun Express had done this before, and succeeded.
A year ago, an express company called “Chilu Express” was developing rapidly, targeting the lower-tier markets in the central and western regions. With good relationships with e-commerce platforms and prices 1-1.5 yuan cheaper per package than Shengrun Express, it became a disruptor backed by big players.
Chilu Express attached great importance to lower-tier markets, printing earthy slogans like “No matter how high the mountains or how long the roads, Chilu Express won’t slack off” on walls in several thousand townships, and declaring they were prepared to lose money for two consecutive years, coming on strong.
So, Shengrun Express issued the “Notice on Prohibiting Agency of Chilu Business Throughout the Network” and the “Penalty Announcement on Agency of Chilu Business,” requiring group companies not to act as agents for Chilu Express business in any form or for any reason at both collection and delivery ends, fining branch companies that violated the rules.
Under this heavy pressure, Chilu Express quickly collapsed due to its low profit margins and internal management chaos, losing the trust of investors and soon fading away ingloriously. It is currently in a half-dead state.
So when facing the threat of Headwind Logistics, the first reaction of this Shengrun Express executive was also to boycott.
But another vice president immediately objected.
“This isn’t a good idea. Headwind Logistics is quite different in nature from Chilu Express back then.”
“Chilu Express was completely our competitor, while Headwind Logistics has maintained close cooperation with us until now. In fact, in the four regions of Jingzhou, Imperial Capital, Magic City, and Sheep City, Headwind Stations have actually become the final link in our delivery.”
“Although we share some profit with Headwind Station for each package, since we no longer need to deliver to customers’ doors, we’ve saved a lot of labor costs, and our delivery efficiency and revenue have clearly increased.”
“If we completely ban Headwind Logistics, they will inevitably retaliate by banning our packages. Once both sides break off relations, it would also be a huge loss for our daily business.”
“Moreover, Headwind Logistics’ intercity express delivery business hasn’t fully launched yet, and even when it does, it will primarily focus on the high-end market for intercity air transport, which is somewhat different from our business.”
“Boycotting them directly now seems like an overreaction. I think it’s inappropriate.”
Another executive also expressed agreement: “I think so too.”
“There’s another important point, which is that Headwind Logistics is different from Chilu Express—their actual risk tolerance is completely different.”
“Chilu Express’s rise was favored by some major capital, but after our boycott, their express business development stagnated, and these major investors lost confidence in Chilu Express, causing it to decline rapidly.”
“But Headwind Logistics completely relies on Tenda. They’ve been losing money for over a year since their establishment, yet their stores continue to open steadily. This shows that Tenda Group’s leadership highly values the Headwind Station business.”
“They were already losing money; being boycotted just means continuing to lose money. With the support of Tenda’s leadership, this can’t possibly cause serious damage to Headwind Logistics.”
“Instead, it would make them focus all their energy on their own express delivery business, and with the advantage of numerous stores, they would compete fiercely with us, which really isn’t worth it.”
“To put it plainly, those with nothing to lose aren’t afraid of those who have something to lose.”
“Using boycott methods is not a wise move.”
Everyone spoke at once, and opinions couldn’t be unified.
Because after such a long period of development, Headwind Logistics didn’t actually have an absolute competitive relationship with these traditional courier companies, but rather a dual relationship of cooperation and competition.
In many areas, Shengrun Express couriers had become accustomed to dropping packages at Headwind Stations and leaving, which had increased delivery efficiency many times over. Many branches had already adjusted their personnel to save costs, laying off some unnecessary courier staff.
If they suddenly boycotted Headwind Logistics, they would either have to deliver packages directly to homes or find a large number of new collection points.
The former was clearly unrealistic given the shortage of personnel, while the latter couldn’t be accomplished in the short term.
Seeing that the discussion had gone on long enough, Nie Yunsheng gently tapped the table.
“Alright, let me say a few words.”
“Headwind Logistics starting their own express delivery business is within our expectations, there’s nothing to be surprised about.”
“Of course, as a potential competitor, Headwind Logistics represents a new model that we must guard against.”
“But to say we should boycott them immediately is clearly an overreaction. Even if we want to boycott, we should only break ties after finding an alternative solution to Headwind Stations.”
“It seems that our previously planned solution for the ‘last mile’ needs to be implemented as soon as possible.”
“Especially in the areas covered by Headwind Stations, we must quickly reduce our dependence on them!”
As the leading company in the express delivery industry, Shengrun Express had clearly already considered how to solve the last mile problem.
No matter how they thought about it, there were only two relatively economical solutions: either install delivery lockers or establish station-style stores.
But they couldn’t provide door-to-door delivery like Headwind Stations, because the labor costs would be too high.
It wasn’t that they couldn’t afford this cost, but that they needed to ensure profits.
Such unprofitable or even money-losing operations would be opposed not only by Shengrun Express executives but also by major franchisees, who would find ways to resist and wouldn’t fully cooperate.
In the end, forcibly adopting Headwind Station’s model would likely fail to be implemented.
While delivery lockers and stations that don’t offer door-to-door service definitely couldn’t match the experience of Headwind Stations, Shengrun Express had its own advantages: cheaper delivery fees and coverage of more cities.
Cheaper delivery fees meant that many e-commerce merchants would default to Shengrun Express to reduce costs, and many price-sensitive customers would sacrifice some experience to choose Shengrun Express.
Additionally, the delivery locker solution was profitable. With a large investment, progress would be very fast.
After these two solutions were implemented, Shengrun Express could gradually reduce its dependence on Headwind Stations in certain specific cities. By then, they could take measures according to the situation with more confidence.
Most of the executives present basically agreed with this view.
Nie Yunsheng made the final decision: “Good, then let’s do it this way. Don’t disturb Headwind Logistics for now, continue normal business cooperation.”
“At the same time, we should invest in a large number of delivery lockers across the country, especially in areas with high Headwind Station coverage, to gradually establish our own ‘last mile’ solution.”
“Of course, in the early stages, we can first establish some pilot points, observing both in places with and without Headwind Stations, to see how customers actually respond.”
“We must attach great importance to this matter!”