In today's increasingly competitive express delivery market, franchise owners face unprecedented challenges: shrinking market share and rising costs. These dual pressures are forcing them to reconsider their competitive strategies. In such a challenging environment, price wars seem to be the only survival strategy. However, industry observers warn that despite some companies' confidence that price wars will soon end, the battle continues to spread. So why do express delivery companies persist with low-price competition despite these difficulties? Let's explore this question in depth.
1. Soaring Rental Costs
First and foremost is the issue of rental costs. In first-tier cities like Beijing, Shanghai, and Guangzhou, rent has become a heavy burden for express delivery outlets. In some prime locations, the annual rent for a 50-square-meter outlet in Beijing has climbed to 500,000 yuan. These exorbitant costs have made normal operations nearly impossible for many franchise owners.
Recent safety inspections have forced many outlets to relocate, leading to widespread rent increases that further drive up operational costs. This trend isn't limited to first-tier cities—second and third-tier cities are experiencing similar rental price surges.
2. The Human Resources Challenge
Labor costs present another major challenge for the industry. As a labor-intensive sector, attracting and retaining talent is crucial. However, with the rapid rise of food delivery platforms, many couriers are switching industries for better pay and working conditions.
Market analysis shows that the emergence of same-city delivery services has created intense competition for talent, leading to significant turnover among experienced couriers. This brain drain has severely impacted outlet operational efficiency.
3. Growing Investment Demands
After years of rapid development, China's express delivery industry is entering a more rational phase. In this context, introducing smart equipment has become essential—not just for improving efficiency but also for maintaining service quality.
Outlets that fail to adopt new technologies and meet industry standards risk being eliminated in this fiercely competitive market. However, many franchise owners struggle with financing these necessary investments.
According to China's State Post Bureau statistics, since 2011, average delivery prices have shown a nearly straight-line decline due to price wars. With costs continuing to rise, profit margins keep shrinking, forcing many outlets to join the price war as a survival tactic.
1. Competition Among Homogeneous Services
Express delivery services have become increasingly similar, particularly among major players like YTO, ZTO, and STO. With little differentiation in delivery speed or service quality, customers naturally focus on price—intensifying competition and price pressure.
2. The End of Profit-Sharing Agreements
2018 marked the conclusion of profit-sharing agreements that were once common in the industry. Facing pressure to meet final profit targets, many companies may have accelerated price reductions to boost volume, potentially triggering a new round of price wars.
3. E-Commerce Price Sensitivity
The price sensitivity of e-commerce clients further fuels price competition. During promotions, online merchants typically choose the lowest-cost delivery option, forcing outlets to lower prices to remain competitive.
In this challenging environment, outlets that fail to differentiate their services or improve competitiveness risk being eliminated. While price wars may help gain short-term market share, long-term survival depends on service quality and technological innovation.
Franchise owners should carefully analyze market conditions and explore sustainable development models. Improving service quality, enhancing customer experience, adopting smart technologies, and pursuing innovation will be key to future success.
In this rapidly changing market, outlets must remember that customers choose them for reliable, timely service. While price matters, service quality and user experience are equally important. As consumer expectations rise, personalized and professional services will become differentiators.
Adding value through personalized delivery options, detailed package tracking, and dedicated customer service channels can improve satisfaction and profitability. Meanwhile, adopting smart technologies to enhance efficiency and reduce costs will help outlets maintain competitive advantages.
While price wars continue, only outlets that innovate in pricing, service, and technology will thrive in the future market. We hope every franchise owner can seize opportunities in these challenging times to achieve sustainable growth.
