JD, one of the Chinese firms with the most efficient logistics network, poured in investment to startup e-commerce FruitDay. (Photo : Reuters)
Various delivery companies in the country are expanding their services using their logistics knowledge to gain alternative sources of profit and compete in the international e-commerce market.
Want China Times reported that another company, ZTO Express, launched its own site on March 1, following YTO Express, SF Express and Yunda Express.
The report said that the expansion into cross-border e-commerce provides delivery firms with an opportunity to offer diverse services to clients and improve their profits amid rising costs.
Experts said that the expansion is timely since cross-border e-commerce trade in China is booming, which hit 3.1 trillion yuan ($495 billion) in 2013.
Chinese products exported through online shopping sites reached over 70 billion yuan ($11.17 billion) in 2013, an increase of 117 percent from 2012.
A recent survey conducted by Forrester Research regarding online shoppers' behavior revealed the reasons behind the companies' decision to go into e-commerce. The study, initiated by FedEx in early February, indicates that customers take delivery time and logistics in utmost consideration before making decisions when shopping online.
The report said that this is the main reason why delivery firms expanded into e-commerce, which is taken advantage by those who want to diversify and generate more profits. In addition to this, companies need to gain more profit to offset the rising cost of services.
According to Economic Observer, nearly half of the 20 delivery companies in China are just managing to survive, while the other half are only getting a maximum of 5 percent in profit.
The report noted that the effort of China's delivery firms to diversify differentiates them from foreign competitors, such as UPS and FedEx, which are also into the cross-border logistics business.
Local delivery companies, however, face many challenges, the report added, including pressure to improve their services from local online retail companies such as Jingdong Mall and Tmall.
