After three years of rapid development, Jitu is slowing down

The "barbarian" Jitu has learned how to "put on a show" and started working hard on brand marketing.

First, during the 2022 Cartel World Cup, Jitu signed Messi as the global brand spokesperson. After becoming the first express delivery company to "sign a football superstar as its spokesperson", Jitu further joined hands with the 2023 Spring Festival Gala and became the "2023 CCTV Spring Festival Gala Logistics Industry Selected Brand".

The crossover combination of "Messi + Spring Festival Gala" attracted a lot of attention during the Spring Festival. After all, Messi, wearing work clothes printed with the "J&T Jitu Express" brand LOGO, or holding a Jitu express box, or holding Jitu mascot advertising materials, is refreshing.

Jitu, which has spent huge amounts of money to "create momentum", has the confidence to do so.

Since its official launch in China in March 2020, Jitu has used brute force to break the oligopoly in the express delivery industry in just three years. Relying on "low prices", Jitu quickly seized the market. In just 10 months, Jitu's daily order volume exceeded 20 million. It took China General Motors 16 years, Yuan General Motors 18 years, Yunda 19 years, and Shentong 25 years to achieve the same daily order volume from 0 to 20 million.

Jitu, the "rule breaker", was also banned in the industry for launching a "price war". The regulatory authorities soon responded with a heavy blow. The State Administration for Market Regulation and the State Post Bureau successively issued the "Administrative Penalties for Price Violations" and the "Express Delivery Market Management Measures (Draft Amendment)", requiring express delivery companies not to manipulate market prices or sell goods at prices below cost. The heaviest punishment is suspension of operations and revocation of licenses.

Although the price war was called off, after sacrificing short-term profits, Jitu also gained a larger market share and in October 2021, it acquired Best Inc's domestic express delivery business for 6.8 billion yuan.

After the price war and the integration of the network after the acquisition of Best, Jitu has become a first-tier enterprise in the express delivery industry, and its influence cannot be ignored. In June 2022, Jitu founder Li Jie announced at an internal meeting that Jitu's average daily ticket volume across the network has exceeded 40 million orders. If only the daily express delivery volume is calculated, Jitu has become the fourth largest express delivery company in China, second only to ZTO, Yunda and Yuantong.

Ranking fourth in the country is obviously not enough to support Jitu’s ambitions.

In March 2020, when Jitu announced its official launch, Jitu officially released a letter to J&T Express China agents signed by its founder Li Jie. The letter mentioned, "If one day we become one of the top three in the industry in China, your name and mine will also appear on the development path of the J&T brand. How proud and proud we are!"

Today, Jitu is only one step away from the goal it set three years ago. But this step is becoming increasingly difficult.

Jitu slows down

"Slow" is the most common option among users' complaints about Jitu.

Because Jitu Express was stuck at the transfer station for 10 days, online shopping enthusiast Leyou now sees that merchants who send Jitu express choose to "take a detour". "Jitu's slow delivery is not the first or second time. But there is no harm without comparison. Last year on Double 11, I placed more than a dozen orders on several platforms, and the express delivery arrived within a week, except for Jitu Express. In the end, although this courier did not lose the item and was delivered to me intact, due to multiple extremely bad experiences, I automatically chose to avoid it, and the note when placing an order was "reject Jitu." "

Another person who has complaints about Jitu Express is Amao.

"I bought a set of tableware online before the Chinese New Year. The merchant shipped it before the Chinese New Year. However, every stage of the package was difficult. It finally arrived at our local outlet after a week, but it happened to be the Chinese New Year. It is understandable that there was no delivery during the Chinese New Year break. Anyway, it has been delayed until now and I have not received the express delivery." A Mao said frankly that the most outrageous thing is not the logistics time efficiency. "A courier was assigned, but he did not deliver the package for several days. I took the time to call him on the weekend and found out that he had resigned."

Because there were too many complaints about Jitu Express's logistics timeliness, Taobao shop owner An Duoduo chose to cooperate with Tongda in the past six months. However, in 2021, when Jitu was in the limelight, An Duoduo was willing to take risks and choose to cooperate with Jitu.

At that time, Jitu Express's data was not connected to the Cainiao logistics system, so Jitu Express could not display Taobao's logistics information. Therefore, Andoduo could only fill in a fake express number on Taobao and send the Jitu number to the customer in a private message.

This approach is undoubtedly risky. Once discovered, Anduoduo will inevitably be punished. However, after weighing the pros and cons, Anduoduo was convinced by Jitu's "super low price". "Anyway, the price offered by Jitu was very low at the time. On average, I could save 1 yuan in express delivery fees per order. The larger the shipment volume, the more I could save."

However, the price advantage gained through "price war" is naturally not a long-term solution.

Consulting analyst Yuchi Zhi pointed out that few companies have ever been able to win in price wars, and Jitu is no exception. "It is extremely easy to adjust pricing, and internal competitors can quickly respond, causing the price war initiator to completely lose the advantage gained from a price adjustment action."

This also means that unless you have an unshakable price advantage that prevents competitors from using the same method against the initiator of the price war, it is almost impossible to establish a sustainable competitive advantage by lowering prices.

Jitu, which was originally able to reach cooperation with Taobao merchants by relying on low prices, unexpectedly spent a huge amount of 6.8 billion yuan to acquire Best, which also allowed Jitu to successfully squeeze into the Cainiao logistics system.

However, Jitu, which successfully entered Alibaba's Cainiao logistics system, did not receive more feedback accordingly.

Now that Jitu's order numbers can be entered into the system normally without being hidden, Anduoduo did not continue to cooperate with Jitu. "I originally thought that Jitu and Tongda were almost the same in terms of logistics distribution and services. Considering the price, I naturally chose Jitu, which has the best cost-effectiveness. But now that Jitu's price advantage has leveled off, its timeliness and service quality have gradually fallen behind. There are more customer complaints about logistics, so I naturally have to change partners."

Luo Shan, who runs two women's clothing stores on Tmall, has never thought about changing couriers. "The average customer spending in my two stores is around 500 yuan. I only cooperate with SF Express and EMS, and I don't consider any other couriers. I won't consider saving logistics costs. After all, logistics is also an important part of e-commerce transactions, and the customer experience of receiving couriers is also part of the transaction."

"My store has been cooperating with two express delivery companies, ZTO and Yunda, for many years. I did not use Jitu when Jitu launched a price war, so naturally I will not use it now," said the owner of a clothing store on Taobao.

Jitu is under pressure

Although Jitu's own order growth hit a bottleneck after joining the Taobao system, its order volume has increased significantly after taking over Best's business.

Regarding this point, Jitu franchisees in many places gave Ranciyuan a positive answer.

"In the area I contracted, Best and Jitu overlapped. I was originally a franchisee of Best, which had more outlets than Jitu. I paid more than 100,000 yuan to take over Jitu's outlets as well." Deng Fajia, one of the franchisees, told Ranciyuan that the transition of the integration of the two outlets under him has been completed, and the current order volume is equivalent to the sum of the previous two. "It feels that the total order volume is neither more nor less."

As far as Ran Dimension knows, although the merger and acquisition of the two networks of Best and Jitu had been completed at the end of 2021, the specific work was carried out in the first half of 2022.

At that time, Jitu proposed four policies for the integration of the two networks: regional splitting, becoming the only franchisee in their respective regions; if one party terminates the contract and withdraws, the other party becomes the only franchisee in the region; jointly establish a joint venture and become the only franchisee in the region; both the original Jitu and the original Best franchisees withdraw, and the agency area looks for new franchisees.

Deng Fajia’s choice was to invest money to allow Jitu franchisees in the same area to terminate their contracts and withdraw, making him the only franchisee in the area.

After becoming the only franchisee in the region, Deng Fajia admitted that although the daily order volume increased, he found that he did not make much more money when he settled the accounts every month. "Excluding water, electricity, rent and labor costs, there is not much left. The money I earn is hard-earned, and the company has many punishment measures. Last year, during the month of Double 11, several outlets were fined tens of thousands of yuan."

But Deng Fajia remains optimistic and says he is lucky. "At least there were no problems during the franchise integration last year. I see that there are still people in the communication group who have been trying to get their franchise deposit back for months to no avail."

"After the Chinese New Year this year, I thought about contracting out the franchise area. However, half a month after I sent out the message, only one person contacted me, but he stopped contacting me after asking a few questions," said Deng Fajia.

Jitu, which has entered China three years ago, is no longer as high-spirited as it was when we first saw it.

After acquiring Longbang Express in 2019, Jitu borrowed the shell of Longbang Express to obtain the express delivery market license, which enabled it to launch a massive attack in the express delivery industry; when acquiring Best in 2021, some industry insiders pointed out that Jitu, which had an "unstable foundation", could achieve "1+1>2" after swallowing Best. But now it seems that Jitu has lost the power to "disrupt the situation".

In the early days of its Internet presence in China, Jitu had two trump cards: one was “low price” and the other was “Pinduoduo”.

The power of the price war is not worth elaborating. This war made Jitu famous, but also made Jitu enemies everywhere. However, whether it is regulatory requirements or cost trade-offs, the low-price strategy is unsustainable.

Pinduoduo's trump card lies in the strong binding between Jitu and Pinduoduo in the early days. Even though Pinduoduo has repeatedly distanced itself from Jitu, it is undeniable that Jitu, as Pinduoduo's original partner, was able to gain a foothold thanks to Pinduoduo's massive orders.

"For Pinduoduo at that time, it faced two strong competitors. Alibaba had Cainiao, which was closely related to the Tongda Group, and JD had JD Logistics. Pinduoduo also needed to develop its own logistics system. Correspondingly, Pinduoduo's package volume also accounted for a large proportion of Jitu's domestic business, which also helped Jitu quickly pass through its growth period." Yuchi Zhi believes that for Pinduoduo and Jitu at that time, this cooperation was a win-win situation.

But the trump card of "Pinduoduo" is slightly inferior at the moment.

In the early and middle stages of Jitu's development, the strong connection with Pinduoduo and the order volume of Pinduoduo can naturally support Jitu's domestic business, but from the perspective of Jitu's long-term development, access to Taobao and the currently popular live streaming e-commerce is a necessary link. The title of "Pinduoduo's direct line" has become a constraint for Jitu at present.

"Only about 15% of Jitu's outlets' orders come from Taobao, but 80% or even more come from Pinduoduo." Deng Fajia said that he had also looked for some Taobao or livestreaming customers before the New Year, but the talks were not smooth. "The number of livestreaming customers I found locally was not large. The large-volume customers were still Taobao merchants, but when I asked, they were companies that I had been cooperating with for many years, and I couldn't pry them apart."

How long can Jitu continue to run wild?

Jitu's situation has not improved significantly after swallowing Best.

On the contrary, after launching a price war, carrying out a round of brutal expansion and swallowing up Best, Jitu's speed could no longer be sustained.

"It's like the foundation has not been laid, but the building is being built continuously by relying on low prices to attract customers." Yuchi Zhi believes that Jitu has reaped the benefits brought by "low prices", but this will only be short-lived. If Jitu fails to clarify its core competitiveness in the future, Jitu will only become the next cannon fodder in the express delivery industry.

The core competitiveness of logistics companies lies in service, efficiency and cost, and Jitu seems to have nothing to do with any of these.

But Jitu has been trying to make efforts in the past. In terms of price, Jitu set off a price war in the logistics industry as soon as it came. Although it stirred up a storm for a while, it was eventually defeated by the boycott and supervision of its peers.

This kind of reliance on low prices is also doomed to fail. As early as 2015, Liu Qiangdong proposed that the value and economic laws of traditional business are completely applicable to the Internet. Any Internet business model is doomed to fail if it cannot reduce the transaction costs of the industry and improve the transaction efficiency of the industry.

On the other hand, Jitu is still implementing punishment measures in terms of service and efficiency. The harsh punishment measures also made Ayuan, a former Jitu courier, resign decisively. "Before joining, I heard that Jitu's fines were very strict, but I didn't expect it to be so strict. Whenever there is a customer complaint, basically there is no escape from the fine. The fine is not as much as the profit, so what's the motivation to work."

Complaints about Jitu are still everywhere on the Internet social platforms, and the situation has not been effectively curbed. Moreover, high labor intensity and low delivery efficiency are always problems in the logistics industry. Improving the efficiency of logistics distribution and service level is not something that can be decided by terminal outlets and couriers or changed overnight.

With its reputation and voice gradually declining, Jitu needs to re-examine its core competitiveness and where it is reflected.

Going overseas seems to be the next destination of Jitu's mad rush. Although the development of Jitu's domestic business has slowed down, Jitu has been active internationally. According to official website data, Jitu has conducted business in 13 countries, 5 of which were officially opened in 2022, including the United Arab Emirates, Saudi Arabia, Mexico, Brazil and Egypt.

Figure/Jitu’s development history in 2022

Source/Jitu official website Ranciyuan screenshot

Jitu is not the only one rushing to the overseas market. Domestic express delivery giants such as Cainiao, SF Express, and JD Logistics are all doing the same. For Jitu, the first-mover advantage in the overseas market that it started a few years ago certainly exists, but the strength of its competitors should not be underestimated, and the pressure on Jitu will only increase.

At the same time, Jitu also faces the challenge of going public. Li Jie has long stated that he will strive to go public in mid-2022 and become the "third franchise express delivery company in China" after ZTO and Yunda in the shortest time.

At the end of 2021, there were also reports that Jitu had completed a C1 round of financing of US$1.735 billion, with a post-investment valuation of US$19.77 billion. According to the agreement reached between Jitu and its investors, Jitu must be listed before March 1, 2026 at the latest, and the IPO financing amount must not be less than US$1 billion. However, Jitu Express responded to this at the time: The news is untrue.

However, it is only a matter of time before Jitu goes public.

In order to build momentum for its future listing, Jitu has not stopped spending money lavishly, including inviting Messi to be its global spokesperson and sponsoring the Spring Festival Gala.

In Yuchizhi's view, these marketing behaviors have nothing to do with the "low price" that Jitu used in the first place. "Price is the only marketing tool that can be deployed without any initial capital investment, but advertising campaigns require a lot of capital investment in the early stage, and there will be no immediate return."

In other words, Jitu, which started from humble beginnings, has also begun to learn how to build its brand. However, how effective it will be depends on which way the wind blows.

*Le You, Amao, Yuchi Zhi, Luo Shan, Deng Fajia and A Yuan are pseudonyms in the article.

*Disclaimer: Under no circumstances does the information or opinions expressed in this article constitute investment advice to anyone.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.