Couriers prey on their own managers as Singles Day sales collapse

Singles Day is usually one of the times when demand for deliveries outstrips supply, but no one is spending this year, and online sellers are super-sensitive to rising costs.

By BAI Fan

 

Singles Day is the busiest time of the year for YU Sheng who runs an STO Express depot in Shanghai. He usually raises prices to cover extra costs, but this year, he has lowered prices to meet targets.

“If I charge any more, customers simply go elsewhere,” he said.

After the war is over

Since October, couriers have been trying to bump up prices but front-end managers have resisted. Yu’s rates start at 2.3 yuan per package for corporate clients. In some cities, it can be as low as 1.8 yuan. Retail clients, with less bargaining power, pay a lot more.

“The low starting price doesn’t necessarily mean losses. Heavy packages and valuable items cost more. Plus, we are trying to cut costs too,” said a ZTO Express regional manager in Jinhua, Zhejiang. Headquarters came up with a price rise of 2 jiao (3 US cents) per package, but Yu is afraid to pass it on to customers.

Couriers have been raising prices since 2021, punishing consumers for the enormous self-inflicted losses of the previous year’s price war. Singles Day is one of the few occasions when demand outstrips supply, but no one is spending this year, and online sellers are not wasting a single jiao, a subunit of the yuan (10 jiao = 1 yuan). For a seller dispatching 1,000 packages a day, a 2-jiao increase means 200 yuan of additional costs each day- 6,000 yuan a month, equivalent to hiring another worker.

Punishments, not profits

Store managers are punished for not hitting sales. Yu Sheng is “fined” if he fails to dispatch 3,800 packages a day, a much higher target than last year despite subdued demand. These “fines” are just a preferred way for the parent company to drive unprofitable branches out of business at minimal cost – or perhaps even a small profit – to themselves. Yu is struggling to reach 2,800 a day.

A ZTO regional manager said his facility processed only 220,000 packages on November 11, as opposed to the anticipated 250,000.  Around 15 percent of pre-sales orders were canceled this year.

“It wasn’t unusual to charge 5 mao extra per package during Singles Day. I would be surprised if the overall prices increase is more than 2 jiao this year. I plan to lower prices in some branches tomorrow,” he said. Cost per package rises quickly if workers and vehicles are idling, so he has to keep selling, even at a loss.  

House of cards

It used to be a Singles Day ritual for stock analysts and business reporters to stay up past midnight and wait for sales reports from e-commerce companies, but no one seems to be interested this year. Tmall didn’t even disclose its numbers, only saying that the sales were “at about the same level as last year.” Its largest competitor JD.com “performed better than the industry average and reached a new high” – particularly interesting, considering that, since no one has disclosed any numbers, there is no “industry average”.

Yu expects to lose money this month. He has hired a dozen temporary workers, which adds an additional 4,000 yuan in wage costs each day. Some customers report that their packages have been stuck for two weeks due to facility closures in Covid outbreak areas. Stores with their own sorting facilities face rising rents. Some have taken out loans for expensive equipment. Congestion and delays are still rampant. It’s a house of cards and the wind is picking up.