BEST. US recently released its financial results for the third quarter of 2023, with revenue increasing by 9.7% year-on-year to RMB 2.23 billion, gross profit margin increasing by 4.2 percentage points year-on-year, gross profit of RMB 51.8 million, and net loss of RMB 193 million from continuing operations, which is narrower than the loss of RMB 378.9 million in the third quarter of 2022.
After completing the sale of its domestic express delivery business at the end of 2021, Best has freed itself from the main burden that has dragged down its performance and started focusing on three major businesses: express delivery, supply chain, and international delivery. Among them, supply chain and express delivery businesses have turned losses into profits in the first half of this year.
"This year, the performance of the supply chain sector is expected to be better than last year, and after continuous investment in the past three years, it has begun to reap positive profits." Wei Yongqiang, Vice President and Deputy General Manager of Baishi Supply Chain, revealed in an interview with First Financial News today.
According to the reporter's understanding, in the past three years of the epidemic, many domestic supply chain logistics companies have had a difficult time. This year, many companies are still selling their businesses or switching careers, which is related to the increasingly fierce price war in the industry.
Wei Yongqiang also pointed out to First Financial reporters that in recent years, various industries have been reducing costs, and the reduction of supply chain logistics costs is also an important part. Many companies have changed their bidding for logistics suppliers from once every two or three years to once a year, and the corresponding transportation and warehousing service prices have also been decreasing. This is a pressure for many supply chain logistics companies to continue operating, Especially for logistics companies that rely on the profit margin sales model for survival.
In this situation, Baishi is still continuing to increase the layout of its national warehouse and distribution network, especially in extending its network to county-level markets.
"At present, our cloud distribution network has covered 13 provinces in China, mainly coastal, southwestern, northeastern, and northern regions. It will be extended to 5 provinces and regions in the first half of next year, mainly concentrated in central and northwestern China. The cloud warehouse network has already covered the whole country," Wei Yongqiang revealed, "In the past, our warehousing operations were mainly concentrated in provincial capitals and first and second tier cities, and transportation was transferred to dedicated lines and regional distribution suppliers through simple sales methods. Now, the reason why we need to increase the extension of our warehouse distribution network to the county market is related to changes in customer sales models and channels."
Baishi's supply chain customers are mainly concentrated in the fields of shoes, clothing, and fast-moving consumer goods. In recent years, with the rapid development of e-commerce, the sales channels of the consumer goods industry have undergone tremendous changes: from the traditional distribution model of selling and delivering through distributors in third - and fourth tier cities and counties, to more self operated stores or direct distribution through distributors. At the same time, sales in first and second tier cities have become increasingly saturated, competition has become more intense, prompting brand owners and merchants to lower their sales, and the focus is gradually shifting to county-level regions.
"After the brand's sales model changes, the demand for logistics services also changes, which determines that logistics service providers also need to layout in the county market in advance," Wei Yongqiang told reporters. In order to make distribution costs more competitive, the entire transportation process is visible and controllable, Baishi Supply Chain has chosen to collaborate and integrate with Baishi Express and Baishi Cloud Warehouse networks while building its own cloud distribution network. ", And select high-quality external resources for integration. At the same time, utilizing the main and branch buses and terminal station resources of the Baishi Express segment as needed, we can quickly start the entire B2B transportation chain by using the Baishi Transportation Management System and a unified operation management platform to provide customers with one-stop high-quality industry distribution services.
Another challenge in expanding the county-level market comes from the waste of empty vehicle resources caused by the low return freight volume in remote areas. To this end, Baishi's response is to tap into local industrial belt customers and transport their products to big cities based on their upstream logistics needs for crops and fruits, while also reducing the transportation costs of return vehicles.
"Starting from 2019, we have been expanding the county-level market. With the increase in scale and the decrease in costs, the supply chain business has been reducing losses year by year in recent years, and has already achieved profitability in the first half of this year." Wei Yongqiang said that in the future, we will continue to focus on the footwear, clothing, and consumer industries, and increase our share in domestic and international (Southeast Asia) regional transportation and distribution resources.