On a social platform, Amy is speaking pure Cantonese and sharing the necklaces, beauty devices, contact lenses and false eyelashes she recently bought from a mainland shopping website. Some of these products have been repurchased many times. As a senior online shopper, Amy likes to shop online from the mainland because she finds that mainland shopping websites are "very cheap" and "very cost-effective". "When there are festivals like Double 11 and 618, shopping seems to be free."
In Hong Kong, there are many people like Amy who like to shop online from the mainland. As a shopping paradise, a large number of mainlanders used to pull suitcases to shop on the streets of Hong Kong, but now more and more Hong Kong people are starting to buy goods on major domestic e-commerce platforms. This phenomenon is called "reverse overseas shopping."
However, unlike the mainland, the express delivery cost in Hong Kong is very high, so consolidated shipping has gradually emerged as a new logistics method. Nowadays, the consolidation method is widely used in Hong Kong. In addition to the leading players such as Cainiao, SF Express, DIMBUY , Taobao Consolidation, and Weiji New Generation, there are also many mid- and low-end players. However, although they provide convenience and save money for Hong Kong consumers in "reverse overseas shopping", many problems are often complained, such as delays, random weighing, and lost items.
The top players are always willing to go the extra mile. In the chaos, Cainiao was the first to sound the clarion call for "quality improvement" and launched the "next-day delivery, late delivery must be compensated" service. In the future, parcels sent from Cainiao's shipping warehouses in the mainland can be delivered to the pick-up point or user in Hong Kong the next day at the latest. If the delivery is not made within the promised time limit, Cainiao will proactively pay up to RMB 60 for each order.
Moreover, in addition to the consolidated shipping service, it is currently piloting local B2C merchant delivery, hoping to make Cainiao a household logistics brand in Hong Kong.
Obviously, a logistics service upgrade war has already started in Hong Kong, starting with consolidation, and it is only a matter of time before other players get involved. The companies that will win in the end will surely be those that provide customers with quality services and solve the pain points of the industry.
Hong Kong's container shipping market is in chaos
As the name suggests, "consolidation" means combining multiple packages into one batch and then transporting them together. Goods purchased by consumers from different stores on the same platform or from different platforms will first be sent to a domestic transit station (i.e., consolidation warehouse), which will then pack multiple packages for the same destination, weigh them, calculate the transportation price, and send them to the designated destination at one time.
This approach can save a lot of shipping costs, but there are also many traps that users can easily fall into if they are not careful.
Mr. Liang from Hong Kong once entrusted a freight forwarding company to ship the goods back to Hong Kong. After filling in the recipient information according to the instructions and paying the freight, he waited for the delivery with peace of mind. However, the next day, the freight forwarding company called and said that the length of the goods exceeded the general shipping volume standard and that an additional fee would be charged. Otherwise, the goods would be returned to the mainland merchant and a return fee would be charged. He had no choice but to pay the money because he was in a hurry to pick up the goods. Unexpectedly, after receiving the goods, Mr. Liang measured and found that the length not only did not exceed the standard, but did not even meet the specified standard.
In addition to charging random fees, many Hong Kong residents are also annoyed by the shipping companies' attitude of shirking responsibility when encountering problems and giving up when disagreeing with them.
Ms. Zhang had previously sent a batch of goods ordered from a mainland website to a transit warehouse of a freight forwarding company, which packed and sent them to Hong Kong. But when she received the goods, she found that one of the wooden hangers she assembled by herself was broken and the accessories were damaged, so she immediately took photos and found the freight forwarding company, asking it to make compensation according to the terms. However, the claim process was not smooth. The freight forwarding company first delayed the process by comparing the photos taken by both parties to determine the responsibility. Three weeks later, it said that it could compensate, but the damaged goods had to be returned. At this time, Ms. Zhang had already discarded the broken wooden hanger, so she did not agree. After that, no matter how Ms. Cai communicated, the freight forwarding company did not respond.
In the past few years, with the rise of "reverse overseas shopping", business opportunities in Hong Kong's freight forwarding market have gradually emerged. Logistics companies of all sizes have flocked into this market. The direct result of the mud and sand is frequent chaos and uneven service levels. According to data from the Hong Kong Consumer Council, it received 243 complaints about freight forwarding services in 2018 alone.
There are also many posts on a domestic lifestyle social media platform complaining about the problems with Hong Kong container shipping.
A user who has used the consolidation service for more than two years said that he was increasingly disappointed with Hong Kong consolidation. "Once, the weight of the package I received differed by 2.2 kilograms from the weight I placed when I ordered it. At the time, I thought it was a mistake made by the consolidation company and did not pursue the matter. However, when I later purchased other products, I found that the weight shown by the consolidation company was 12 times heavier than the weight given by the merchant."
Another user who has lived in Hong Kong for five years was very dissatisfied with the customer service of the freight forwarding company, saying that their customer service is often not online and the response depends on their mood. Another user said that some freight forwarding companies have fast service and low prices for the first order, but the freight becomes more and more expensive and the speed becomes slower and slower when they use them later.
In summary, the current problems in Hong Kong's container shipping market mainly include: 1. Serious delays and lost items; 2. Random weights and overcharges; 3. Poor service awareness and giving up when encountering problems; 4. Serious damage to packages; 5. Opaque charging standards.
Today, the problems of Hong Kong's container shipping market have been fully exposed, and the conflicts between users and container shipping companies are deepening. Change is imminent.
The world is changing as the top players improve their quality
A report by JPMorgan Chase shows that Hong Kong is located in the heart of Asia, with a superior geographical location, close to mainland China and only a short distance from Southeast Asia, all of which are major markets for e-commerce. Against this background, cross-border sales account for about 60% of Hong Kong's total e-commerce spending, of which 75% of online shoppers purchase goods and services directly from mainland China.
Relying on this huge purchasing market, the freight forwarding industry has been able to develop rapidly and competition has become increasingly fierce. In addition to companies specializing in freight forwarding such as DIMBUY , Taobao Freight Forwarding, and Weiji New Generation, logistics giants such as Cainiao, SF Express, and Jitu are also making efforts here.
According to incomplete statistics, there are about 50 to 60 logistics companies providing Hong Kong consolidation services, of which the top 10 companies account for 80% of the market share. Since Taobao is the mainstream choice for users in Hong Kong, Cainiao has a unique advantage with its Taobao business flow .
Cainiao has a long history in Hong Kong, dating back to 2017, when it provided delivery services to Hong Kong consumers as a logistics partner of Tmall Supermarket. In 2018 , it began to enter the consolidated transportation market.
In 2022, when people thought that the competitive landscape of Hong Kong's container shipping market had been determined, Jitu Logistics, which has Pinduoduo genes, suddenly entered the market, making the situation confusing again.
Not only that, as competition intensifies, the pain points of the container shipping market are more thoroughly exposed, and many container shipping companies are stuck in the quagmire of "low prices" and " low quality ".
In this context, Cainiao took the lead in sounding the clarion call for "quality improvement" and recently launched the "next-day delivery, late delivery must be compensated" service to improve the online shopping logistics experience of users in Hong Kong. In the future, parcels sent from Cainiao's logistics warehouses in the mainland can be delivered to the self-collection points or users in Hong Kong the next day at the latest. If the delivery is not made within the promised time limit, Cainiao will proactively pay a compensation of up to RMB 60 for each order.
Cainiao's sudden "speed-up" can be said to have caught other competitors off guard. Although Cainiao entered the market relatively late compared to many container shipping companies, it has clearly stated that it is a company with "quality service" as its goal.
The source of its confidence is the full-link self-operated logistics network. In 2018, this large network began to be laid out. Now, 11 distribution centers, more than 750 Cainiao self-pickup points, as well as strong control of trunk lines and local self-operated fleets have been built. This has laid the foundation for Cainiao to achieve next-day delivery service in Hong Kong.
In contrast, many other shipping companies have disconnected head-end services and tail-end distribution and lack end-to-end capabilities . Therefore, not only is it difficult to guarantee timeliness, but the quality of service is also difficult to control.
Self-operation of the entire chain and self-pickup at the end require heavy investments and are also a reflection of long- termism . Cainiao's continuous investment over the years shows its determination , which also creates the essential difference between it and other shipping companies today .
Today, Cainiao's self-operated pick-up points are all over the streets and alleys of Hong Kong, which allows Cainiao to extend its delivery service to the doorsteps of Hong Kong residents. And now this team is growing.
In 2022, TVB actress Ho Kai-yu, who had been in the Hong Kong entertainment industry for more than 20 years, learned from a friend that Cainiao was recruiting franchised self-pickup points in Hong Kong. As she was optimistic about the future of Hong Kong's online shopping market, she decided to try her hand in the logistics industry. From March 2022 to now, in just over a year, Ho Kai-yu has opened four Cainiao self-pickup points in succession.
During this year's 618 promotion, the average daily package volume of the pick-up point run by He Kaiyu was three times more than usual, which further strengthened her determination to become the heroine of the pick-up point and open more Cainiao pick-up points in the future.
The pressure on other shipping companies is undoubtedly enormous now, but Cainiao’s ambitions in Hong Kong are more than that.
Cainiao’s ambition to expand beyond consolidation is to start local B2C delivery
As mentioned above, relying on Taobao's consolidated shipping orders, Cainiao has already won a large share of the Hong Kong consolidated shipping market, but it has not chosen to lie flat. In addition to accepting Taobao orders, it has also launched the CAINIAO APP to accept orders from other e-commerce platforms. The current installed base has exceeded 200,000, and the proportion of non-Taobao orders is increasing month by month.
In addition to consolidated shipping services, local logistics services are also an important business development direction for Cainiao in Hong Kong. It is currently piloting local delivery, that is, providing B2C logistics services to merchants.
According to data released by the Hong Kong Census and Statistics Department , e-commerce sales accounted for nearly 10% of Hong Kong's total retail sales in 2022, up 21% year-on-year. Therefore, efficient fulfillment and delivery has become a rigid demand for e-commerce consumers, and has also put forward higher requirements for the seamless connection of the "last mile" delivery and the entire logistics chain.
However, although there are more than 100,000 people employed in the logistics industry in Hong Kong , the vast majority of them serve in international logistics and cross-border transportation. Influenced by the concept of "good guys don't deliver outside", there are few local express delivery practitioners and development is poor.
At the same time, unlike the mainland's SF Express, JD Logistics, and Jitu, which have all blossomed, Hong Kong's express delivery and collection mostly rely on SF Express. SF Express has fast speed and good service, but the price is relatively high. The express delivery fee is equal to the retail price of the product, or the freight accounts for a quarter of the retail price of the product. Merchants dare not provide free shipping, and consumers cannot afford such high transportation costs. The heavy fulfillment costs have destined SF Express to only serve the high-end market and cannot be rolled out to the entire consumer group, leaving a gap in the mid- and low-end markets.
In fact, over the years, other express delivery companies have been eyeing this piece of meat, but the high labor costs, shortage of manpower at the end, and high warehousing costs have discouraged them from entering the market.
Cainiao is different. It not only has strong financial strength, but also has accumulated enough strength. Yuan Ting, general manager of Cainiao Logistics Hong Kong Station, said that Cainiao has been deeply rooted in Hong Kong for many years, and its logistics products, logistics network, and customer service have become more mature. It is now able to provide a more comprehensive service experience. It is obvious that the network of more than 700 self-pickup points laid out over five years has largely solved the manpower problem. Hong Kong's residential areas have a high population density, and one self-pickup point can cover many online shoppers.
If you pay close attention, you will find that Hong Kong e-commerce lags behind the times. Whether it is the early PC era or the booming mobile era, Hong Kong has not produced any influential local e-commerce platforms. The reason for this is that high fulfillment costs are a very important factor.
According to the figures from the Communications Authority , as of October 2022, the number of registered broadband Internet users in Hong Kong has reached 2.96 million, and the household broadband penetration rate has reached 99.1%. However, in terms of global e-commerce penetration, currently, mainland China, the United States and South Korea have reached 30 to 40%, while Hong Kong is only about 5 to 10%. This shows that the popularity of online shopping in Hong Kong is relatively low, and there is still a lot of room for improvement in the Hong Kong e-commerce market.
If Cainiao can succeed in local B2C delivery, it will be of great benefit to the development of e-commerce in Hong Kong. Conversely, as the scale of Hong Kong's e-commerce market expands, the logistics companies that are closely related to it will also benefit.
Obviously, Cainiao is playing a big game in Hong Kong, and the two chess pieces, consolidated shipping and B2C local delivery, which have been put down one after another, are changing the course of the game. Rookie Hong Kong Consolidation |
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