Introduction: With adjustments to the Universal Postal Union system rules and the increasing maturity and concentration of dedicated logistics enterprises, the small packet market may be on the verge of new changes. In the future, how will the market landscape of postal small packets and dedicated line small packets evolve?

1. Market Changes in Postal and Dedicated Line Small Packets

In the early stages of industry development, characterized by the prevalence of low-value lightweight goods, the direct postal packet model, known for its low prices and low customs inspection rates, has dominated China's cross-border e-commerce direct logistics. To date, the international small packet market is still primarily dominated by the postal system.

Looking at the distribution of parcels sent from China to overseas channels, China Post holds a dominant position with a 57% share, followed closely by third-party cross-border e-commerce logistics service providers such as YunExpress, Yanwen, and Wanbexpress; international express giants DHL and FedEx; and domestic express giant SF Express.

However, with adjustments to the Universal Postal Union system rules and the increase in terminal rates, the price gap between postal and dedicated line small packets has further narrowed. In situations where the price difference is not significant, buyers and sellers may prefer dedicated line services with shorter delivery times and tracking capabilities.

According to the XiaoSheng Research Institute's "2021 Cross-border E-commerce Direct Logistics Data Research Report," the overall timeliness index for China's export direct shipments in the first three quarters of 2021 was 0.5, on par with the standard value. Specifically, the timeliness index for postal channels was 0.32, below the standard value by 36%; while the timeliness index for dedicated line small packet channels was 0.66, exceeding the standard value by 32%.

The freight index had an overall value of 0.8, exceeding the standard value by 60%. Specifically, the freight index for postal channels was 0.76, exceeding the standard value by 52%; while the freight index for dedicated line small packet channels was 0.87, exceeding the standard value by 74%.

The time-price ratio, which is the ratio of the timeliness index to the freight index, reflects the level of timeliness of logistics channels under established freight rates. In the first three quarters of 2021, the overall time-price ratio for China's export direct shipments was 0.62, with a time-price ratio of 0.42 for postal channels and 0.76 for dedicated line small packet channels.

Considering the comprehensive analysis of the three metrics, dedicated line small packet channels demonstrate a more significant advantage in overall timeliness levels. Apart from price and timeliness, the demand from platforms and sellers also influences the market landscape of postal and dedicated line small packets.

In recent years, major e-commerce platforms such as AliExpress, eBay, Wish, etc., have strengthened their control over logistics services, with increasing demands for service quality and timeliness of logistics delivery. Independently operated online stores, which have regained popularity, also tend to use registered logistics products to provide consumers with better shopping experiences.

With the changes in industry development and platform supervision, sellers are gradually transitioning from mass distribution to branded products, with private domain traffic becoming the primary focus for brand sellers.

To avoid losing customers due to poor logistics experiences, sellers' demand for logistics services is no longer limited to transportation alone. It has expanded to include high-end services such as logistics information tracking, returns and exchanges, goods data management, and specialized demands tailored to specific products.

As a result, postal small packet services without tracking information have gradually become insufficient to meet demands. Cost-effective dedicated line small packets may become the preferred channel for sellers, and the market share of dedicated line logistics is expected to gradually increase.

According to a research report by Guangfa Securities, based on market space calculations for different delivery methods, it is estimated that by 2025, the market share of international dedicated lines is expected to reach 30%, corresponding to a market space of approximately 316.8 billion yuan (approximately 104.9 billion yuan in 2020).

2. Continuous Improvement in the Development of Dedicated Logistics Enterprises

Driven by market demand, third-party cross-border e-commerce logistics enterprises have encountered greater development opportunities, with dedicated logistics enterprises reaching a certain level of maturity.

For example, among the enterprises participating in the XiaoSheng Research Institute's 2021 Cross-border E-commerce Direct Logistics Data Research, the majority are third-party cross-border e-commerce logistics enterprises primarily engaged in dedicated line small packet services. Nearly 70% of the surveyed enterprises have a dedicated line small packet channel volume accounting for over 50%, while postal and express channels mostly account for less than 30%.

In terms of shipment volume through various dedicated line channels, 42.35% of enterprises have a shipment volume greater than 50% through North American dedicated lines; 47.06% have shipment volumes between 30% and 50% through European dedicated lines; shipment volumes through Japanese-Korean and Southeast Asian dedicated lines mostly account for less than 30%; 45.88% of enterprises have not yet opened Southeast Asian dedicated lines.

On one hand, the North American and European markets show relatively high concentration; on the other hand, there remains significant untapped potential in emerging markets.

In terms of customer types, nearly half (48.24%) of enterprises have over 50% of their volume coming from medium to large-scale sellers; over half (62.35%) of enterprises have shipment volumes from small to medium-sized sellers ranging between 30% and 50%; shipment volumes from factory-type sellers mostly account for less than 30%.

It can be observed that mature medium to large-scale sellers still contribute significantly to the shipment volume of dedicated line small packets, while the long-tail effect of small to medium-sized sellers does not show a clear advantage in total shipment volume, and there remains potential to develop factory-type sellers.

Additionally, according to XiaoSheng Rankings' comprehensive statistics on the annual revenue of companies listed in 2020, enterprises primarily engaged in small packet dedicated lines accounted for over half of the total revenue in the three major segments of FBA logistics, overseas warehouses, and small packet dedicated lines.

Based on incomplete statistics and analysis from the XiaoSheng Research Institute, in the entire cross-border e-commerce logistics industry, there were approximately 10 small packet dedicated line enterprises with annual revenues exceeding 1 billion yuan in 2020. Among them, the top three companies accounted for over 60% of the revenue in the top 10 small packet dedicated line enterprises. Therefore, the level of concentration in the small packet dedicated line track far exceeds that of the FBA logistics and overseas warehouse segments.

3. Can the Competitive Advantage of Postal Small Packets Continue?

While the advantages of dedicated line small packets are gradually becoming apparent, can the competitive advantage of postal small packets in the small packet market continue?

Although the price gap between postal systems and dedicated line express small packets is gradually narrowing, this process is not instantaneous. Moreover, if the destination country strengthens commercial customs clearance inspections for imported e-commerce parcels, postal Delivery Duty Unpaid (DDU) products still maintain an unparalleled advantage in avoiding inspections and mailing certain sensitive items.

Furthermore, to better meet the needs of e-commerce parcels, postal services themselves are actively exploring and reforming. In the future, more innovative products may emerge, such as more registered products under bilateral or multilateral postal agreements to replace the existing registered products under the Universal Postal Union system.

Taking EUB (ePacket) as an example, it was initially designed for e-commerce parcels sent from China to the United States by eBay, China Post, and the United States Postal Service. After the success of EUB in the United States, similar products were subsequently developed for other countries. Meanwhile, other postal services also introduced similar products, such as Bpost's Dragon Scan and Asendia's Swiss Post.

Compared to traditional postal small packet products, these innovative postal products not only leverage advantages in customs clearance but also improve delivery efficiency. Their prices are comparable to traditional registered products, making them more suitable for e-commerce parcel delivery.

However, it is important to note that this model may be affected by bilateral relations between countries and challenges and influences from customs clearance requirements for e-commerce parcels. Moreover, it may be difficult to cover all countries globally, thus having certain limitations.

In conclusion, the competition between postal small packets and dedicated line small packets will continue, and the competitive landscape and market share of different logistics methods will constantly change with the development of the industry. Meanwhile, platform policies, international situations, and customs policies will continue to impact cross-border export direct logistics and are trending towards increasing influence.

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Public Account: Cross-Border E-Commerce Logistics Baixiaosheng