There has been a lot of talk about the red ocean of China’s ecommerce and parcel delivery scene, and how players, including those invested by Alibaba, have been trying to fend off the assault by Indonesia-born J&T Express.

Express delivery service counts on the same workforce as food delivery, but the economics (for the workers) are slightly different. There is a recent article (in Chinese) which details the current competitive landscape, and we thought the part about Mr Yu, a typical delivery driver running with an electric tricycle, is interesting. we put a summary here:

The revenue of Mr Yu

Mr Yu works 14 hours a day, and each day is a game of calculations.

He delivers about 300 parcels at his maximum capacity, and earns CNY 1 per item. So his daily revenue is CNY 300 (US$46).

However, to save time, he places about 80 of the 300 parcels in the self-pick-up lockers. The locker operators charge him CNY 0.5 per parcel. So his revenue is reduced by CNY 80*0.5= 40. He has $260 left in his pocket.

Like this one – Hive Box affiliated to S&F Express

If he works every day, without taking weekend or holidays off – he will make a monthly revenue of CNY 30*260=7800.

Another part of his job is collection from senders. The area he is in charge of is not a typical busy area for outgoing parcels – and he collects about 30 a day. He earns CNY 5 for each collection.

A roadside sorting point
A roadside sorting point

However, he needs to buy his own tapes, wraps and other consumables, which costs him, on average CNY 3 per parcel. So he earns about CNY 2 per parcel collection, or CNY 60*30=1800 per month.

Adding both, he earns CNY 9600 per month.

Very occasionally he meets a “good customer” who has 1,000 parcels to send out at once. That’s his happy day, something that he prays will happen the next day every time before he goes to bed.

Other considerations

Of course, these are not the only things he needs to calculate. His area includes estates ranging from new condominiums to old walk-up apartments (6 levels with no lift).

His nightmare is seeing a number of destinations on the 5th or 6th floor of older apartments – which takes much longer time and energy to reach.

After earning 9600 gross income, he needs to pay CNY 200 per month for the electric tricycle rent, and CNY 200 for mobile phone bill.

Another headache is the fines – every time he loses a parcel, receives a complaint, or fails to deliver. The fines will be deducted from his income by the express company.

When Mr Yu first started, his fines would amount to as much as CNY 3000 per month. Now he is an old hand, but it is rare that fines fall below CNY 1000 on any given month.

Earnings

So Mr Yu’s earnings = 7800+1800-200-200-100 = CNY 8200 (US$1282). For this earning he puts at least 14 hours of work every day, starting at 6am to collect parcels for delivery at the company outpost.

During ecommerce festivals such as 6.18 or 11.11, he often works until 2-3am.

How a collection point looks like after 11.11

The worst, according to Mr Yu, is the competition between logistic companies which pushes prices, as well as his income per order down. He has seen per parcel delivery payout to be as low as CNY0.6 at times.

No wonder many of his friends have left to become food delivery riders. With Meituan’s dominance under social scrutiny, at least riders there earn a more stable income.

For now.

And there is talk of robots being rolled out to ‘help’ the delivery drivers.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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