China’s expansive labor pool and robust internet landscape have enabled a surge in the demand for on-demand delivery services, with companies like U.S.-listed BingEx leading the charge. According to Deutsche Bank analyst Jessie Xu, who issued a buy rating in a report dated June 10, BingEx has distinguished itself by assigning a dedicated courier for each order, positioning itself as a frontrunner in dedicated courier services. Through its application, customers in China can effortlessly have items like suitcases or cakes transported directly to their desired locations. Operating under the brand name “FlashEx” or “Shan Song,” which translates to “delivery in a flash” in Mandarin, the service has become synonymous with rapid delivery, similar to how Kleenex is associated with tissue.
FlashEx has reportedly started to generate positive unit operating profits since the third quarter of 2023, with profitability established thereafter. Xu highlighted that many competitors in the one-on-one courier market continue to operate at a loss. The sector has become intensely competitive, with various logistics firms and e-commerce platforms heavily subsidizing their services while consolidating multiple orders into single deliveries. Recognizing a shift in consumer preferences towards on-demand purchasing, Alibaba has recently introduced a delivery channel on its Taobao platform, allowing customers to receive food, clothing, and other items within a mere 30 minutes.
Most of FlashEx’s rivals are subsidiaries of larger corporations with diversified interests. Dada, which previously operated as a Walmart-backed supermarket delivery service distinct from JD.com, has been integrated into the JD.com ecosystem in the past few years. Dada reported a rise in operational losses, reaching 2.16 billion yuan in 2024, compared to 2.11 billion yuan the previous year. JD.com has also launched new campaigns in on-demand delivery to compete with Meituan, a leading food delivery service, both of which have reported operating losses in their recent initiatives.
Meanwhile, SF Holdings, another major logistics company in China, has a smaller intra-city on-demand delivery division that contributed over 3% of its total revenue last year. This segment saw a revenue increase of 22% year-on-year, with net profits more than doubling to 132 million yuan. Overall, the on-demand delivery market is projected to grow at an average rate of 13% annually through 2028, a decline from the 20% growth experienced between 2019 and 2023. Xu attributes this anticipated growth to the rapid evolution of Online-to-Offline (O2O) retail, food delivery services, and the rising demand for personalized delivery options. However, personal one-on-one courier services currently account for only 4% to 5% of the overall delivery sector, with expectations of 10% annual growth over the next three years.
As of the end of 2024, FlashEx boasted 2.8 million riders serving over 100 million registered customers across 295 cities. BingEx’s shares, traded in the U.S., ended on Friday at $3.87, reflecting a 21% upside relative to Deutsche Bank’s price target of $4.70. Nevertheless, the stock has seen a decline of over 50% this year, impacted by mounting competition and weak consumer spending in China. Xu noted that “FlashEx has strategically exited some 2B businesses since the second half of 2024,” indicating a shift towards focusing on unit economics rather than prioritizing volume for market share. Management has signaled a commitment to sustainable growth and profitability in the mid to long term.
