On June 28, at the 2023 Global Smart Logistics Summit, Wan Lin, CEO of Cainiao Group, stated that he will launch a self-operated high-quality express delivery service “Cainiao Express”. In the previous period, the organizational reform and split of Ali Group, the listing of Cainiao was put on the agenda. We know that Cainiao used to provide more digital technology services behind the express delivery companies. This time, it stands at the front desk and launches its own express delivery brand, which means that Cainiao is vigorously deploying the entire logistics business sector, expanding its service capabilities for the open market, and the pace of listing. Speed up further.

cainiao express

Cai Chongxin, the executive vice chairman of the board of directors of Alibaba Group and the chairman of Cainiao Group, also made his first public “appearance” in the form of video at the summit. Talking about the next step of Cainiao, Cai Chongxin said, “As a smart logistics company that faces the market and customers independently, Cainiao will also adhere to the strategic direction of digital intelligence, globalization, and industrialization, and continue to invest in building logistics capabilities.” So, what changes will the launch of Cainiao Express bring to the express delivery industry?

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New Changes Brought by Cainiao Express

Wan Lin said, “China’s express delivery market is developing fast enough and large enough, requiring the logistics industry to provide multi-level supplies. Cainiao hopes to create more cost-effective quality services to meet the new needs of merchants.” Cainiao Express focuses on “quality express delivery, easy to use and inexpensive”, and promises to provide nearly 300 cities with cost-effective services such as door-to-door delivery without compensation, fastest half-day delivery, and night pick-up, forming a differentiation from existing express companies complementary. The newly established Cainiao Express will aim at the “quality express” business. Judging from the positioning of Cainiao Express, the current market share that Cainiao Express competes for is more aimed at the “cake” of JD.com and SF Express, avoiding the deep cooperation with Cainiao Express.” Three links and one reach”.

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In fact, the launch of Cainiao Express is not the first time Cainiao has set foot in domestic express delivery. Danniao Direct Delivery is Cainiao’s self-operated express delivery business, providing regional and localized delivery. Cainiao related personnel introduced that “Cainiao Express” comes from the upgrade of “Danniao Direct Delivery”. Nationwide express delivery. At the meeting, Wan Lin mentioned the problem of the low brand recognition of Danniao Direct Delivery. He believes that in the past few years, with the construction of national trunk line transportation and transshipment network and the construction of express delivery capacity, Cainiao must make some changes in the new stage to meet the needs of its customers for high-quality express delivery. The main reason for upgrading its express delivery brand.

Since Cainiao Express mainly focuses on high-quality services such as half-day delivery, next-day delivery, door-to-door delivery, and night collection, it provides late arrival, damage compensation, and no-door delivery compensation in nearly 300 cities across the country. Wait for five 100% commitments. How to achieve the promised service, then the digital technology upgrade behind it is essential. As an important technology for digital perception and identification, RFID has played a pivotal role in improving logistics efficiency in scenarios such as warehouse inventory, intelligent sorting, and transfer bags. However, The role of RFID is not maximized. In fact, friends and merchants have already established a certain amount of precipitation in express delivery services. How to further widen the gap with friends and merchants in the existing services, technical upgrades and applications, among them, it is very necessary to enlarge the application of RFID, but currently RFID is used in parcels. There are still many pain points in the application on the Internet.

Two Challenges of RFID on Domestic Express Parcels: Cost and Production Capacity

Looking at the world, UPS has taken the lead in planning to apply RFID tags on parcels. The demonstrations of leading international companies have proved the feasibility of RFID tag parcel application in terms of investment benefits. However, the investment benefit analysis is based on UPS’s parcel market transportation unit price. Under the premise that the starting price of the ultra-small package is $8.80 and the starting price of the super-large package is $22.85, the unit price of domestic express delivery differs greatly from that of foreign countries. According to the data compiled by China Post Bureau and AIoT Star Map Research Institute, it is as follows:

rfid tags

Therefore, the biggest challenge facing reality is cost pressure. The overall profit margin of the domestic express delivery industry is very low. From the perspective of express delivery companies, the price expectations for logistics parcel labels are also extremely low. They expect the price to be as low as possible; from RFID label companies In other words, even if domestic chips are used, under the existing manufacturing process, the profit of label manufacturers will be extremely low or even not profitable. If the balance cannot be achieved, the driving force of the industry will not be high.

Another challenge is the problem of production capacity. Once RFID tags are fully adopted in logistics express parcels, the existing production capacity will not be able to keep up, and the speed of expanding production capacity (adding binding machines) will not be so fast.

So, are these challenges insurmountable? Of course not. In terms of cost, we know that the cost of upstream chips accounts for 50%-60% of the entire label. If the largest integration of upstream companies represented by chips can still reduce costs in a certain space; If further or additional benefits are achieved in terms of channels, costs, services, brands and even capital, then this balance can be established. In terms of production capacity, after the market rises, label companies or equipment companies can expand production capacity, and the industry will not adopt it all at once. Generally, leading companies take the lead and adopt it in batches, so that the problem of production capacity can also be solved.

Cainiao’s Omni-channel and Capital Layout has Created Conditions for the Application of RFID Tags on Packages

Earlier we introduced the methods of RFID package labels to deal with the challenges. With the launch of Cainiao Express, I personally think that the conditions are now met. Standing behind Cainiao on the chip side is the flat-headed brother. The shipment of RFID electronic label chips led by Cainiao has exceeded 100 million pieces, the chip side has the right to speak, which can control the cost of RFID to the greatest extent; on the downstream application side, there is Cainiao Express, which improves the efficiency of the supply chain through RFID and establishes industry advantages. The driving force will be stronger, and it will be omni-channel from top to bottom The layout can achieve the best balance in terms of cost and benefit.

Once Cainiao really adopts RFID and achieves the expected results in terms of efficiency and service, then JD.com and SF Express, which provide high-quality services, will definitely have to keep up. Then the application of RFID tags in express parcels will really blossom everywhere. Therefore, the launch of Cainiao Express has greatly promoted the application of RFID. The application of RFID tags has ushered in a good opportunity. It can be boldly concluded that the application of RFID tags in express parcels is in sight.

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