Tech Planet has exclusively learned that Shansong is currently testing a feature called "Squirrel Express" with three main order modes: Squirrel Exclusive Delivery (one-to-one delivery and one-to-many delivery) and Squirrel Group Order (many-to-many delivery). Among them, one-to-one exclusive delivery is a dispatching model, while more delivery and group order delivery are grab-and-go models.

At present, on the "Shansong Courier" APP, there are two options for courier identities: "Shansong Knight" and "Squirrel Brother". The official customer service of Shansong replied to Tech Planet, stating that Squirrel orders are third-party platform orders with prices lower than those of Shansong orders. Currently, Squirrel Express is in the testing phase and is being trialed by some couriers in areas such as Beijing and Shanghai.

On social platforms, Shansong Knights have shown screenshots of their backend, which includes a button for "accepting Squirrel Exclusive Delivery orders". Couriers can choose whether to accept orders independently.

In comparison, over the past decade, Shansong has always adhered to a "one-to-one urgent delivery" model, where couriers do not pick up other orders along the way. A single order only serves one user. Common use scenarios in daily life include emergency needs such as delivering keys and documents, as well as perishable products like flowers and cakes.

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According to Shansong's prospectus, the number of registered couriers increased from about 1.1 million in 2021 to about 2.7 million in June 2024, and the number of registered users also increased from about 31.1 million in 2021 to about 88.9 million in 2024.

Under the "urgent needs" of these 88.9 million users, Shansong successfully landed on NASDAQ on October 4th of this year. However, after a significant increase in stock prices on the first day, Shansong's stock prices have been broken for several consecutive days, and the current market value is less than $900 million.

Shansong has always wanted to maintain a small and beautiful presence, with fast enough speed and high enough quality, but has also avoided a larger market. With Squirrel Express as a representative, Shansong may start to explore a new story.

In a hurry to use Shansong for errands, an additional 4.5 billion was spent.

On short video platforms, a courier displayed a "Squirrel Express" order, where a meal of 1.3 kilometers could earn the courier 5.03 yuan. In contrast, as of the first half of 2024, couriers of Shansong, who focus on "one-to-one urgent delivery" services, have an average income of 16.5 yuan per order, which has always been at the leading level in the industry.

However, Shansong's management rules for couriers are different, and Squirrel Knights can accept orders more flexibly, supporting group orders and multiple deliveries. Taking group orders as an example, a courier can accept orders from multiple merchants at the same time and deliver to different users simultaneously. That is to say, couriers of Squirrel Group Orders can earn income similar to that of Shansong couriers by relying on more orders. Currently, both types of couriers are accepting orders on the Shansong Courier APP.The "many-to-many delivery model" is also the main order acceptance model for major internet companies such as Meituan's errand service and SF City, and its advantage lies in its ability to greatly enrich both the supply and demand sides.

Shansong has always focused on the "one-to-one urgent delivery" track, which is inseparable from the strategic positioning made by its founder and CEO, Xue Peng, for the company.

Xue Peng once shared at the Tsinghua Wudaokou Alumni Meeting in 2022 that there are two models for immediate delivery: one is the B2C model, and the other is the C2C model. The B2C delivery model mainly serves catering merchants and is based on short-distance delivery within the business circle. The number of merchants within the business circle, order time, and quantity can all be predicted in advance and matched with corresponding transportation capacity, so the service model is easy to build, which leads to lower advantages and faces the most intense competition.

In Xue Peng's view, C2C is a city-wide immediate delivery from person to person. Once this model is formed on a large scale, it will form a strong competitive advantage, and the entry barrier is relatively high, making it difficult for latecomers to survive.

According to the prospectus, Shansong's annual revenue has already exceeded 4 billion yuan. From 2021 to the first half of 2024, Shansong's revenue reached 3.04 billion yuan, 4.003 billion yuan, 4.529 billion yuan, and 2.284 billion yuan, respectively.

However, at the same time, looking at the slowing revenue growth, Shansong, which insists on being small and beautiful, is also more likely to reach the ceiling. Shansong's target users are willing to pay a higher premium for speed and security, but at the same time, their needs are relatively low-frequency, and it is difficult to form a stable order volume.

Due to the high unit price, the difficulty of expanding into non-first and second-tier cities has also increased accordingly. A Shansong employee told Tech Planet that Shansong has suspended franchising in low-tier cities this year, mainly because Shansong insists on the "one-to-one" model, and it is difficult to expand in small cities. Because the price per order must be high for couriers to be willing to take orders, but merchants want to save money, they tend to choose platforms with cheaper freight.

The above employee said that in the past, they hoped that franchisees could make up for this problem through their own resource advantages, but once franchisees encounter price competition, they basically have no confidence in doing it anymore.

"Hard Business" Surrounded by Big Factories

The price competition in the immediate delivery industry is also inseparable from the influx of internet giants. With the outbreak of the market, user needs have gradually expanded from urgent documents and small items to daily commodity delivery, and platforms including SF City and Meituan Errand have also flocked into this market.Tech Planet tested courier orders of about 17 kilometers at the same time, with Shansong's price at 43 yuan, which is about 5 yuan higher than the prices of SF City and Meituan's courier services, both of which are 38 yuan, with an estimated delivery time about half an hour slower.

Many users also told Tech Planet that unless there is an urgent need, they would prefer to choose platforms with cheaper prices.

The presence of giants makes it difficult for Shansong to maintain a comfortable zone. Moreover, behind the insistence on a niche market, Shansong is also engaged in a tough business. Shansong needs to offer higher commissions to attract more couriers to take orders and achieve capacity matching in the entire region, but correspondingly, the labor costs paid are also higher.

According to the data in Shansong's prospectus, the total revenue for the year 2023 was 4.529 billion yuan, and the expenditure on couriers' salaries and rewards was 3.975 billion yuan, which means that more than 80% of Shansong's revenue was used to pay couriers' salaries, and this part of the expenditure once accounted for 90% of Shansong's revenue.

A courier's backend data shown by a Shansong courier to Tech Planet shows that for an order of 20.3 kilometers, plus a night fee of 4 yuan, the courier can earn 39 yuan. The courier said that compared to other platforms, Shansong has stricter requirements for couriers, and they cannot privately take orders from other platforms, but the high price per order is the main reason for attracting him.

Shansong has also been reducing labor costs to the greatest extent. Currently, the relationship between Shansong and couriers is not an employment relationship, but a "crowdsourcing" model that allows individuals to register and join on their own to recruit couriers.

In the instant delivery market, crowdsourced couriers are almost the main force. A Meituan special delivery courier told Tech Planet that it is more cost-effective for crowdsourced couriers to take Meituan's courier orders. He gave an example that for a 6-kilometer order, the round trip is 12 kilometers, and he can take four or five takeaway orders to earn the same income.

Moreover, the customer requirements for courier services are also higher. The aforementioned Meituan special delivery courier said that he had previously taken a 28-kilometer order, and the other party's note required not to be placed at the door and to contact by phone, but because the phone was not connected, he was finally complained about by the user. He revealed that a complaint about a special delivery courier would result in a deduction of hundreds to thousands of yuan, but crowdsourced couriers would not have such troubles, and the punishment would be relatively small after being complained about.

Under the pressure of labor costs, like other players in the industry, Shansong still faces the problem of profitability. The prospectus shows that from 2021 to the first half of 2024, Shansong's net profits were -291 million yuan, -180 million yuan, 110 million yuan, and 124 million yuan, respectively.

Although it has turned a profit since 2023, Shansong stated in the prospectus that it was mainly due to the increase in government subsidies, which increased other income from 9.2 million yuan in 2022 to 74.32 million yuan, and the operating profit related to operating conditions was only 11 million yuan.Snatching Market Share from Internet Giants

Behind ShunSong, the instant delivery market clearly has a broader market to tap into. Especially in the past two years, with the rapid development of instant retail, more internet giants have rushed into the market to seize a share.

A research report on the instant delivery market released by CICC shows that in the application scenarios of instant delivery, the proportion of catering takeout orders reaches 70%, fresh fruits and vegetables orders account for 12%, supermarket convenience orders account for 10%, and one-to-one urgent delivery orders only account for 3%.

Looking at the current internal test of Squirrel Express by ShunSong, merchants can experience delivery models such as Squirrel Group Delivery through the third-party platform "Easy Delivery". In the ShunSong personal APP, it still only supports dedicated delivery orders. Squirrel Express may open up more B-end markets for ShunSong, which is mainly aimed at C-end users.

At present, the scale of ShunSong riders is 2.7 million, which is comparable to the scale of internet giants in the instant delivery industry. In comparison, the number of Meituan delivery riders under Meituan is about 7.45 million, the number of Honeybird delivery riders under Ele.me is about 3 million, the number of riders under Dada Group is about 1.2 million, and the number of SF City riders is about 950,000.

However, according to the prospectus, the number of active ShunSong riders is not high. ShunSong disclosed in the prospectus that each active rider has 9.3 orders per day. According to the order volume of 270.7 million in 2023, the number of active ShunSong riders per year is only about 80,000, accounting for only about 3% of the total registered rider number of 2.7 million.

A ShunSong rider told Tech Planet that new riders must go through the "nutrient" stage and can only have the opportunity to grab more orders after the score reaches a certain level. If it is a part-time new rider, the score will not be too high, and they will not be able to run a lot of money.

The aforementioned rider said that recently, the autumn weather in Beijing is quite suitable, and there are more riders running ShunSong, making it more difficult to grab orders. This situation is definitely not friendly to new numbers. The score of old riders is high and the impact is not great, and the dispatch rate has always been relatively high.

According to the reply from ShunSong customer service to Tech Planet, Squirrel Knights can only accept orders from the Squirrel channel at present, but whether ShunSong Knights can accept orders from the Squirrel channel depends on the specific display of each rider's background. This also means that ShunSong riders may have an additional order channel in the future. Of course, the income per order under Squirrel Express will also decrease the attractiveness to new riders.

The difficulty for ShunSong to grab a larger market is not small. After all, its competitors have already taken the lead in the B-end catering and local retail instant delivery markets with larger traffic. Dada has taken on the traffic of JD.com, and SF City has strengthened cooperation with the local life business of the Douyin platform. This year, new players including Didi, Huolala, and Gaode Map have also set their sights on the instant delivery market.However, judging from the capital market's response to the errand service, the new narrative of Shansong now appears to be more imminent.