On the weekend, May 10, SF unveiled the Fengshi WeChat mini program in China, which mainly targets enterprises' group meal demands. Currently the platform has signed some restaurant chains including Pizza Hut, Yoshinoya, and Ajisen Ramen. And what's more, in order to to attract more merchants to the service, it has rolled out a series of measures, including zero franchise fees and promising low commission rates.

Due to the impact of the epidemic at the beginning of the year, the food industry suffered a heavy blow from the COVID-19 outbreak, and food delivery has become their main revenue source of many catering companies. In April, multiple restaurant associations issued an open letter accusing Meituan, a food delivery giant, of excessively high commission fees, which affected store operations. Although Meituan and the catering association finally reached a settlement, the high commission label of the takeout platform has been entrenched. At this time, SF launched the food delivery service, which triggered people's speculation.

SF launched Fengshi, Meituan takeout began to deliver mobile phones and other goods to users, flash delivery began to do takeout business from the end of last year… "cross-border" business seems to have become the main theme of the last two years in the delivery market. In fact, as a company that provides "delivery capacity", logistics players such as Meituan, SF Express, Flash Delivery and Fengniao Delivery have laid the logistics infrastructure and penetrated into the vertical industry, which is not a choice but a trend to penetrate into other scenarios.

Fengshi enters the food delivery market quietly 

The homepage of Fengshi mini program may be relatively simple because it is a public beta version. After entering the application for the first time, it will ask user's location information. The large poster on the cover Banner shows its main "enterprises' group meal".

In fact, SF's attempt at the food delivery scene started a few months ago.

In March 2019, SF Tongcheng has started its independent operation as the fastest growing business of SF Express. In the first half of 2019, the number of its orders in the whole country reached 5.08 billion, achieving 786 million yuan without tax revenue, an increase of nearly 130% year-on-year. Chen Lin, CTO of SF Express, said at the press conference that the "full scene" was the company's consideration.

At that time, SF Tongcheng had already set foot in the catering scene, and cooperated with well-known brands such as Luckin Coffee, Pizza Hut, McDonald's and Heytea, which gathered "100,000 small and medium businesses." Relying on SF's logistics strength, it can guarantee delivery within 30 minutes, giving consumers the best experience due to some products like Heytea and Luckin Coffee that need to be consumed within an appropriate time.

If the cooperation with catering companies still belonged to the field of To B at that time, Fengshi, which targets enterprises' group meal demands, has already have the idea of entering the To C field. And it is relatively easier to switch from To B to To C in the field of terminal logistics in the same city.

Moreover, the time node of Fengshi is very suitable. All the catering companies in the world are struggling with the high commission fees of the existing platforms, but the former has played the sign of "free entry". Therefore, those dissatisfied restaurant owners are likely to join a third-party platform with low initial commission.

After the news about Fengshi came out, SF Group's shares rose 2.5%, while Meituan's shares fell 2.9%.

The delivery industry is destined to have a battle

In fact, SF is not the first to do cross-border business.

Not long ago, a delivery staff of Meituan began to deliver purchased mobile phones to users. In fact, from the second half of last year, Meituan's takeout has gradually established cooperation relationship with some cosmetics and physical clothing stores. The head of Meituan's takeout flash products, Liu Shuai, directly stated in an interview with the Economic Observer that the flash team plans to do LBS (location-based service) e-commerce platform that can guarantee delivery within 30 minutes."

If SF Express is transitioning the terminal logistics from the B end to the C end, then Meituan is obviously going the other way, countering the B end scenario from the C end. The fact that both parties step into each other's territory at the same time is not a conscious choice, but an inevitable result.

According to the 2019 Meituan financial report, in the fourth quarter with the largest profit margin, Meituan takeout (11 billion yuan) accounted for nearly 40% of Meituan's overall revenue (28.16 billion yuan), but contributed less than a quarter of the profit. Even though the catering companies complained about its high commission fees, Wang Puzhong, the person in charge of Meituan's takeout, revealed in an open letter that, in fact, the profit of each takeout is less than 0.2 yuan.

So, where does the profits of Meituan takeaout go? According to Meituan, the takeout profit is the cost of the delivery. The data seems to prove that for the whole year, in 2019, Meituan's takeout income was 54.8 billion yuan, and the cost of delivery staff was 41.04 billion yuan, accounting for about 75%. It can be seen that most of the revenue was engulfed by costs.

From this perspective, Meituan's delivery is actually a very high-cost "infrastructure" system. And, with the gradual increase in labor costs, this part of the cost will rise further. It also means that when this system has already penetrated into a vertical industry, in order to maintain the normal operation of the system, Meituan must constantly seek and invade another more profitable scene.

When Meituan penetrates into another vertical scene, its starting point is often higher than other players in the scene due to its user, traffic, and perfect logistics system. 

And such a feature is actually applicable to all companies that have a strong capacity, such as SF Express, Fengniao Delivery and Flash Delivery.

Many scenarios that have supported the huge valuation of Internet companies have gradually peaked because of the environmental changes in the past two years. In order to maintain the company's high growth, moving into other tracks and scenarios has become their only option.

The launch of Fengshi should be just the beginning, a fierce competition is inevitable that grabs the delivery market in the second half of the Internet.

This is an article from WeChat official accounts GeekPark(ID: geekpark), translated by Chris Yuan.