China’s personal delivery market is on the rise. Only some are already making money

China’s large labor force and internet ecosystem have supported fleets of couriers delivering an increasing range of products on demand. U.S.-listed BingEx has taken a unique strategy by dedicating one delivery person for each order, becoming “a pioneer in the dedicated courier service industry,” Deutsche Bank analyst Jessie Xu said in a June 10 report that initiated coverage on the stock with a buy rating. By using the Chinese company’s app, someone in China can have their suitcase transported across town, or have the courier buy a specific cake and deliver it to a party. The business operates under the brand “FlashEx” or “Shan Song,” which means “delivery in a flash” in Mandarin. The brand’s name has become a local way to describe the service, just like Kleenex. FlashEx “started recording positive unit operating profit from 3Q23 and has been profitable since then,” Deutsche Bank’s Xu said, pointing out that most of its competitors still operate at a loss in the one-on-one courier business. On-demand delivery has become a competitive market that logistics companies and e-commerce platforms have expanded into, often with heavy subsidies and piling several orders onto one courier. But even Alibaba expects consumers will want to buy on demand, and in the last several weeks has rolled out a channel for people to buy food, clothes and other products on e-commerce platform Taobao — and get it delivered in as quickly as 30 minutes. Most of FlashEx’s competitors are subsidiaries of larger companies with other business lines. U.S.-listed Dada , which was previously a Walmart-backed supermarket delivery business separate from JD.com, was absorbed into the Chinese e-commerce giant over the last few years. Dada reported loss from operations rose to 2.16 billion yuan in 2024, up from 2.11 billion yuan a year earlier. Earlier this year, JD.com launched a campaign in on-demand delivery to compete with food delivery giant Meituan. Both companies reported operating losses for “new” initiatives in the first quarter. Chinese logistics giant SF Holdings has a small intra-city on-demand delivery unit, which contributed to just over 3% of total revenue last year. The segment’s revenue rose by 22% from a year ago, while its net profit more than doubled to 132 million yuan . The on-demand delivery market is expected to grow by an average of 13% a year through 2028, a slowdown from 20% annual growth from 2019 to 2023, Xu said in the report. “This growth should be supported by the rapid expansion of Online-to-Offline (O2O) retail, food delivery services, and increasing demand for personalized delivery options.” But personal, one-on-one courier services still represents only 4% to 5% of that delivery market, Xu said, predicting 10% annual growth in the next three years. She pointed out that as of the end of 2024, FlashEx had 2.8 million riders serving over 100 million registered customers in 295 cities. U.S.-traded shares of BingEx closed at $3.87 a piece on Friday, for 21% upside to Deutsche Bank’s price target of $4.70. However, the stock has plunged more than 50% so far this year after the company grappled with more competition and tepid Chinese consumer spending in the last several months. “FlashEx has strategically exited some 2B businesses since 2H24, as the company is focused more on” unit economics,” Xu said. “Management made it clear that the company will not chase pure volume market share gains at the cost of profitability. … This set a positive tone for the company’s sustainable growth and profitability in the mid-to-long run.” — CNBC’s Michael Bloom contributed to this report.