China express firms opt for self pick-up outlets to save on costs

China's express delivery companies and their e-commerce partners have been forced by high costs to pull back from door-to-door delivery and instead ask customers to pick up their packages to keep shipment prices low and remain competitive.

Taobao, the customer-to-customer online trading platform of mainland e-commerce giant Alibaba, launched a self-pick-up service in Hong Kong in late August, allowing consumers to choose from 200 pick-up points, including the 125 post offices in Hong Kong, for their shipment options. Picking up purchased goods instead of requesting door-to-door delivery may save consumers more than 50 per cent in shipping costs.

Delivery industry analysts feel the "self-pick-up solution" is an option Taobao and its logistics partners were forced to take.

"As Taobao expands outside China, with Hong Kong as the first key overseas market, it realised managing logistics capacity is a challenge," said Gary Ng, chairman of the Hong Kong Courier Association. "Sometimes online sales could suddenly explode due to the small base of overseas markets, the logistics capacity in the real world is not as elastic as the online world. That's why they need self-pick-up points."

The concept is not entirely new to Hong Kong consumers. The 7-Eleven convenience store started the arrangement in collaboration with delivery firm SF Express in April 2011. Consumers could pick up goods delivered by SF Express at 120 of the 900 7-Eleven stores in Hong Kong.

Taobao partnered Hongkong Post, 7-Eleven, and mainland express delivery firms SF Express, ZTO Express and 4PX Express in the arrangement. Taobao feels logistics is a key issue in overseas markets along with cross-border payments, says Teddy Lui, head of Hong Kong business for Taobao Marketplace.