E-commerce fuels the 4PX Express growth story

4PX Express, which Mr Kevin Li founded in 2004, helps merchants on online bazaars like AliExpress, TaoBao, eBay and Newegg get their goods to customers across the world.
4PX Express, which Mr Kevin Li founded in 2004, helps merchants on online bazaars like AliExpress, TaoBao, eBay and Newegg get their goods to customers across the world.ST PHOTO: MARCUS TAN

Call it the long arm of e-commerce. When Mr Kevin Li visited Singapore last month, he was pleased to find that many young women versed in the art of online shopping recognised the name of his firm.

4PX Express, which Mr Li founded in 2004, has grown into China's biggest cross-border e-commerce platform, helping merchants on online bazaars like AliExpress, TaoBao, eBay and Newegg get their goods to customers across the world. "In terms of scale, 4PX is twice the size of the No. 2 and No. 3 players in China combined," he said.

As China's e-commerce boom spreads to foreign shores, outbound volumes have spiked over the last two years and Mr Li reckons the market will grow at least 80 per cent each year for the next few years.

About 40 per cent of shipments handled by 4PX are bound for buyers in the United States. Russia is the second largest destination followed by Brazil. Buyers in Britain, Germany, France and Spain together account for another 40 to 45 per cent of shipments.

"It's crazy. The world economy is not so good, but foreigners like online shopping," said Mr Li, 46, who is based in Shenzhen. "Web technology, online payments and logistics support is making online shopping more easy and more popular."

4PX closed its latest investment round last month with e-commerce giant Alibaba's logistics arm Cainiao injecting an undisclosed sum into the firm for a 15 per cent stake.

4PX turns an annual profit of about 50 million yuan (S$10.1 million), and employs 3,500 people across 50 centres in China and 17 overseas.

As the items sold by Chinese sellers grow in value, it plans to expand its network of overseas warehouses, where sellers' inventory is sorted, packed, consolidated and shipped out. 4PX is set to be the biggest Chinese employer in the Czech Republic, with a promise to add 600 jobs over five years as it uses the warehouse there to service Western Europe.

Mr Li said he sometimes jokes with Ms Goh Hui Ling, Singapore Post deputy chief executive of international mail and a 4PX board member, that 4PX may one day overtake SingPost in size.

SingPost, an early investor in 4PX, has a roughly 30 per cent share in it. The partnership with the state mail operator goes back to 2008, when 4PX first identified the huge opportunities to be seized in cross-border e-commerce.

At the time, the number of online sellers was booming, but the parcel service industry lagged far behind, said Mr Li.

"The sellers were very new, they didn't know how to sell and how to choose a logistics company, and the players were not professional - maybe small companies run by a husband and wife. DHL and FedEx did professional fulfilment, but they are more focused on the business- to-business segment," he said.

But e-commerce is not like the traditional general cargo business, said Mr Li. "Buyers are buying all sorts of things, from as small as a sticker to as big as a sofa, and these things require different solutions."

So 4PX embarked on building a complete product line for parcel services, and SingPost became its first postal partner outside the mainland. Small parcels from China would be routed to Singapore and sent out to various countries from here.

That partnership raised 4PX's freight charge revenue from about 300,000 yuan a month to 30 million yuan.

Mr Li expects that his company's margins will fall as the industry matures, but he is not worried. "We're not just a forwarding agent. We are an integrator of different firms' solutions. We exist because of our technology, and that will help us achieve higher margins."

A version of this article appeared in the print edition of The Straits Times on August 15, 2016, with the headline 'E-commerce fuels the 4PX Express growth story'. Print Edition | Subscribe