But analysts said it would become increasingly hard for the group to bridge its huge funding gap, if it did not go public soon. The concern is that the firm's dismal financial results are apparently holding back its initial public offering plans.

Shi Tao, the group's vice-president for retail operations, told the last month that the investment is crucial as success in the last-mile of parcel delivery would give them the ammunition to compete with e-commerce leader Alibaba.

Well aware of this, Alibaba and others including Lenovo and Suning Appliance, invested heavily in the past year to strengthen their logistics network. Computer giant Lenovo has been busily acquiring domestic express companies to incorporate into its own courier division.

Suning has committed tens of billions of yuan to build 60 logistics centres and 12 warehouses that are expected to begin operation in 2015.

Jack Ma Yun, co-founder and executive chairman of Alibaba, is the most ambitious in this field. In May he said his group would lead a consortium to invest up to 100 billion yuan over the next five to eight years in an intelligent logistics project to be known as the China Smart Logistics Network. CSN would not only consolidate logistics resources across the nation, but would allow users to track cargo movements along the entire supply chain.

But Edmon Fung, an operator of more than 1,200 warehouses on the mainland, said the network would be unlikely to overcome the problems in the highly fragmented sector. "Such a system would require the sharing of even the most private information - such as one's client list and trading records," Fung said. "It will bring as much, if not more, risks as benefits."

Fung said a system operated by Taobao - Alibaba's platform for trading between consumers - that ranks and rates the best-selling items with prices stated on the website has been a key factor behind the low profitability of many online retailers. The practice has intensified competition by leading to price cuts that have driven out some of the small players - while Alibaba thrives on the booming online traffic.

While hopefuls rush into the logistics business, domestic express deliverers complain of fierce competition and very low profit margins. Often they are competing for cargo that barely generates a profit.

"The express fee for a parcel below one kilo is just five yuan. Three yuan already went to the delivery worker, the remaining two yuan has to cover all other costs including sorting, warehouses, transportation and investments in hardware. The gross profit margin is practically zero," a regional cargo handler told China News Services.

Yet, industry players are investing more in the expectation of future growth.

"They may not be profitable now or even next year, but everyone is struggling to maintain market share because as the market grows, it will bring them economies of scale. So the bigger share they get, the earlier they will reach the tipping point that steers them out of losses," said Mo Daiqing, an analyst with China e-Business Research Centre.

But Shi Xiangliang, the head of logistics management department at Beijing Jiaotong University, said that many operators may crash and burn in the process.