#Asia ‘Uber for logistics’ proving to be a lucrative business model in Asia


Traditional logistics companies have not adapted well to the e-commerce boom in Southeast Asia, and startups are finding cash in the gap

Lalamove_motorbike FINAL

Have you seen a Ninja Van? Well, not if it’s a good ninja. But the company name should certainly ring a bell.

You’ve probably come across one of their iconic vans while stuck in traffic, its distinctive (and adorable) ninja character is too striking to miss. That courier van is likely to be on route for a same-day delivery to a customer who cannot wait see that ruffled dress purchased just minutes ago.

It is a sign of the times that Ninja Van is no longer a plucky startup trying to disrupt a traditional economy; but rather, a major player in one of Asia’s most lucrative ‘new tech’ industries.

E-commerce and its impact on the logistics industry

Given the reality that e-commerce is all the rage across Southeast Asia, we can expect to see the same speed and efficiency in making online transactions happen for delivery as well. The rapid urbanisation of rural areas has boosted internet penetration rates exponentially in developing countries, resulting in more people than ever shopping online.

In fact, logistical issues in e-commerce hit especially close to home for shoppers in Indonesia, boasting a population of approximately 260 million people, as they are known to be wary of using credit cards for online transactions.

Also Read: La La Logistics: Hong Kong’s Lalamove raises US$10 million, eyes expansion

Instead, they prefer to have cash-on-delivery, where they pay cash to the courier on the spot. Other options simply do not sit well with them as a Nielsen Survey found 60 per cent of respondents felt unsafe in divulging credit card details.

However, the cash-on-delivery option proves to be a quagmire for e-tailers as it takes skillful manoeuvring on the part of logistics.

Such a complex problem is better overcome through enlisting the expertise of logistics marketplaces like Ninjavan and Lalamove with their extensive network of delivery workers. Otherwise, the e-tailer risks hampering delivery flow and turning away customers, particularly in a scene where speed and efficiency take precedence.

Taking the Uber approach to logistics

Similar to Uber, logistics marketplaces such as Ninja Van have an elastic fleet at their beck and call.

Withing this fleet is a core group of workers, independent contractors hired by the marketplace itself and the size of this fleet can be calibrated according to the demand for a particular season. As demand for logistics services increases during a busy period, additional temporary workers are called in via crowdsourcing drivers who have free time to spare in a bid to accommodate clients’ requests.

In fact, Uberifying logistics marketplaces has proven to be lucrative —  NinjaVan CEO Chang Wen Lai told TechCrunch in April the company had achieved profitability in some large cities.

Also Read: Ninja Van scores US$30M led by Abraaj Group, will jump to new markets

It is little wonder why same-day retail delivery has become increasingly important for e-tailers, posing an acutely imminent logistical problem to these online business owners.

The same-day delivery just happens to be one of many logistical considerations these owners have and it is simply too much of a hassle to manage their own fleet of delivery workers so outsourcing helps to deal with the problem.

Moreover, these ‘Uber for logistics’ marketplaces give conventional logistics providers a run for their money by being able to do their job equally well, at just a fraction of the price.

More money pours into logistics start-ups

As logistics players tread further upon the path in e-commerce, it is only going to get more interesting. More opportunities are bound to unravel as more vertical markets see outsourcing as a solution to their logistical problems.

As of late, Lalamove has raised a figure of US$10 million from existing investor MindWorks, Appworks in Taiwan and Aria Group in Hong Kong, Crystal Stream in China and Asia Plus from Thailand. In fact, profitability is no issue for the existing cities they already established a presence in this year, leaving them more resources to devote to their plans for expansion into 30 more cities.

Amongst one of the earliest logistics startups in Singapore, Ninja Van also has massive plans in the making to own the title of the leading logistics marketplace in Southeast Asia. Currently, the scene in Southeast Asia does not have anything akin to the ride-hailing company Grab, known to be the leading platform in the region.

Also Read: A sunrise industry: Singapore’s YCH Group launches US$14.6M venture fund for logistics startups

But, with US$30 million worth of funding coming earlier this year, the money could help pave an inroad to the actualisation of this ambition.

In the region, we can surely expect to see more ‘Uber for logistics’ to come our way, but the real question is who ends up on top.

Only time will tell.

Carrie Er is a Marketing Communications Specialist at Arcadier, a SaaS company that powers next generation marketplace ideas. You can follow Arcadier on Twitter, Facebook, and LinkedIn for the latest insights on the Sharing Economy.

Photo courtesy of LaLamove given when company announced US$10 million funding.


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