Lalamove, an on-demand logistics service that lets users hail delivery vans with an app, will expand into twelve new cities in China after getting $10 million in fresh funding. The round was led by MindWorks Ventures with participation from AppWorks, Crystal Stream, and individual investors.
This doubles the total Lalamove has raised since its inception in 2013 to $20 million, including a Series A round it disclosed at the beginning of this year.
Lalamove’s expansion plan for the next three months, which includes Shanghai and Chongqing, will bring the total number of Chinese cities it serves to 20. It also operates in Hong Kong as EasyVan.
The startup’s goal over the next two years is to build its tech platform as it gets ready to launch in 50 new cities in China. Lalamove claims it recently completed one million deliveries and now counts 30,000 drivers on its platform.
Lalamove was founded as an alternative to traditional delivery services, which often operate like a traditional taxi company with a dispatch center. Blake Larson, Lalamove’s head of international, said small businesses often had to get quotes from four or five companies days in advance.
The complicated process put them at risk of missing shipment times, which in turn upset customers. Lalamove’s on-demand logistics service is like Uber, but instead of passenger cars, users hail licensed delivery trucks. While Lalamove can handle large-volume deliveries, its main customer base is small businesses and it offers services like shared trucks to help them save costs and motorbikes for time-sensitive items, like legal documents.
“Our primary market will still be small businesses because they have the most acute pain point,” says Larson.
One of Lalamove’s goals for its tech platform is to make it easy for current clients keep up with larger orders as they grow. For example, it will help them figure out the quickest routes in each city and how to optimize space on delivery trucks.
“We also look at the more complex orders they do,” Larson adds. “So if they have a distribution center and need to drop off orders at multiple retail outlets, we are looking at different ways to do that much more efficiently in the next stage.”
Lalamove’s closest rival is GoGoVan, another on-demand logistics service that has also raised funding to expand in China. It also faces the possibility of Uber and Didi Dache launching deliveries as the ride-hailing apps battle each other in a costly war to for Chinese consumers. (Uber has already shown an interest in logistics by experimenting with a service called Uber Cargo in Hong Kong).
Larson says Lalamove plans to differentiate by cultivating close relationships with its clients. While passengers may switch between ride-hailing apps depending on car availability or what city they are in, businesses are more apt to stick with one dependable logistics provider because they often need to call as many as a 100 vans a day and using multiple platforms is expensive and time-consuming.
“A business owner does not want to make that jump all the time, so what will decide the winner is that relationship, whether it is in person or if it is the technology that makes their lives as easy as possible,” says Larson.
Lalamove is still deciding which 50 Chinese cities it will expand into next, but will focus on ones with over 500,000 to one million people. The startup plans to enter new markets by working with strategic partners, including large retailers or freight providers who need last-mile delivery providers.