An e-commerce revolution is imminent in Southeast Asia after Alibaba’s investment in Lazada, but who is going to power the unsexy, unappreciated but ultimately essential service of delivery?
Right now, the region’s logistics is fairly scattered with the top firms differing from country to country and that’s where a startup called Ninja Van hopes to make a difference. The Singapore-based company today announced $30 million Series B round aimed at building it into the go-to partner for anyone selling online in Southeast Asia.
No regional partner
Two-year-old Ninja Van is essentially a plug-and-play logistics partner that gives e-commerce companies reach to customers across Southeast Asia. That might sound simplistic — the company does say it is “powered by proprietary cloud-based technology” — but the idea is to make the challenging issue of logistics partnerships in Southeast Asia simple.
While the region is attractive for its cumulative population of over 550 million people and an emerging middle class that is already mobile internet savvy, the day-to-day process of managing a business in Southeast Asia’s six biggest countries is like running, well, six different businesses. Logistics is an essential component of e-commerce — the final loop with customers — so picking the right partner in six markets requires six different research efforts, six different partnership decisions and six relationships to manage.
“There are no last mile companies that are present across the region,” Ninja Van CEO Chang Wen Lai told TechCrunch in an interview. “The likes of SingPost, Malaysia Post and [Thailand’s top logistics firm] Kerry are only present in their own countries. So when [e-commerce] giants want a single logistics player that can provide a seamless experience across the region, there is nobody to turn to.
To fill this gap, this Series B round — led by the Abraaj Group with existing investor Monk’s Hill Ventures and new backers B Capital Group and YJ Capital (Yahoo Japan) — will fuel an expansion to cover Southeast Asia’s core markets. (Ninja Van raised a $2.5 million Series A round last year.)
The company is presently in four countries — Singapore, Malaysia, Indonesia and Vietnam — and it intends to add Thailand and the Philippines to that list before August. Rather than simply being in countries, the Ninja Van CEO said he wants to spread its logistics roots beyond the biggest cities to tap into tier-two and -three locations.
“We are making a concerted effort across the region, and not just in tier-one cities,” the 28-year-old added. “It makes a big difference.”
Helping E-commerce Grow
In addition to geographical expansion plans, the money will also go towards offering more specialized services.
As we pointed out last week, Lazada’s landmark Alibaba investment was somewhat forced since the company ran out of money. Why did that happen? There are many factors, of course, but overly aggressive predictions and slower-than-expected market growth were two major factors. Lai believes that Ninja Van can help here.
“The [e-commerce market in Southeast Asia] is facing a lot of roadblocks for expansion. Our value-added services — like cash-on-demand, services in out-of-reach-places, and economically-priced deliveries — can come together to help e-commerce grow,” he explained.
Ninja Van CEO Chang Wen Lai
Challenges aside, Alibaba’s entry — which consisted of $500 million in secondary share acquisition and a $500 million invest in Lazada — is expected to be a precursor to many other big names stepping into Southeast Asia.
“It’s the next important growth market after India,” Lai remarked. “A lot of investors and global companies are looking at this part of the world now and figuring out if it makes sense to enter.”
Tying up with the Dubai-based Abraaj Group, which manages $9.5 billion in investments Africa, Asia, Latin America and the Middle East and has international business contacts, will help open doors, he believes.
Not that Ninja Van immediately needs their custom. It claims to have 3,000 customers already — including Rocket Internet’s Lazada and Zalora — with around 15,000 deliveries per day. In some large cities, the company is already profitable, Lai added.
Like established logistics firms, it charges businesses per package but its approach to fleets is quite unique. It owns and runs a primary fleet in each city, which is augmented by a reserve fleet that consists of crowdsourced recruits (like taxi drivers, or the general public) and, interestingly, other startups, too.
“We give [startups] our fleet management system [to help them manage their own delivery people better] and in exchange they provide a reserve fleet. It gives us very elastic capacity,” Lai explained.
That’s particularly useful in peak times — like the Christmas period — since it allows Ninja Van to pull in more delivery staff without having to expand its capacity permanently and watch the additional workers sit idle when not required. Typically, such temporary workers might account for 20 to 50 percent of deliveries during a peak period.
Startups are compensated for providing their ‘spare’ workers and, while Lai admits that the rate paid per delivery is perhaps lower than established competitors, he said that Ninja Van’s technology enables its crowdsourced workers to actually earn more by delivering more packages for their time. At the same time, he claimed, the company can match the delivery rates of its competitors and still be unit profitable — the difference for customers, he said, is that the company offers a more efficient and transparent service.
With just three percent of commerce happening online in Southeast Asia, it’s very much a waiting game for Ninja Van and others in online commerce needing scale. But the signs are certainly promising for the long-term.
“We aim to be the logistics fabric across the region, not necessary number one in, say, Jakarta,” Lai said.