<Editor's Pick>Delivery by motorcycles, 'Uber for logistics' startup Lalamove 's new try in Southeast Asia and South Asia

May 08, 2019 Logistics HuoLaLa DiDi

On a Sunday afternoon, in Indiranaga, Bangalore's upscale business district, a 150-square-meter showroom for a sports fashion brand was filled with stuff, not full of customers, but full of cardboard boxes. The more than 200 cartons filled with old things were originally intended to be piled up in suburban warehouses, but the trucks of local logistics companies have not arrived, and they have been late for more than six hours.

While in the Lalamove’s dictionary, there is no lateness.

The huge business opportunities in the Indian market have attracted Lalamove, and it promises to solve this problem quickly, with its efficient truck driver network, which can deliver goods quickly within an hour. At present, India's $160 billion logistics market is huge, but it has no rules.

Blake Larson, head of Lalamove International, said in an interview with The Passage that users can interpret them as Uber and Ola in the logistics version. As a shared-model logistics company, Lalamove connects its truck drivers with SMEs through its own platform to meet their day-to-day delivery needs.

“After talking to the truck owner and the driver, we found that these drivers can only deliver within three times a day, which is very inefficient. We should be able to help them improve efficiency.” Larson said, “We use the model of DiDi Chuxing, Uber, Ola and other ride-hailing companies."

Lalamove, which was founded in 2013 in Hong Kong, China, entered mainland China in 2014 and began to enter Southeast Asia at the same time. It has now landed in nine countries, and trucks and motorcycles on the platform can be delivered to the station within one hour. Larson said that the company now has more than 2,000 truck drivers, and the number of registered users in a month exceeded 20,000.

In January 2019, Lalamove landed in Mumbai and officially announced its entry into the Indian logistics market with a total amount of US$160 billion. In just one month, 2,000 trucks and 8,000 motorcycles have been registered.

Lalamove's target users are mainly small and medium-sized enterprises in India, including a small number of B2C businesses, such as transporting packages under 20 kilograms on motorcycles and helping people move home.

The successful experience of using motorcycle delivery comes from the Southeast Asian market.

Compared to the truck-and-van-only and mature Chinese market, multi-vehicle “mix and match” is more suitable in Southeast Asia, especially with motorcycles. In Malaysia, Indonesia and Vietnam, the delivery vehicles are even more varied, and cars, trucks, vans and motorcycles are all coming. Lalamove said it will use mini trucks, tricycles and motorcycles in India to guarantee their one-hour delivery promise.

Timing is very important

Santosh Pai is a cross-border investment expert between China and India. In the past, he has advised Chinese venture capital firms on Indian investment. He believes that Lalamove will definitely bring unique value to Indian companies, given that China's logistics industry is very mature. They are strong in terms of proprietary technology, experience, technology and funding. But if they choose to do it themselves (rather than investing), the result may still need to be looked at.

“Now it is time for them to accumulate experience. The Indian market is growing rapidly, especially in industries such as e-commerce, food distribution, and groceries. I believe they will succeed,” Pai said.

However, Pai believes that in order to stabilize the market in the Indian logistics sector, Lalamove needs to be thoroughly familiar with the Indian market.

Charles Brewer, former CEO of DHL, is very optimistic about Lalamove's entry into India. According to him, despite the large number of Indian logistics companies, there are few that focus on the one-day delivery and the one-hour delivery service.

“Lalamove’s rivals are not Delhivery, ecomExpress, and Blue Dart, which are the next day or two days of Indian logistics companies. What they really need to pay attention to are urban consumers who are accustomed to door-to-door delivery and have high requirements about arriving time.

Although Lalamove-style “one-hour delivery” is not possible, Shadowfax, headquartered in Bangalore, is still one of the few companies that claims to be able to deliver one-day delivery logistics, providing delivery services to multiple e-commerce companies and online grocery companies. Since the Indian Amazon has upgraded two-hour delivery and one-day delivery as regular service, users of other e-commerce platforms are now expecting delivery speed to be faster and faster.

“Five years ago, the demand for 'one-day delivery' on a global scale was not high, but the e-commerce sector is growing very rapidly, which is what Lalamove focus on,” Brewer said.

Lalamove has been negotiating with Indian e-commerce companies to provide logistics services. "E-commerce is growing rapidly around the world. Many Indian logistics companies have begun to provide services to e-commerce companies. We are also planning to do so, but we will carefully choose partners," Larson said.

Previously, Shadowfax co-founder Vaibhav Khandelwal told The Passage, “The times have changed, and now people are asking for fast delivery. Customers who buy a small amount of daily goods often want to quickly deliver from nearby grocery stores. So, delivery of groceries within 30-90 minutes will be a breakthrough."

According to Indian rating agency ICRA, the Indian logistics industry is expected to grow at a rate of 8-10%. The 2017-18 economic survey shows that with the implementation of the GTS (Goods and Services Tax Act), the industry is expected to grow from the current $160 billion to $215 billion over the next two years.

In 2017, China's same-city cargo transportation market was about 1 trillion yuan, and Lalamove, 58 Suyun and Banyunbang occupied the majority of the market. Larson believes that although the Chinese market is still growing, it is becoming saturated. On the other hand, consumers in many cities in India have more than 1 million people, and the growth rate may be similar to that in Southeast Asia.

Lalamove's SME business accounts for more than 97% of Southeast Asia's business. “Although our target customers are SMEs, we are also negotiating with large companies. For SMEs, timely delivery is a top priority. We must ensure that there are enough drivers to deliver within 30 minutes.” Larson said.

A large number of challenges are waiting for Lalamove

Although the Indian market has great potential, it is a lot of resistance for new players. Industry insiders in the Indian logistics industry explained to The Passage that Lalamove may be subject to two obstacles in the Indian market: poor infrastructure and price sensitivity.

“India's infrastructure is really a headache. One of Lalamove's value propositions in the Southeast Asian market is that it can be delivered within an hour. If they want to stick to the idea of one-hour delivery here, it will be difficult: traffic, road conditions, weather condition and the population are full of variables. This is indeed an exciting opportunity for the Lalamove, but it is also full of challenges,” Brewer said.

According to Brewer's understanding, Lalamove should make adjustments according to the situation in the Indian market. In addition to the delivery on the same day, the next day delivery service should be carried out.

In India, Lalamove faces competition from players in the B2B space such as Porter, Shadowfax and Lets Transport, and Dunzo, one of the fastest growing delivery platforms, will also compete in the B2C field. According to Mint, Google's investment in Dunzo is also planning to enter the B2B space.

In contrast to Dunzo's hiring errands, Lalamove is primarily a platform technology that connects truck drivers to customers, a model that saves money.

“One of the reasons Lalamove leads in Southeast Asia is its light asset model, where most of the business is taken over by a deliveryman like me. This is a very interesting business model.” Kishan Mishra said that he had been in Delhivery, India. Worked with a global logistics company in Southeast Asia.

Larson agrees that there may be some overlap between Dunzo and Lalamove's business scope. "They (Dunzo) are more concerned with individual customers, and our focus is mostly on SMEs," he said.

Pushkar Singh, co-founder of the logistics company Lets Transport, said there is a huge difference between Chinese and Indian SMEs.

“Most of the SMEs in China operate factories, which may require 20 deliveries per day. Indian SMEs are basically small shops or furniture stores. It is not bad to ship three times a week,” Singh said. He feels that it will be difficult for new players to break the 10-year cooperation model between Indian SMEs and truck drivers.

“The links between Indian truck drivers and SMEs are quite close because they have been working together for decades. To win market space, you have to give a big discount,” Singh explained.

Lets Transport works primarily with FMCG, e-commerce and large retailers, with major customers including PepsiCo, Marico and more. The company claims to have more than 25,000 trucks, and in general, 7,000-8,000 trucks will ship the goods at the same time.

“Looking at the achievements of their other markets, I think Lalamove will be a great competitor. The Indian logistics industry is still very basic, and we need more new-age companies to help people adapt to new technologies,” Singh said.

Photo from The Passage.

This is an article from the Wechat Subscription The Passage(ID:passagegroup), translated by Xu Yin