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“Uber for logistics” proves to be lucrative in Asia and Lalamove rounds up $10 million

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Have you seen a Ninja van or does its name ring a bell?  

I bet it does. You’d probably come across one of their iconic vans while stuck in a traffic jam. Their signature red-coloured van and its distinctive (also adorable) ninja character are too striking to miss. The courier van that you saw is likely to be on schedule for a same-day delivery to a customer who cannot wait to get her hands on the ruffled dress she bought just minutes ago.

E-commerce and its impact on the logistics industry

Given all the rage e-commerce is now across Southeast Asia, we can expect to see the same speed and efficiency in making online transactions happen for delivery too. As internet penetration rates elevate exponentially amid the rapid urbanisation of rural areas in many of the developing countries, more people than ever are shopping online.

In fact, logistical issue in e-commerce hits especially close to home for shoppers in Indonesia, boasting an astounding population of approximately 260 million people, as they are known to be wary of using credit cards for online transactions. 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 60% of them feel unsafe in divulging credit card details.

However, this 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 in the likes of 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.

Photo Source: Unsplash

Taking the Uber approach to logistics

Similar to Uber, these logistics marketplaces such as Ninja Van, have an elastic fleet at their beck and call. Amongst this fleet is a core group of workers, who are independent contractors hired by the marketplace itself. Nonetheless, the size of this fleet can be calibrated according to the demand for a particular season. As demand for logistics services increases in 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, in corroboration with the CEO of Ninja Van claiming their profitability in some large cities. It is little wonder as 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 that. 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.

Photo Source: Unsplash

More money pours into logistics start-ups

Long before most of us caught onto e-commerce, these guys behind “Uber for logistics” have already seen the immense potential for profitability in logistics as a need for it to catch up with the explosive e-commerce growth emerges. This enticed hopeful angel investors and venture capitalist firms alike to throw funds in, and they still continue to do as they have recently pumped in more money in these start-ups.

As of late, Lalamove has rounded up an astounding figure of $10 million from existing investor MindWorks, Appworks in Taiwan, Aria Group in Hong Kong, Crystal Stream in China and Asia Plus from Thailand in venture capital funding. 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 logistics scene in Southeast Asia has not seen anything akin to Grab, who is known to be the leading ride-hailing platform in the region. The $30 million worth of funding that came in timely earlier this year will pave an inroad to the actualisation of this ambition of theirs.

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

Well, we can surely expect to see more of such “Uber for logistics” to come our way but who do you think will come up on top? Only time will tell.

About: 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.

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