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Delivery van-booking apps seen having good prospects in Asia

Absence of proficient logistics infrastructure and growth of e-commerce ensure greater demand: industry watchers
Monday, January 26, 2015 - 05:50
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(From left) Mr Lam, Reeve Kwan and Nick Tang, co-founders of GoGoVan. In terms of volume, GoGoVan reportedly processes over 20,000 bookings across its markets on an average day; it is now valued at close to US$100 million.

Singapore

SINGAPORE is not about to witness the same war embroiling delivery van-booking apps like it did with taxi-booking apps late last year, industry watchers said, referring to the competition that saw at least six taxi-booking apps fighting brazenly for market share here. But prospects for delivery van-booking apps remain positive in the rest of Asia, they noted, amid greater demand due to the absence of proficient logistics infrastructure and the growth of e-commerce.

For starters, the Singapore market for such apps is currently small, with only two major players - GoGoVan and EasyVan - plying the roads. Both are Hong Kong-based, and at best one-third the number of taxi-booking apps here, which include San Francisco-based UberTAXI, Vertex Venture-backed GrabTaxi and Singapore's ComfortDelGro.

On why Singapore hasn't started its own GoGoVan, Christopher Quek, director of Angel's Gate Advisory, said: "I presume that the independent delivery van owners have already signed on with more established logistics and courier providers and there are strict regulations that they cannot deliver goods for other companies."

In terms of volume, GoGoVan reportedly processes over 20,000 bookings across its markets on an average day, a tenth of what GrabTaxi averages - 259,200 bookings - daily. The latter operates in over 10 cities in Australia, Greater China, South-east Asia and South Korea while GrabTaxi operates in 17 cities in South-east Asia.

In Singapore alone, GoGoVan has over 3,800 registered drivers, while GrabTaxi said it has the second-largest fleet of taxis on its platform; it did not reveal any numbers. ComfortDelgro, the largest operator here, owns close to 17,000 taxis.

Moreover, the fact that Singapore has an efficient transportation network and no lack of good logistics providers renders it a minor market, said Mr Quek. "Singapore is well overcrowded with players like Ta-Q-Bin, Singapore Post (SingPost) and many courier and logistics providers who are offering very competitive rates. These third-party apps will succeed more in crowded secondary metropolitan cities in the Philippines, Indonesia and Malaysia where there is an undeveloped transportation network and a significant lack of good delivery providers fulfilling the demand."

But there are also challenges abounding in these countries, he cautioned, such as goods getting misplaced in transit, training delivery van owners to use the app and building a trusted network of vans.

Nonetheless, app providers GoGoVan, EasyVan and even Uber - which just over a week ago debuted UberCARGO in Hong Kong - believe there is significant demand for such services in Asia, each having raised substantial funding from global investors to capture that very demand.

GoGoVan, for instance, has raised US$16.5 million from China's Renren and Singapore's Centurion Investment Management, while EasyVan recently bagged US$10 million in its first funding round led by Crystal Stream Capital. Uber, in a league of its own, has amassed some US$3.3 billion since its founding in 2009.

"The market is getting crazy now!" said Steven Lam, co-founder of GoGoVan. "We expected Uber to come to our area, so it's no surprise for us. Clearly, with their resources, they will be one of our strongest competitors."

According to Mr Lam, aside from UberCARGO and EasyVan, several call centres make up the rest of the Hong Kong delivery van-booking scene.

In fact, the decision to go with Hong Kong as UberCARGO's first market came easy for the San Francisco-based startup. "We see an enormous need here. Uber's mission is to reduce congestion and help make cities more efficient ... UberCARGO, an Uber Everything experiment focused on making every day city living easier so you have more time to do what matter most, speaks to that ambition," said an Uber spokesman.

He did not comment on UberCARGO's plans for Singapore.

For EasyVan, it sees the market for last mile logistics in Asia backed by a huge, established demand. "Whether it's an individual sending a newly purchased bed home from Ikea or a law firm sending time-sensitive documents across town, people are always moving things," said a spokeswoman.

The booming e-commerce scene is also boosting demand for such logistics services. New entrants like Lazada, RedMart, and Carousell that only have online storefronts can turn to EasyVan and the like to manage their delivery demand and avoid high logistics costs, said industry watchers. Meanwhile, big-name players like Alibaba, SingPost, Amazon and Google are increasingly investing in new logistics models and technology.

Said Mr Lam: "The growing acceptance of disruptive technologies in traditional industries - such as transport and logistics - is evident in the popularity of taxi-booking apps. And this, too, has boosted the growth of delivery van-booking apps."

The two-year-old GoGoVan is now reportedly valued at close to US$100 million, in what looks like a clear testament of this burgeoning market.

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