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How a Vietnamese logistics giant is staying nimble during a pandemic
[HO CHI MINH] Like many other organisations, Scommerce has been buffeted by the challenges thrown up by Covid-19. But the integrated logistics provider’s chief operating officer Hang Do says the company has been left relatively unscathed by the pandemic.
The company, better known in Vietnam by its two main brands — GHN and AhaMove — has had to be nimble in recent months. As governments and companies scrambled to contain the outbreak and introduce safe management processes, Scommerce and other logistics companies have seen rising demand for their services.
“The first week of the outbreak was a bit of a fire drill for us all, but we quickly adapted our operations to meet new government requirements,” says Ms Hang.
Despite these challenges, Scommerce considers itself “lucky” that it operates in an essential sector that is less impacted by Covid-19 compared with other sectors. “We have tried our best to keep everyone on the payroll while fighting in a very competitive market,” she says.
Ms Hang also credits the management team’s foresight and the right partnerships for Scommerce’s rapid growth. Founded in 2012, Scommerce offers its logistics services to millions of Vietnamese merchants and consumers today.
Scommerce services millions of merchants and consumers across Vietnam. PHOTO: SCOMMERCE
“The logistics industry is growing rapidly, and we managed to get a headstart just as e-commerce companies were finding their footing in Vietnam,” she says. An early-mover advantage may have played a part in helping Scommerce establish its footing, but the team’s vision of itself, more as a technology business than just a logistics player, is also one of its main strengths.
“We must be one of the very few players, if not the only player, where none of our founders had any experience (in logistics),” says Ms Hang. “We built the company from scratch by responding to what customers wanted. We are in an industry that is growing very fast and as our customers become more sophisticated over time, we have had to build the technology and operational infrastructure to meet their fast-evolving needs.”
Through the early years of Scommerce, Ms Hang remembers one partner that has stood by her company. Standard Chartered, which is present across all 10 Asean countries including Vietnam, partnered with Scommerce when the latter was looking for a strategic banking partner. Ms Hang credits the financial and advisory support provided by the bank as an important catalyst for the company’s growth.
Scommerce saw its logistics business grow with its steady partnership with Standard Chartered Bank. PHOTO: SCOMMERCE
“We started working with Standard Chartered when we didn’t have much money. We were a fast-growing logistics company but we didn’t make any profit and we had little capital. So I give the bank a lot of credit for believing in us,” says Ms Hang.
“About 85 per cent of our e-commerce transactions in Vietnam are cash-on-delivery (COD), so the amount of money we handle can come up to a few million dollars a day. All of this money is in change, or in Vietnam Dong, all over Vietnam. To improve these processes, we wanted a bank who could provide us with more seamless trade-related financing solutions and we eventually found that with Standard Chartered.”
The bank is also the first in Vietnam to implement virtual accounts; other banks in the country have since followed suit and started to offer similar services.
Mr Nirukt Sapru, CEO, Vietnam and ASEAN & South Asia Cluster Markets, shares “We offer instant FAST Pay 24/7 and our bank’s own payment gateway (Straight2Bank) to facilitate Scommerce’s merchants, clients, operators (truck drivers), so that they can process their orders in a timely, real-time manner by cooperating with local fintechs like NAPAS, VNPay etc.”
While Scommerce is now an established player, it has had to grow quickly and having “someone to hold your hand” through that process has been helpful, says Ms Hang.
“Standard Chartered has been one step ahead of anticipating our needs. We didn’t know what it’s like to run a huge business so having that level of support was very assuring and something I think growing companies need.”
Said Mr Sapru: “We constantly invest in our capabilities to ensure that we offer clients the right solutions they need for their development and success. The bank has continued to introduce solutions around the client’s working capital cycle and provide financial institutions access to funding. The bank has also expanded its mobile wallet capabilities to both payment and collections and implemented electronic tax payment services to help clients pay taxes and custom duties with ease and convenience.”
And, as an indication of their strong working relationship, Scommerce chose Standard Chartered to help them execute a number of significant M&A transactions, one of the 10 largest deals in Vietnam, in 2019.
Keeping ahead of the curve
Meanwhile, the logistics landscape in Vietnam has become more challenging in recent years, with regional players, including NinjaVan, J&T, and Best Inc, moving in. E-commerce platforms have also started establishing their own in-house logistics. According to the Vietnam Logistics Business Association, the country’s $40 billion logistics industry comprises around 30,000 logistics companies, including 4,000 international players.
But Ms Hang says that the company sees its independence as a selling point.
“Being an independent company allows us to work with different types of customers and really forces us to keep optimising on both costs and operations to stay competitive. We must prove to our customers that we are as good as, if not better than, their in-house services.”
To remain at the cutting edge, Scommerce has started to invest in their automation facility to further develop its existing infrastructure and optimise delivery costs for merchants. Their partners include Vietnam’s four largest e-commerce platforms — Shopee, Tiki, Sendo, and Lazada — as well as over 100,000 small and medium-sized online merchants.
Going back to fundamentals
These investments have paid off in the current climate. Ms Hang says the Covid-19 pandemic helped the organisation refocus on its business fundamentals: customers, operations, technology, and costs.
The evolving Covid-19 situation has allowed for Scommerce to ramp up its capacity to move goods and services. PHOTO: STANDARD CHARTERED BANK
“We have spent the past six months improving our customer touchpoints, both online via our customer portal and apps, as well as offline via our delivery fleet. This is on top of ensuring a top-of-market performance measured by lead-time and reliability metrics.”
“Technology constantly evolves to adapt with operational and customer demands. SME sellers in Vietnam are quite tech-savvy, and demand transparency and usability across our tech products. Obviously, the Covid-19 context also urges the management team to examine cost efficiency more thoroughly.”
“When we started, we wanted to be like a technology business so we built everything from scratch. That gave us a huge advantage because our customer base is made up largely of e-commerce customers.”
Standard Chartered is also supporting Scommerce’s future growth trajectory; they recently approved the request for a short-term credit facility to support their business operations amid the still-evolving Covid-19 situation.
Says Ms Hang: “What constantly impresses us is the resilience and entrepreneurial mindset and spirit of the Vietnamese people. Our merchants are working very hard to grow their online businesses. Our goal is to continue to provide the most reliable service to online merchants and omnichannel businesses. We aim to stay at the top of the market and top of mind for customers with logistics needs.”