TRANSPORT & LOGISTICS | Krisana Gallezo-Estaura, Singapore

HK’s Lalamove shares global expansion experience with Singapore as test bed

Singapore average transaction value is up to twice that of HK.

Asian Intra-city delivery platform, Lalamove, was originally founded as EasyVan in Hong Kong three years ago. From a small beginning, the on-demand van rental start-up has seen a stellar growth since 2013. It now connects customers to its more than 50,000 professional delivery drivers in Hong Kong, Singapore, Bangkok, Taipei, and 20 cities across China including Shenzhen, Guangzhou, Beijing, Shanghai, Chongqing, Chengdu and many more.

It does not stop there. To aid its expansion in China and Southeast Asia, Lalamove recenty raised US$10 million in funding. The latest round led by its existing investor Mindworks Ventures brings the total amount of funding raised by the company to US$30 million. But before expanding to various countries in the region, it is important to note that Singapore is actually its first expansion city, which in a way served as its test bed.

Blake Larson, Head of International for Lalamove, shared that expansion to other countries outside Hong Kong has not been that easy. Among all the countries, Singapore, he said is the most challenging market they have so far.

“We started in Hong Kong as the market for deliveries has always been a very impromptu service where most people request for vans like calling for a cab (using call centres). Hence, the progression to an app service was natural. However, the experience of launching and expansion to other markets was vastly different from what we expected as we eventually realised that Hong Kong is extremely unique in having such a natural market,” he said.

In Singapore, Lalamove was actually launched in April 2014, but was delayed for three months as they decided to customise the app for the local market. The user app was officially launched in July 2014.

“As the first international city to be launched outside of Hong Kong, we were excited to test the model and the team was way over the moon when we had our first order. Looking back, we eventually ended the first day with only 14 orders. But by the end of the week, we had already delivered very strange and interesting stuff like a Go-Kart for a local (future) F1 racer, multiple business parcel deliveries and even had a driver queue up at Chomp Chomp to order a stingray for a user,” said Larson.

Larson believes that the potential of Singapore market is huge and they made further strategic decisions after that to target different groups of long term users.

First, Larson shared that they saw the potential of the market for fulfilment of last mile logistics in the market, on top of the concierge needs within the consumer market. On top of that, Singapore, he said is an extremely complex and sophisticated market compared to most parts of Asia. “After cracking the code for the driver supply in Singapore, the future growth and development of the product is a key reason for our choice of Singapore for our first expansion city,” he said.

The spotlight on SEA e-commerce is also an important reason for Lalamove to ensure that future strategic product direction is driven by the market requirements they see in Singapore. The geographical proximity of Singapore to key future markets like Indonesia, Malaysia and Vietnam, he said, are also critical for future hubbing of activities for the region.

According to Larson, Singapore is the most costly market they have launched their business in so far. That said, in terms of transaction value organically, Singapore has the highest transaction value across ALL the cities they have launched so far. Singapore average transaction value is approximately a third to twice the price of average transaction value in Hong Kong.

“The republic's operations is the closest to profitability (which we are on route to achieve this year) but it is made possible only with very strict budgets and control on the way we spend in the city. Business is robust but it is always a tough situation when potential competitors have a lot more cash to artificially lower the cost of logistics,” he said.

Larson shared that the highest cost in Singapore is talent acquisition in any case. They see a lot of great talent in the city as well as amazing foreign talent with exceptional skillsets. However, the costs of talent, he said, is a crucial factor as they expand the team especially on maintaining the operation. “We started the business with only 4 local hires to a total headcount of more than 15 in Singapore currently. Marketing costs come second and securing a strong driver supply continues to be our focal point as we build the business,” he said.

Other than differing pricing concepts among business users, Larson observed that Singapore is a very adaptive market and the high mobile penetration as well as open-mindedness of the population here has made their launch smooth.

“Consumers and business users are not used to the idea of getting items delivered to customers immediately. This mindset is gradually changing through the years.
As a sophisticated market, the concept of variable costs (even if it is cheaper in the long run), seems to be an uncomfortable concept for most businesses. We have since launched a few beta pricing models to define how we can better offer the best and fastest services for businesses in Singapore. With successful models defined, we will build our technology to back these services as we expand,” he said.

Lalamove revolutionizes intra-city delivery with features such as real time order matching, delivery tracking, 24/7 services and drivers rating; fulfilling customers’ moving needs and at the same time helping drivers get more business. Furthermore, customers have the convenience of using their smartphone or computer to place and track orders in a couple clicks.

With regards the recent funding, Larson shared that most of this round will be invested into enhancing marketing awareness of their services and branding with the goal of expanding market share and new markets. Since most of their cities are in the midst of monetisation, proving a sustainable and strong operational model, Lalamove aims to expand their offering to inform and educate businesses and consumers about the convenience and viability of leveraging on a platform for logistics services.

For Singapore, other than further benefits for their driver community, they are going to continue to provide more complex product enhancement for local users. “Given the more sophisticated market and strong competition, the city will be deeply involved in the global product direction as well as playing a more strategic role as we expand our regional footprint in South East Asia,” said Larson.

According to Larson, te are raising another sum within such a short time as they are also looking to use these funds to support the strong growth especially as their model has proven to be very scalable regardless of location.

“Expansion to other SEA cities are already in progress and we are already evaluating the expansion to other regions as soon as we finalise the global business expansion plan. This round is just a bridge round as we continue to push for profitability across most of our operational cities this year,” he said.

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