Exclusive | Thai-listed logistics firm Begistics invests in startup Sokochan

In an exclusive interview with KrASIA, Thai e-commerce and logistics startup Sokochan talks partnerships, expansion plans and more.

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Exclusive | Thai-listed logistics firm Begistics invests in startup Sokochan

Thai e-commerce fulfilment startup Sokochan has recently raised a six-figure sum (US$) from locally listed logistics conglomerate Begistics PCL which will hold a 10 per cent stake in Sokochan. The latter will act as more of a strategic investor than a financial investor, said Adrian Stewart, Chief Strategy Officer at Sokochan to KrASIA.

Sokochan will also use the new funds to expand its services outside of Thailand. Stewart shared that the startup has already signed a joint venture agreement with a local firm in the transport and warehouse business in Malaysia. It intends to be operational in Malaysia by October 2018.

Signing of the agreement

Founded in 2014, Sokochan helps merchants with storing their goods, picking out the ones that were ordered, packing and shipping items out to customers. It operates a 1200 sqm warehouse and is looking to operate a new fulfilment centre with Begistics by end-2018.

Begistics, which was incorporated in 1995, operates a port, provides cargo transport, warehousing, customs clearance and other related services.

Stewart also commented on the state of e-commerce in Thailand, noting that the industry has been growing, especially with Chinese giants like Alibaba and JD entering the fray.

In April this year, Alibaba announced that it will invest US$320 million into a Thai digital hub bringing agricultural goods from the Southeast Asian nation overseas. In last September, JD and Thai retail conglomerate Central Group formed a US$500 million joint venture to boost the Chinese company’s operations in Thailand.

Growth spurts are often accompanied by pains. “However, in terms of Thai logistics, the increased in e-commerce transactions puts additional pressure on last-mile shippers and with cut-throat competition, many companies are ‘bleeding'”, he said.

The cheaper prices may lead to a lower quality of service, he shared, adding that there has been a high turnover when it comes to last-mile delivery providers. Many have come and gone, he said.

 

The Sokochan journey

When Sokochan first started in 2014, its biggest challenge was in merchant acquisition and finding clients to fill up its warehouse space. However, as the e-commerce market in Thailand grew, demand for its services took off as well. For today’s Sokochan, the challenge lies in ensuring that the company has enough physical space to accommodate its merchants’ growing orders.

Sokochan’s warehouse

It generates revenue through several means: it charges merchants for storage, picking and packing services as well as value-added features like allowing cash on delivery, and earns a monthly fee from sellers with existing warehousing resources but who wish to use the Sokochan platform to manage other operational needs.

Cash is still the preferred method of payment for 70 per cent of Thai online shoppers, with 6.7 million out of 68.86 million Thais holding 19.8 million credit cards.

Sokochan also works with Shipjung.com, an affiliate company that allows home-based merchants to pack their own items, prepare labels, and drop off packages at designated locations without queuing up at the post office to mail out items or make payment at the counter.

Other than operating a fulfilment unit, Sokochan has also developed an order and inventory management platform, that manages a combined 400,000 items in stock across three physical locations and ships up to 4,000 orders daily.

Stewart added that this platform has been directly integrated with popular marketplaces like Lazada and Shopee, allowing orders to be fetched automatically and shipped out the same day. Third party sales and stocking companies can also integrate their solutions with the Sokochan system using an Open API, so merchants can have more options and choice in selecting features they require.

On-site assistance from Thailand Post and Kerry Express

Sokochan has also formed partnerships with last-mile companies such as Thailand Post, Kerry Express and Alphafast, he added. State-run postal provider Thailand Post and parcel delivery firm Kerry Express currently have on-site teams based in Sokochan’s fulfilment centre to accept and process packed orders, said Stewart.

Going forward, Stewart expects Sokochan to add more services to its range of offerings to increase its reach.

For example, leveraging on its joint venture with QuickService, a local company operating 250 stores in Thailand offering postal services, Sokochan can convert the physical stores into e-commerce service centres to help buyers make online purchases and payments, as well as to help sellers in packing or shipping their goods.

 

Editor: Ben Jiang