Lai Chang Wen, a Singaporean who had started a men’s clothing line, knew first-hand that traditional logistics companies weren’t catering well to online sellers, so he teamed up with two friends to rebuild the logistics sector in Southeast Asia for the e-commerce era. This story of how Ninja Van got started has been told many times over.
Lai’s pivot from fashion to logistics, which happened in 2014, proved to be good timing. As Southeast Asian e-commerce platforms grew, so did the need for reliable logistics firms. Today, Ninja Van partners with pretty much all the big players, including Lazada and Shopee.
The startup also has heavy-hitting investors. It recently scored funding from Grab. The terms of that deal weren’t disclosed, but in previous rounds, it raised a total of USD 117.5 million from investors including international parcel delivery group DPD.
Ninja Van’s business is built on two core beliefs. First, fully employed delivery fleets work better than freelance contractors. Secondly, C2C sales through social networks like Facebook and Instagram will grow, not shrink, in Southeast Asia even as e-commerce platforms become more dominant.
In a recent interview, Lai Chang Wen told KrASIA more about his ideas and what to expect from Ninja Van’s partnership with Grab.
KrASIA (Kr): Ninja Van is often mentioned in one breath with other regional logistics startups, like GoGoVan or Lalamove. Help us understand how Ninja Van is different.
Lai Chang Wen (C): We’re completely different from those two. They specialize in point-to-point deliveries, we run a hub-and-spoke business.
GoGoVan and Lalamove use the Grab model, they work with independent contractors. We consider FedEx and DHL to be our competitors. We have our own fleet of 15,000 vehicles. We have 800 logistics hubs around the region. We use trucks, passenger planes, and boats to connect these hubs. We also have 2,000 pick-up and drop-off points across the region. These are either our own stores or run through a franchising model. In Singapore and Malaysia, we work with convenience stores, in Indonesia with cellphone shops.
Gig economy people tend to think that “Uber for this, Uber for that” works best. We always knew we needed a network backbone [formed by our own vehicles and drivers] to move parcels over long distances at low prices.
We’ve seen that full-time drivers are more productive than part-time drivers. They only have a three-block radius to operate in, know this area inside out, and can truly optimize routes and delivery times. The sharing economy model is much less efficient. Having full control over your staff just makes things much more productive.
Kr: So what’s going to come out of the collaboration with Grab?
C: As I just explained, from a fundamental viewpoint, we are very different businesses. But that means there are many things we can explore with Grab as a partner because we each get perspectives from the other side.
The main function of Grab’s Express courier service is to solve instant and same-day deliveries within one city. But if you’re sending something for next-day delivery through Grab, this will soon be supported by Ninja Van.
Kr: How has Ninja Van’s business changed from when you started to where you are today?
C: In our first year, we were only in Singapore, and we found our feet. Then came the expansion to Indonesia and the rest of the region. We needed the first-mover advantage in these markets, and we hired locals for local context and knowledge.
We hire a mix of people with backgrounds in the logistics industry, and some with e-commerce backgrounds. We wanted a fresh perspective.
Being regional and focusing on e-commerce give us a competitive edge. Incumbents see less, they only see their own country, and they have less foresight about where e-commerce is going. It can be harder to change something than to build it from scratch.
When we started, our initial focus was on e-commerce, the B2C space. Now we also provide options for multi-channel sellers. Companies and individual sellers typically use a variety of online channels. They switch from one to the other and have specific needs as a result.
One regional innovation we introduced is called Ninja Packs. Sellers can stuff as much as possible into one standardized box. It’s an easy value proposition.
Platforms make up about 60% of our e-commerce volume. Another 20% comes from sellers on Instagram and other social media channels. The remaining 20% comes from niche players.
We see social commerce growing quite strongly. It’s not going away because social commerce is a nice way to shop. Facebook might wake up to the social commerce opportunity. It has started this with Marketplace.
Kr: Describe some of the major flows of goods you see. Who is sending what, and to where?
C: We see an increase in cross-border shipments coming in from China. Southeast Asia is their avenue for growth. We’re in a good position here because it’s hard to find another logistics firm that can deliver to all homes in Southeast Asia. Even in remote areas, we have complete coverage.
A sizable part of our business originates from China. B2C, from a Chinese seller to a buyer in Southeast Asia, makes up about a quarter. The rest is domestic distribution. But even in what we see as domestic distribution, the goods typically also come from China and were purchased in bulk, B2B.
We currently focus on domestic distribution, where we are seeing 10% growth, but we are making inroads in delivering in bulk from China. It’s in our next phase of development and we expect even higher growth in that segment.
Intra-Southeast Asia, we don’t see much flow at all. If anything, in the next ten years, Vietnam could take that role. Vietnam is the only country with the macro policies to spur a significant manufacturing industry.
The flow from Southeast Asia to China is also still quite limited. It’s only for certain products.