Startups

Lalamove aims to break into Thai delivery market

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Lalamove, a Hong Kong-based on-demand delivery app, will start providing same-day delivery services in Bangkok by June.

Lalamove is poised to enter Thailand's same-day delivery market as the Hong Kong-based no-frills messenger service plays catch-up with global logistics chains in response to a surge in online shopping.

Time sensitivity has become a key element in express delivery service, with same-day delivery becoming the next evolutionary step in parcel logistics as most people are simply eager to receive their parcels while merchants want speedy payments.

Lalamove will start providing same-day delivery services in Bangkok by June, following on the success of Hong Kong-based Kerry Logistics, which poses challenges for state-owned Thailand Post.

"The same-day delivery service will create a new revenue source," said Santit Jirawongkraisorn, regional director for city operations at Lalamove.

Competition in the same-day delivery sector is still in its infancy as there is only one major player, Kerry Logistics, dominating the market.

Mr Santit said Lalamove is on the verge of automating the delivery process to scale up service standards at no extra cost.

The average price range for delivering parcels is 40-60 baht each.

Lalamove is providing point-to-point, on-demand deliveries serving small and medium-sized enterprises. Deliveries include documents, cheques and food.

Next-day delivery now accounts for 95% of Thailand's logistic services, with the remaining 5% from on-demand delivery.

Mr Santit said the entry into the same-day delivery market is to escape the highly competitive on-demand delivery space, as there are many strong players, with new competitors increasingly jumping into the fray.

Chanon Klahan, managing director of Lalamove Thailand, said the company saw 600% growth in revenue from 20 million baht in 2015 to 120 million in 2016, thanks to huge growth in online retail and its aggressive business expansion.

In 2016, Lalamove registered 210,000 downloads in Thailand. The company had over 17,000 participating drivers.

Lalamove has operations in 40 cities in China, plus another five in Asean including Taipei, Singapore, Hong Kong, Malaysia and Bangkok.

Mr Chanon said Bangkok posted the highest growth for Lalamove in Asean and it expects to generate profits within the next two months.

Lalamove aims to increase its operation from 45 cities in 2016 to 100 cities across 10 countries in 2017.

Warawut Natpradith, assistant general manager at Kerry Express (Thailand), said speedy delivery has become a key element to differentiate services for online merchants.

"We believe same-day delivery will be the new normal for delivery options in e-commerce logistics soon, instead of 2-3 working days," he said.

Samorn Terdthampiboon, president of Thailand Post, said the state enterprise now also provides its Super Speed EMS service for same day delivery in Bangkok on a limited scale.

"We aim to boost our revenue stemming from EMS and parcel deliveries to account for half of the total by 2019, up from 46% of the 46 billion baht generated in 2016," she said.

Last year, two players entered the local express delivery market to capitalise on the nascent e-commerce industry.

They are SCG Yamato Express, a joint venture between Siam Cement Group and Yamato Asia Pte; and DHL, which set up a new operating unit, DHL eCommerce Thailand, to provide same day delivery service in Bangkok and 2-3 days in rural areas.

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