Singaporean delivery startup Ninja Van aims to be among the top three players in the market in three years by introducing same-day delivery services and undercutting established players like Kerry Express.
Ninja Van entered the Thai market in 2016, and holds close to 2% of the business-to-consumer (B2C) and consumer-to-consumer (C2C) e-commerce delivery market, but is aiming for the top echelons, said Victor Chou, Thailand head for the company.
Last year Kerry Express was regarded as an upstart dark horse looking to challenge the supremacy of Thai Post by emphasising tracking and reliability. Today, the Hong Kong-based company has a larger network than Thai Post, and is fighting to defend its market share against well-funded startups.
Mr Chou admits Ninja Van's underlying infrastructure is very similar to that of Kerry Express, which holds upwards of 50% of the C2C delivery market, and operates more service points than Thai Post. Both companies operate on a hub-and-spoke system, which differentiate them from more expensive point-to-point services like Line Man.
Victor Chou, Thailand head of Ninja Van
The Thai unit of Ninja Van logged 300% growth last year, and aims to grow 200-300% yearly over the next few years, fuelled by a series of capital injections.
Mr Chou did not disclose the amount the group raised in its recent C series round, but Tech in Asia estimates the company raised US$87 million (2.72 billion baht), 33% more than Grab raised in its 2014 round C.
French parcel delivery company DPD group is now Ninja Van's largest stakeholder, with 32% of the company.
The company previously raised $32.6 from investors and issued $120 million in share capital. Part of the funding will be used to expand the company's reach in Thailand, and upgrade its technology, he said.
Ninja Van delivered 2 million parcels in Thailand last year, but is playing catch-up with Kerry Express, which delivers an average of 800,000 packages a day in the country.
"Our competitive advantage relies on our relationship with suppliers, our technology, and our price. We aim to be cheaper than Kerry Express and other premium services," said Mr Chou.
Part of its strategy focuses on increasing coverage from 35 to 55 provinces by the end of the year, and on rolling out same-day delivery by the first quarter of 2019, a feature consumers have come to expect. Kerry Express' one-day delivery services cover 99.9% of the Thai population.
In March, Kerry announced it would invest 1.8 billion baht to double the size of its Bangkok same-day delivery network, and to expand its service points from 1500 to 2500 by the end of the year.
Both companies focus heavily on technology and have established relationships with key e-commerce players like Lazada, although Ninja Van's geographic footprint is larger. Ninja Van, for example, is a major partner with Lazada across the latter's six markets, while Kerry Express only delivers Lazada products in Thailand.
The last prong of its strategy is maintaining lower prices than its competitors. Both players have grown used to burning through funding to push forward aggressive pricing strategies.
Kerry Express took on losses in Thailand for 12 years before turning a profit last year. Mr Chou said it would take Ninja Van around five years to become profitable in the Thai market.
Ninja Van's services start at 35 baht, which is also Kerry's starting cost for parcels service at its Tops or FamilyMart outposts, a result of a close partnership with Central Group. Kerry also recently introduced 30-baht delivery from its parcel shops.
For years, couriers have attempted to transform the highly commoditised industry into a less price-driven sector by providing a host of value-added services.
For its part, Ninja Van is betting that live-tracking services, and at-home pickup are the keys to growing its consumer base.
It is also exploring the possibility of installing delivery lockers around the city, although Mr Chou said Thai customers may not be ready for the feature yet.
"Thai consumers may not have the discipline to pick up a package within three days. Lockers will be a money-losing proposition if packages are left there for long periods of time, or are returned to stores," he said.
E-commerce market
The market is growing rapidly, however, and substantial changes in market share are within the realm of possibility.
"The e-commerce delivery market in Thailand is growing 20-30% this year on the back of similar growth in the e-commerce market," Mr Chou said.
In Thailand only 2-3% of purchases are conducted online, as opposed to 15-20% in markets like US and China, which indicates that the market has room for growth, according to Mr Chou.
The entry of JD.com, in collaboration with Central Group, will do much to increase e-commerce adoption in the country, he added.
JD.com, operates its own logistics service in China and Indonesia under J-express, a separate corporate entity run by JD.com's shareholders.
Mr Chou said in Thailand, the joint venture could make use of Central group's extensive delivery network, and collaborate with an array of third-party providers, just like Lazada.
"They will need several players to help them cover demand, especially for last-mile delivery. It will be very hard for a non-logistics specialist like Central to run cost-effective last-mile delivery services," he said.
Kerry Express, however, is on a special footing with Central Group, leading some to believe the conglomerate may choose to work exclusively with the Hong Kong company. The two firms recently penned agreements that allow Kerry customers to send packages at FamilyMart, OfficeMate, and Tops branches, and further entrenching Kerry's position in the lead.