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When successful, established businesses tell their story, it usually sounds all very straightforward. The founders get an idea, work hard to execute it, and miraculously, it all works smoothly from the very beginning to result in millions of dollars earned.

The reality of start-ups in today’s economy is different – the initial idea is only the starting point that almost always evolves at any point of time. The founders of TheLorry, Malaysia’s on-demand logistics start-up, experienced this firsthand and have been on the tips of their toes since deciding they would capture the market’s overlooked opportunities.

TheLorry is a technology-enabled platform that matches lorry owners and drivers with private and corporate customers who need help moving house, office and/or general cargo.

Founded late 2014 by ex-colleagues Nadhir Ashafiq and Chee Hau Goh, TheLorry was initially intended to be the “Expedia for logistics”, but then became the “Uber for lorries” to focus on the business-to-consumer (B2C) market and then later switched focus to the business-to-business (B2B) market.

Ex-colleagues Chee Hau Goh (on the left) and Nadhir Ashafiq (on the right) have reinvented TheLorry three times within two years, showing how startups can adapt to unexpected factors.

It may sound like there was a lack of vision, but this is the reality of businesses in dynamic markets, especially developing ones. The growth of any company involves adapting to unexpected factors such as new competitors, new technologies or customer demands.

ecommerceIQ sits down with TheLorry co-founder and executive director Nadhir Ashafiq to find out how his company carved out a niche in Malaysia’s competitive logistics landscape and why they decided to pivot.

The Business Model Evolution of TheLorry

2014 – early 2015: Expedia for Logistics

At first, TheLorry built a website that allowed customers to access instant lorry rental price quotes online after sharing some common variables: the type and size of the lorry needed, the start and end points of the journey, etc.

The whole business was a two-man team at that time. While Chee Hau was pumping up marketing and sales, Nadhir was running around Kuala Lumpur and Selangor meeting lorry drivers and giving them Excel sheets to fill in their prices, which would afterwards be uploaded on TheLorry website.

TheLorry initially wanted to be “Expedia for Logistics” where users could choose lorry rental on the startup’s platform from selected service providers based on ratings and prices

Right away, there were several downsides to this model, the most pressing being the scalability of the model. It was a time consuming and tedious process to acquire the price quotes from service providers that sometimes involved over 900 price points.

The other reason was that TheLorry could not prevent customers from going directly to the service provider instead of booking through the website. There were several cases when TheLorry got to know that people were searching for their providers online either by customers’ own admissions or comments from the providers.

“Therefore, around the mid-2015 we moved to an Uber-like model where we would be setting the prices ourselves,” explains Nadhir.

Early-2015: Uber for Lorries

The switch meant TheLorry would need to match providers with jobs. At first, it was done manually until the company built an app in-house and the minimum viable product (MVP) within two months. The drivers could accept the job on the app, and thus the process became automated.

TheLorry built an app for drivers in-house within two months. It automated the process of matching lorry drivers with the jobs available.

As TheLorry had attracted funding at the beginning of 2015 from pre-accelerator program WatchTower and Friends and Singapore’s venture capital KK Fund, the company started scaling up by hiring people for their team. Their obsession became to grow bookings through their website and increase their fleet size.

The need for a second major pivot came when the company realised that lorry rental aimed at individuals was mostly a one-off event as people did not often move homes or offices. And apart from customer referrals, the company would find a difficult time sourcing new clients.

Mid-2015 – present: Lorries for B2B  

This is when TheLorry decided to push for B2B sales targeting commercial cargo market – manufacturers, distributors and freight forwarders with urgent trucking needs. Now business customers make around 60% of the company’s sales when it was only expected to make up around 30% of the entire business.

But every business model, no matter how successful, has its own set of challenges.

“There are a few drawbacks for B2B. First, the onboarding process of each client is longer and sales managers have to be hired to pitch our services and build a long-lasting relationship. Then, we also have to give corporate clients a credit meaning at least 30 or 60 days to pay for the services. But chances of repeat business are high and generated revenue is healthy,” says Nadhir.

Servicing Different Customers: B2C versus B2B

Targeting B2C and B2B segments obviously require different approaches. TheLorry adopted online marketing strategy to acquire more individual customers and invested in Google adwords, Facebook ads and content marketing to drive as much traffic to website as possible.

This tactic, however, did not really work for targeting corporations where it is more effective when sales managers knock on client office doors for a face-to-face meeting – especially in the Southeast Asia business world.

“Online marketing gave us visibility, but to seal the deal, we needed a salesperson on the ground and account managers to meet customers to clearly explain our solutions. B2B sales is all about creating and maintaining relationships,” says Nadhir.

Once onboarded, corporate clients can use TheLorry app to hire drivers directly or in the case of any special needs they can turn to an account manager, assigned to each business. Through the TheLorry platform, clients can view all the past and present bookings and invoices as well as track drivers who are on the job.

As TheLorry is a technology-enabled platform, around two thirds of its business is automated. Compared to other start-ups, Nadhir says the company wants to be fully transparent with its clients and does not promise full automation because of the difficulty it entails.

“There needs to be a bit more scrutiny and a bit more manual intervention in order to get the business to run properly,” explains the entrepreneur.

As quality of service is important to any type of customer, TheLorry interviews all drivers and puts them through 2-3 test drives where their skills and professional manners are assessed. If clients give them 1-star rating after these test jobs, they don’t get the opportunity to join TheLorry driver family.

TheLorry team interviews all their drivers face-to-face and gives them test jobs before accepting them to TheLorry driver family to ensure quality of the service.

What’s in The Cards for TheLorry?

TheLorry still has plenty of room to grow. The B2B lorry rental market in Malaysia is estimated at $3.9 billion. There are no solid figures for the B2C market, but the company estimates that this segment is worth around $22.5 to 45 million based on property sales data.

TheLorry wants to become profitable in 2017 and expand to Thailand in addition to its existing services in Malaysia and Singapore.

Jumping on new and unexplored opportunities to raise revenues is one way to grow. Yet, one piece of advice Nadhir hopes other entrepreneurs remain mindful of is that potential top line revenue always carries costs.

Lured by potential revenue growth last year TheLorry took a business opportunity, which Nadhir did not want to disclose, in a field they had no experience and no clear plan to make unit economics profitable.

“In the end, we ended up in a situation where we were selling our service for 1 ringgit and our cost was 2 ringgits. And there was no way for us to increase the price to 3 ringgits,” said Nadhir, adding they decided to quit the business opportunity later that year.

On the bright side, there also have been surprising successes. In 2016, TheLorry introduced a new product – 4 wheel drive car rental, which turned out to be a hit for small and medium mom-and-pop shops who use them on a more regular basis.

As for 2017, the company’s end goal is to grow revenue by a certain multiple, not disclosed, to become profitable. In the second half of the year, TheLorry hopes to expand to Thailand in addition to its existing services in Malaysia and Singapore.

After raising $1.5 million in Series A funding early last year, TheLorry is still in touch with many investors but has no plans for fundraising as yet.

You can read more about TheLorry in SPARK40 here.

Nadhir Ashafiq’s Tips for Aspiring Entrepreneurs

  1. Validate your business idea – test the product, see whether you will have a market before spending money on it. Prior to TheLorry I spent RM 200,000 ($USD 45,000) on a thing which did not work. Don’t spend so much money for nothing!
  2. Read The Lean Startup by Eric Ries, create minimum viable product and get as many people to review your product and launch as fast as possible at the lowest cost possible.
  3. Learn about online marketing, things such as how to drive traffic, conversion rates, upsell and do email marketing, if you will be working in ecommerce space. Good resources for this are kissmetrics.com, backlinko.com, quicksprout.com, neilpatel.com.  

 

By Aija Krutaine based on an interview with Nadhir Ashafiq

Here’s a wrap up of what ecommerce headlines you should know.

1. Thailand is launching a stock exchange just for startups; no revenue required

The new exchange will be unlike Thailand’s two existing stock exchanges — SET and mai — which are tightening regulatory rules and other criteria amid a surge in listings, in part due to second- and third-generation family businesses seeking to go public. The proposal for the new exchange is still being drafted, but the expected rollout will be in the third quarter of 2017.

Startups can list on the new exchange even if they have not earned any revenue. They can choose to issue equity and non-equity products including bonds and options. Investment may, however, be limited to accredited investors, but that detail has not been finalised.

Read the rest of the story here.

 

2. DHL introduces fully customized digital freight platform CILLOX

DHL Freight introduces CILLOX, a virtual marketplace for enterprises with transportation needs. The fast and seamless solution helps companies to match their full truck load, part truck load and less than truck load offerings with transport providers’ capacities and find the appropriate provider according to their needs.

Read the rest of the story here.

 

3. Recommended reading: How companies can cater to the unbanked in Southeast Asia

Emerging markets in APAC such China, India, Thailand, Malaysia, Vietnam, Philippines and Indonesia are more dependent on account-related revenues.

This stems from the fact that a sizeable demographic in these markets are unbanked; people without credit cards and bank accounts. According to a 2015 report by McKinsey, the unbanked in Indonesia number at 116 million; Vietnam, 49 million; Philippines, 46 million; Thailand, 12 million; and Malaysia, 4 million.

Read the rest of the story here

Metra Digital Investama (MDI), Indonesia’s Telkom corporate venture arm, has signed an agreement with Australian carrier Telstra’s venture capital arm, Telstra Ventures. The deal will see them jointly explore the investment opportunities in the growing tech startup scene in Southeast Asia. Nicko Widjaja, president of MDI, and Group Executive Internasional & new business head Telstra Cynthia Whelan signed the MoU in Jakarta last week.

Telkom Indonesia Director Indra Utoyo said the recent MoU will give Telkom access to Telstra’s experience and existing relationships in global startup centers in Silicon Valley, China and Israel. “Today, our continued partnership extends to collaborating on venture opportunities in the region, where we will again leverage both Telkom and Telstra’s deep local expertise as well as experience in global ventures investments,” said Pak Indra.

The MoU will give Telkom access to Telstra’s experience and existing relationships in global startup centers in Silicon Valley, China and Israel.

Telkomtelstra supplies network application services – corporate computer and telecommunications services – to large companies and enterprises based in Indonesia. The company is 51% owned by Telkom.

Over the past five years, Telstra Ventures has invested over $152.6 million (A$200 million) in more than 30 different technology companies. Telstra announced in the statement that the company believes now is the right time to collaborate more closely with Telkom, Indonesia’s largest telco company, to take a part to explore Southeast Asia potentials. There are many opportunities seen in areas like ecommerce, e-health, the internet of things (IoT) and fintech, Whelan added.

Telkom, through MDI has also invested in various potentials tech startups in Indonesia. The latest is when they led the $10 million pre-series B funding round of aCommerce.

“Through our existing joint venture with Telkom, Telkomtelstra, we have seen the pace with which new businesses are reaching scale in response to the digital transformation of the economy and the fact that the middle class in this part of the world is expected to double over the next decade,” she added.

A version of this appeared in Deal Street Asia on August 8. Read the full article here.

Digital Ventures, a new subsidiary of Siam Commercial Bank Group, announced the launch of its first startup incubation program, reports The Nation.

Charle Charoenphan, Head of the Digital Ventures Accelerator incubation program said the initiative will provide advice and funding for startups to strengthen Thai based and regional financial technology business, (fintech buzzing again).

Each business participating in the program will be given a grant of $8,600 (300,000 THB).

Startups participating in the program will be intensely educated on basic entrepreneurship with consultation mentors. This kind of model already exists in the form of Dtac Accelerate and True Incube, among many others. Although these new startups get initial funding, 300,000 THB is only enough to kick-start a project off the ground, not viable for any significant development.

Half of the program slots have been reserved for start-ups directly related to fintech, while the remaining half have been reserved for start-ups in other fields – a move designed to maximize the benefits for both SCB and its corporate and individual customers.

Digital Ventures plans to launch a free bank-simulation platform next month that acts as a virtual testing environment for businesses developing fintech products.

The division is playing the role of a laboratory within SCB that carries out research and development for fintech products and services, and innovates new solutions such as blockchains, the Internet of Things, machine learning and biometrics technologies to satisfy customer demand.

Digital Ventures has also partnered with Singapore-based Life.SREDA, a global venture-capital fund specializing in financial technology. The collaboration would strategically benefit Digital Ventures in both research and investment, improving the company’s financial services.

SCB’s digital ventures is another fintech initiative that has recently been surging in popularity.

A version of this appeared in The Nation on July 22. Read the full version here.

DBS bank and Singtel launching resources for Singapore's SMEs

Launching of the Singapore’s 99 SME campaign. Source: Marketing Interactive

As part of Singapore’s 99 SME campaign, DBS bank and Singapore’s telco company Singtel are launching multiple resources meant to help SMEs with ecommerce and cashless payments. The campaign is entering its second year and continues to further advancing the nation’s SMEs.

DBS Academy and partners of the 99% SME campaign will offer training courses to SMEs and its employees to upgrade their knowledge and kick-start ecommerce. Singtel and DBS will be working with SPRING, Singapore’s Infocomm Development Authority, to organize seminars and workshops to help SMEs better understand the online space, including areas such as data analytics, digital marketing and cyber security.

DBS will offer the first 10 participating food and beverage establishments a discount on its DBS FasTrack monthly fee, a system that enables ordering and payment in-store. DBS is also offering fee waivers for the first 250 business that sign up for the NETS and DBS Card Acceptance service, which allows merchants to use only one terminal for both the Singapore-native NETS payment scheme and regular credit card payments.

Finally, the company is going to give all participants a $7,417 (S$10,000) overdraft facility with an interest rate of 6%, which it claims is one of the lowest in the market for small businesses.

Meanwhile, Singtel will offer the first 500 SMEs its Ecommerce Solutions package for 99 cents a day for six months – a total cost of $148 (S$200), which includes workshops, training, and hands-on assistance for SMEs to build and manage their own online stores.

SMEs can apply to participate in the 99% campaign through the official website. The deadline is September 30. To qualify for the program, they must have at least 30% Singaporean ownership, and have less than S$100 million in revenue per year or less than 200 employees.

The initiative is supported by SPRING, Singaporean chambers of Commerce and Industry and trade and merchants’ associations, MasterCard, and media partner MediaCorp.

A version of this appeared in Tech in Asia on July 15. Read the full article here.

Thai-fiance-minister, Thai Companies To Get Tax Break Incentive To Help SMEs

Source: National News Bureau of Thailand

The Thai government wants to impose another measure to encourage big companies to help SMEs. According to Apisak Tantivorawong, Thailand’s Finance Minister, this initiative will allow the big corporate players to request tax deductions one to two times higher than for normal expenses for helping SMEs.

The government is set on developing and helping SMEs grow, as there are up to 2 million operators in the small and medium enterprise segment. Businesses can provide SMEs with accounting advice, computer software or be a loan guarantor for new entrepreneurs. Apisak Tantivorawong, Thailand’s Finance Minister comments,

If we can upgrade 500,000 or 1 million firms to be strong players, it will be a powerful driving force for the economy. 

The government sees that small players should receive proper support and perhaps narrow the gap with the larger corporations.

“Large corporations have money to pay for cutting-edge technology, which will eventually replace the human workforce. So it makes sense for us to boost growth in SMEs, who will help the country maintain the employment rate,” said Mr Apisak.

A version of this appeared in Bangkok Post on July 2. Read the full article here.