At the beginning of April, Lala (the listed entity Lala Technology) submitted an updated version of the prospectus to the Hong Kong Stock Exchange again, which means that the company's listing plan has been officially restarted in the near future. In this updated prospectus, the rapid growth of Lala in overseas markets has become one of the biggest highlights. According to the prospectus, in 2023, the global freight GTV of Cargo Lala will be US$9.414 billion, a year-on-year increase of 28.8%, and the platform revenue will be US$1.334 billion, a year-on-year increase of 28.8%.
Lalamove's rapid overseas growth is not unique. After the development of the domestic logistics market has entered a deep water period, in 2023, the overseas market has become the target of China's logistics platform. The three most representative logistics companies are called the "Three Musketeers of Logistics Going to Sea" by the market, relying on the local market, cross-border trade and e-commerce, respectively, to bring great changes to the global logistics market.
Relying on the local logistics market, the market size of its overseas brand Lalamove has increased nearly 5 times in the past five years. According to Frost & Sullivan's statistics, in the first half of 2023, in terms of global closed-loop freight GTV, Huolala is the largest logistics trading platform with a market share of 44%, the largest intra-city logistics trading platform, and the world's largest logistics trading platform with average monthly active merchants and the largest number of completed orders.
In March this year, the joint AliExpress upgraded the "global 5-day delivery" in an all-round way, and the layout of the country increased from the United Kingdom, Spain and other 5 countries in September last year to more than 10, and newly entered Germany, France, Portugal, Saudi Arabia, the United States and Mexico, etc., to further achieve rapid scale.
J&T has seized the dividends of local e-commerce and expanded rapidly in the global market, and after entering new markets such as the Middle East, North Africa and Latin America in 2022, J&T's network coverage in its market has exceeded 95%. In terms of parcel volume, J&T will enter the top five markets in Brazil, Mexico, Saudi Arabia and Egypt in 2023.
In addition to the "Three Musketeers", logistics companies such as JD.com and SF Express are also constantly expanding overseas markets. Chinese logistics companies are stirring up the global logistics market.
1. Chinese logistics companies reshape the Southeast Asian market
Southeast Asia is the region with the deepest influence on China's logistics enterprises going overseas. In addition to the huge geographical advantages, the rapid development of the Internet, especially the e-commerce industry, and the improvement of infrastructure have also made overseas logistics companies regard this as the preferred market for going overseas.
According to data from Capital Securities, the GMV of e-commerce in Southeast Asia will be US$131 billion in 2022, a year-on-year increase of 16%, and it is expected that the GMV scale of e-commerce in Southeast Asia will increase to US$211 billion in 2025, and the penetration rate of e-commerce in Southeast Asia will reach 6.5% in 2025. At present, there are more than 350 million Internet users in six Southeast Asian countries (Singapore, Malaysia, Thailand, Philippines, Indonesia, Vietnam).
The good market foundation has allowed overseas logistics companies to develop rapidly in the Southeast Asian market, and even changed the business model and ecology of local enterprises.
Taking Lala as an example, the digital logistics solutions it provides have been favored by enterprises in many Southeast Asian countries, especially small and medium-sized enterprises. Before Lalamove entered the Southeast Asian market, the logistics of local SMEs mainly relied on booking vehicles or self-supporting fleets.
In Malaysia, Jane Teh, general manager of Lalamove Malaysia, said that after entering the Malaysian market in 2018, it quickly opened up the market by relying on the instant on-demand delivery model of "5-minute matching and 45-minute delivery". A local business owner said that before Lalamove entered the market, its logistics and distribution needed to make an appointment with a truck driver in advance, and try to put together orders from the same route to improve transportation efficiency, and just arranging logistics took up a lot of energy. After Lalamove took over its logistics, transport efficiency and costs improved dramatically.
According to Lalamove's official statement, nearly ninety percent of Lalamove's customers in the Malaysian market are small and medium-sized enterprises. Lalamove has even become a verb locally, with users saying "Just Lalamove it" when using Lalamove for delivery.
In the Indonesian market, J&T, as the largest third-party logistics company, undertakes the country's main e-commerce logistics services, providing strong support for the development of the local e-commerce industry. Indonesia is known as the "country of a thousand islands", the country is composed of 17,508 large and small islands, of which more than 6,000 are inhabited, so the express delivery cycle is extremely long, from the capital Jakarta to a remote island, often takes half a month, J&T does the next day or even the same day. In 2023, J&T's e-commerce logistics market share in Southeast Asia will reach 25.4% (in terms of parcel volume), and the proportion will be even higher in Indonesia. During the peak period, J&T once carried 50% of the parcels of Tokopedia, the largest local e-commerce platform, and more than 70% of the parcels of Shopee, the second largest e-commerce platform. In 2022, J&T's business volume in Southeast Asia is 3 times that of the second place.
In contrast, the cooperation between rookies and their overseas partners pays more attention to cross-border logistics. As early as 2017, Cainiao cooperated with the Malaysian government to build eWTP (World E-commerce Trade Platform) and eHub (International Logistics Hub), and successively signed memorandums of understanding with Singapore, Vietnam, Indonesia, and Thai Customs to promote digital customs clearance, smart logistics technology, logistics information sharing, A series of links such as electronic cross-border trade single window have been implemented in these Southeast Asian countries, and at the same time, a number of local logistics companies in Southeast Asia have reached investment or cooperation to promote cross-border logistics and digital logistics services.
There are many factors that contribute to the success of the "Three Musketeers" in the Southeast Asian market, but the core is undoubtedly the success of the long-tested digital logistics system in the domestic market and the transformation of the local traditional logistics model. Lalamove focuses on logistics and transportation and instant delivery, J&T is deeply engaged in e-commerce express delivery, and Cainiao is based on cross-border logistics, opening up the situation in the Southeast Asian market from different dimensions.
Second, how to adapt logistics to the local market
Although the market growth rate is bright, after several years of development, the competition in the Southeast Asian logistics market is becoming more and more fierce, and the "three musketeers of logistics going to sea" are still facing the challenges of the market environment.
Although we have traditionally referred to Southeast Asia geographically as Southeast Asia, it is actually a vast region of 11 countries, with a land area of more than 4.5 million square kilometers and a population of nearly 700 million. For the logistics industry, the diverse geographical environment and complex ethnic, cultural, religious, linguistic and economic environment have brought great challenges to the development of this diversified market. How to adapt to the local market has become a key issue in front of logistics enterprises.
Lu Jiapei, Chief Operating Officer of Lalamove, said that adapting to the local environment is very important for logistics companies going overseas, and Lalamove's solution is to use the same set of apps, operating models and technologies while carrying out thorough localized operations in different markets to adapt to the local market.
A typical example is that in Islamic countries such as Malaysia and Indonesia, due to the local religious custom of praying at noon on Friday, there will be a significant decrease in Lalamove orders and drivers at noon every Friday, and after the prayer, the number of orders will increase rapidly, so it is necessary to mobilize a large number of drivers online at this time node. In addition, Islamic countries need Lalamove to prepare and regulate its capacity in advance during the annual Ramadan period to meet the local changes in working hours during the day and increase in working hours at night during the festival, and in other markets with large Muslim populations, such as Singapore, they also need to adapt to the market characteristics brought about by local customs.
In order to adapt to different regions, Lalamove has its own team in each market, and the management is local, and this promotion mechanism can also attract more local talent to join Lalamove. At the same time, local companies try to use the local language as much as possible to better cater to the local market demand.
In the same way, there are many differences in customs, religious beliefs, working and living habits, currency, language, etc., so Lalamove will fine-tune the local internationalization strategy, such as maps, languages, car models, payment methods, etc., so that the products and services can meet local needs.
In addition to the core instant delivery service, Lalamove also provides cross-city long-distance delivery in some markets to help SMEs reach more customers and expand their business.
These measures, combined with Lalamove's technical and functional teams in Hong Kong, as well as the tactics of targeting the pain points of local SMEs, have enabled Lalamove to achieve rapid development in the Southeast Asian market, and at the same time provide an excellent sample for logistics enterprises to adapt to different regional markets.
3. Seek the second growth outward
After years of development, the domestic logistics market is seriously involuted, and it is the only way for logistics companies to seek the second growth curve. In 2023, the most discussed topic in the logistics industry is "going overseas", and the preferred destination for going overseas is Southeast Asia.
In recent years, affected by geopolitical changes and the mainland's acceleration of industrial chain upgrading and transformation, many manufacturing companies have shifted their industrial chains to Southeast Asia, where costs are lower and infrastructure is gradually improving. From 2013 to 2023, the average annual growth rate of trade between China and ASEAN reached 8.8%, realizing the deep interconnection and integrated development of the industrial and supply chains between China and Southeast Asia. At the same time, the rapid development of the Internet and e-commerce in Southeast Asia has also ushered in development opportunities for its infrastructure logistics industry.
With the continuous progress of the "Belt and Road" economic and trade cooperation, the construction and development of the international logistics supply chain has also become the focus of policy encouragement. In 2023, the trade volume of goods between the mainland and the Belt and Road countries will reach 19.5 trillion yuan, an increase of 2.8%, and the proportion of total foreign trade will increase by 1.2 percentage points to 46.6%. The "14th Five-Year Plan for the Development of the Postal Industry" also clearly points out that to develop international mail and logistics, one is to expand the layout of overseas services, and the other is to improve cross-border service capabilities.
With the development of the Southeast Asian market, Chinese logistics enterprises have gradually set their sights on the world. The experience provided by the Southeast Asian market will also help Chinese logistics companies to develop rapidly on a global scale.