Thai logistics startup Flash Express closes $200m Series D, achieves profitability in two years

Thailand-based e-commerce logistics provider Flash Express has landed $200 million in its Series D funding round, bringing the total investment into the company to about $400 million.

The latest round was led by local energy major PTT Oil and Retail Business Public Company (OR), Thai consumer goods firm Durbell, and Krungsri Finnovate, the corporate VC unit of financial group Krungsri. The company’s existing shareholders — including Alibaba’s eWTP Fund, Gaorong Capital, and Cloud Angel Fund — also returned to back Flash Express in the round.

Two-year-old Flash Express provides integrated logistics services targeting the e-commerce sector and claims to be the second-largest private express delivery company in Thailand. It has over 5,000 service branches covering all 77 provinces of Thailand and delivers over 1 million parcels per day, according to an announcement.

Flash Express uses its fully in-house developed technology and big data to digitise the delivery process, which has allowed it to increase operational efficiency and offer competitive prices. The company added that it was the first in the country to offer free door-to-door pickup services.

Flash Express said the Series D financing will help it add more value-added services and expand its business to other Southeast Asian countries.

“Establishing this alliance with three of Thailand’s biggest business organisations is a monumental step forward for Flash Express to transform the logistics industry. […] We intend to assist SMEs in lowering their investment costs, which we believe will provide long-term benefit for the overall Thai economy in the digital era,” commented Komsan Lee, CEO of Flash Express.

Rajsuda Rangsiyakull, senior executive vice president for corporate strategy, innovation, and sustainability at OR, said the investment in Flash Express will help it strengthen business expansion and investments through enhancing joint business potential in its core operations, as well as expanding into other businesses that can meet future customer demands.

Meanwhile, Durbell, as a consumer goods distributor, believes there is great synergy with Flash Express. “Our businesses will mutually complete one another’s potential and thus render us a logistics powerhouse as well as help us achieve our collective goal of helping Thailand transform into a truly digital economy,” said Saravoot Yoovidhya, CEO of TCP Group, Durbell’s parent.

Richard Tang, CFO of Flash Express, told DealStreetAsia in an interview that the company chose to keep a low profile since its establishment because it wanted to build its network and achieve scale. “Now that we have risen to the second position in Thailand’s express logistics market, it’s time for more people to get to know us, and this will be helpful for our future growth,” he said.

Tang also spoke about Flash Express’ existing investors, how the company has become profitable, and what the Thai logistics market looks like.

Edited excerpts:-

Why did you choose to stay low-profile before announcing the Series D funding?

Our company is pretty young. In the two years since our establishment, the primary target of our company was to establish the express network, and achieve scale and then a market leadership position before we step up to the front stage. So, now as we have achieved the second position in Thailand’s express logistics market, it’s time for more people to get to know us, and this will be helpful for our future growth.

Who are the investors that participated in your previous fundraisings?

Our investors include Alibaba’s eWTP Fund, Gaorong Capital, Cloud Angel Fund, and other Chinese and Southeast Asian investors.

Given the substantial amounts you have raised, do you expect to become Thailand’s first tech unicorn?

The unicorn title is not what we aim for. We just want to focus on carrying out our business plan. Our target is to become the leader in the express delivery market in Thailand. Secondly, we are going to expand into other Southeast Asian markets, and, hopefully, we can become the leader there as well.

To what do you attribute the success you have achieved in a matter of two years?

I think every success, in the end, is because you have the right people. Our two co-founders — Komsan Lee and Weijie Di have extensive experience in this industry. Komsan Lee, who is the CEO, is very familiar with the logistics market in Thailand. Before Flash Express, he had founded another logistics company which also became very successful.

Weijie, who is from China, had worked at Alibaba as a senior executive. He brought to us a lot of know-how from the Chinese market in terms of working together with e-commerce players and building e-commerce infrastructure, including logistics. The past experiences set the starting point for our company.

And we also implemented a lot of new logistics services in Thailand. For example, we were the first to offer the all-year-long free pick up service [from a customer’s home or office]. Because of this service, we’ve attracted a lot of customers to use our services. We believe that leveraging new technologies to enhance the efficiency of logistics services is critical to our success. From day one, we have put a lot of effort to develop our systems and applications to digitalise our operations. That’s why we can develop at a relatively faster pace compared to peers.

Can you elaborate on your work in developing the technology?

First of all, in order to decide when and where to open your distribution centres, you need data. We set up our system from day one, so we understand what the demand and volume of parcels are in a certain region. So, we know when and where to open up new centres to cater to increased demand. And then, we can also enable the couriers to deliver the parcels in a more efficient way, all based on our technology system, which is able to understand that in certain locations and at certain time slots, how many parcels have to be delivered.

You mentioned in the fundraising announcement that you are the second-largest player in Thailand. Who are your major competitors?

There isn’t any ranking or statistics published by the local authorities, so we cannot be sure about it but to the best of our knowledge, the largest private express company is Kerry. State-owned express companies like Thailand Post also provide parcel delivery services. Some overseas firms like Best Inc and J&T are also the main players in this market. Since China has a leading position in today’s e-commerce segment, the express companies that emerged there in the past decade have a good know-how of how to run the business and replicate it in other countries. That’s why you see some of the players originated in China.

What is the overall scene of e-commerce in Thailand?

Overall, the e-commerce adoption rate in Southeast Asia is still pretty low. But I think Thailand is one of the few countries in which the penetration is relatively high compared to the region’s average. However, it’s still behind more mature markets like the US or China. Based on our observation, the e-commerce market is still growing at between 30-45 per cent per annum. That fast growth rate is going to continue for a few years. That will create a continuously increased demand for high quality, in-time delivery services.

Thailand is one of the few countries in Southeast Asia with a scalable market. The GDP per capita is relatively higher in the context of Southeast Asia. That’s a very attractive market to make investments.

The logistics sector in Thailand has attracted a lot of interest from Chinese investors.

Generally, Southeast Asia lags behind the Chinese market by five to 10 years in terms of e-commerce and related infrastructure. So, they see a lot of opportunities in Southeast Asia becoming the new China in five to 10 years’ time. That’s why they are making investments today.

As logistics requires great investments to make it faster and cheaper, how can you balance between the required investments and profitability?

Logistics is a business where, in the beginning, you need to make investments and incur some losses as you expand your network through building distribution centres and hiring couriers. For us, we’ve already reached the profit-making stage.

What are the strategies and initiatives you leveraged to reach the profit-making stage?

On the one hand, along the way of establishing your network, you have to acquire customers and increase your transaction volumes. We acquired different types of customers, not only the big e-commerce platforms but also a lot of mid- to small-scale social commerce players to further increase our revenue. On the other hand, we have to control our costs. One of the biggest is courier costs. So, one thing we need to do is enhance efficiency. The higher the courier efficiency, the higher revenue per capita we can create. As a result, that staff cost, as a percentage of revenue, will decrease significantly. We do not reduce the absolute dollar amount of our cost but reduce the percentage of the cost to the revenue.

There are some reports that the overall freight and logistics revenue in Thailand will be hit by COVID-19, probably losing 200 billion baht ($6.45 billion). How about domestic express delivery?

Yes, the broader logistics industry is being hit by COVID-19, because a lot of the businesses are shutting down and a lot of the import-export activities are suspended. But it’s going to be beneficial to the express segment. Because of the lockdown period, people choose to buy items from e-commerce platforms more than usual. We are seeing very rapid growth. Our business volume increased by more than three times during the lockdown period.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.