When Indonesian logistics company SiCepat Ekspres declared itself a soonicorn — a startup with a potential to be valued at $1 billion or more — after closing a $170 million funding round in March, the announcement raised some eyebrows.
Although it had previously raised over $100 million in funding, the last-mile delivery company had hardly been seen as a contender to become the archipelago’s next unicorn.
A key factor in the logistics startup’s quiet, yet meteoric rise has been how it has used a web of affiliates to expand its gamut of offerings. The company, which started as a last-mile delivery company for online merchants in 2014, today offers warehousing and fulfilment, commerce-enabling services, online distribution and middle-mile logistics services.
SiCepat’s parent company, Onstar Express, owns a host of subsidiaries that provide additional services to supplement those offered by the flagship brand. These affiliates include PT Clodeo Indonesia Jaya, PT CKL Indonesia Jaya, PT Bintang Dagang Internasional, and PT Bintang Aset Indonesia.
In fact, SiCepat’s latest funding was raised to fuel the growth of all of Onstar’s subsidiaries. When contacted, both SiCepat and Onstar declined to confirm the details of the providers of its “end-to-end” logistics services.
The holding company said it would further invest into its logistic services and infrastructure, including last-mile, fulfilment, commerce-enabler, merchant platform and mid-mile logistics offerings.
“Our goal is to support and empower millions of SMEs and local businesses not only to survive but to thrive as well by providing the ease of use where they can fully manage orders supported by our comprehensive solutions. Hence, users/merchants’ satisfaction level and stickiness will be enhanced,” said Onstar Express corporate finance vice-president Yurizki Rio.
Seizing a fragmented logistics market
Among SiCepat’s oldest affiliates is Bandung-based PT Clodeo, a platform that helps online merchants manage their inventories.
Founded in 2017, Clodeo received an investment from Onstar before being taken under the holding company’s wings. Soon after, the startup’s co-founder and CTO Reynaldi Oeoen assumed the position of SiCepat CTO in 2018. Currently, Clodeo provides pick-up services to merchants, and its partners include SiCepat and its peers, including J&T, JNE, Anteraja and NinjaExpress.
On the warehousing side, Onstar has Haistar, a company founded and led by former SiCepat chief commercial officer Donny Maya Wardhana. The company offers warehousing, sales channel and delivery management for e-commerce merchants, and much like Clodeo, partners with a host of last-mile courier companies.
Interestingly, Haistar gets part of its business from an exclusive tie-up with Tokopedia, which is understood to have invested SiCepat in 2019, as DealStreetAsia reported last year. Haistar is one of only three warehousing companies used by Tokopedia to roll out its own fulfilment service called TokoCabang. In the terms and conditions for TokoCabang, Tokopedia says that its fulfilment service will be provided by a partner by the name of PT Bintang Dagang International, the legal name of Haistar.
Last year, Haistar’s Wardhana founded another company called Hera.id, the latest addition to Onstar’s suite of logistics subsidiaries. Hera operates as an e-commerce enabler that provides multi-channel management, multi-location e-fulfilment and distribution to brand owners.
In the middle-mile play, SiCepat leverages the air freight capabilities of its sister company, CKL, which was founded a year after the former’s establishment in 2014.
According to Rafael Damar, a senior analyst at Asia-focused strategic advisory firm YCP Solidiance, the expansion by logistics startups into multiple verticals can be expected given the intricate nature of modern supply chain networks requiring many different offerings from players.
The opportunity around the logistics space has been amplified by the immense growth of e-commerce in Indonesia. The local e-commerce market, according to YCP’s forecast, will be worth $109 billion by 2025, growing at a 27% CAGR from an estimated $33 billion in 2020.
Indonesia has similarly seen other logistics technology players branching out into other verticals. Waresix, for one, has moved into the trucking space after starting as a warehousing player, while logistics enabler Shipper expanded into warehousing and fulfilment through its acquisition of Pakde. However, both Waresix and Shipper offer their new services under their own brand and company, which is different from the approach adopted by SiCepat.
“This move by SiCepat is optimal for long-term advantage in logistics. By being an open ecosystem, they are making competitors [in some areas] their customers in other parts of the value chain and hence, expanding their source of revenue,” said Damar.
Damar added that having independent entities could provide better agility in responding to market dynamics in the growth phase compared to the rather rigid one-company model. However, he noted that such a strategy could be costly to maintain, and therefore, the company may want to consolidate some entities to improve margins.
Damar believes that SiCepat’s diversification strategy has shown its sheer focus on ‘playing the long game’, which is bound to instil confidence among investors.
Existing investors may already be rubbing their hands in glee after seeing the numbers presented by the company. Last year, the company claimed to have reached a total transaction of Rp 3.7 trillion, sepresenting a 245 per cent growth.
In the current Ramadhan month, SiCepat claims to have fulfilled more than 16 million packages as of the 15th day of the Muslim holy month, representing a 121% increase from the same period last year. The company predicts the numbers will increase by 30% in the last week of Ramadhan.
This year, the company looks to be increasingly ambitious and has embarked on an aggressive marketing spree. In the first half of this year, SiCepat has become the main sponsor of national TV show Indonesian Idol, inked a livery branding partnership deal with local airline Citilink and signed up one of the country’s most prominent YouTubers, Deddy Corbuzier, as its brand ambassador.
SiCepat says it is hopeful the marketing moves will help crank up its fulfilment figures by 40% in the second half of this year.
By enhancing its brand awareness and providing a more comprehensive logistics service, SiCepat is looking to ward off competition from its last-mile delivery rivals, most notably J&T Express. Although its offerings are not as expansive as SiCepat at the moment, J&T may look to emulate its rival’s strategy, particularly after reportedly raising one of the region’s largest growth rounds at over $2 billion.
In March, J&T announced the launch of its air freight delivery service, after fully leasing all-cargo aircraft.
Peek into the public markets
While SiCepat has started to invest heavily in marketing, its appetite for growing its already sizable ecosystem has not waned.
The year 2021 has seen Onstar engage in a series of investment transactions with listed digital company M Cash Integrasi and its subsidiaries. In January, SiCepat acquired a 51% stake in F&B ordering platform DigiResto from an M Cash subsidiary. As a result of the transaction, SiCepat became the last-mile delivery provider for DigiResto and continues to eye the food delivery market for additional revenue opportunities.
The DigiResto deal was followed by an investment in Logitek Digital Nusantara (LDN), a company under M Cash subsidiary Telefast, which had been helping develop SiCepat sub-services such as a WhatsApp-based customer application called SiCepat Klik and delivery point services SiCepat Points.
In return, Telefast in April announced the acquisition of a 15% stake in SiCepat’s sister company, Clodeo.
A key factor behind the deepening SiCepat-M Cash relationship is venture capital firm Kejora Ventures. Kejora is SiCepat’s earliest institutional investor and had even roped in its limited partner, Barito Pacific, to join the startup’s Series A round in 2019.
The Indonesian VC firm has also been an active partner of M Cash in the past. In August 2019, M Cash subsidiary DIVA bought a 30% stake in mobile point-of-sale (mPOS) company Pawoon, a Kekora-backed company. Later in the same month, M Cash sold part of its 12.32% holding in DIVA to Kejora, which made the investment through its Star SEA Growth Fund I.
Kejora did not respond to a query on SiCepat’s partnership with M Cash.
In an interaction with DealStreetAsia, M Cash Group CEO Martin Suharlie described his company’s relationship with Onstar as a partnership “based on mutual benefits.” The partnership, he added, enables M Cash to round out its tech ecosystems and digital portfolios with Onstar’s logistics capabilities and allows Onstar to leverage its tech offerings.
Another potential upside for Onstar is M Cash’s access and expertise in public market listings, which may be on the cards soon for SiCepat, whose investors include Indies Capital, which IDX commissioner Pandu Sjahrir leads.
M Cash currently has three digital subsidiaries, namely NFC Indonesia (IDX: NFCX), Digital Mediatama Maxima (IDX: DMMX) and Telefast Indonesia (IDX: TFAS), which have tapped the local bourse.
While Suharlie said he is not able to assess SiCepat’s capital market readiness, he expressed confidence that the logistics startup will progressively gain a competitive edge and clout in the domestic market and possibly foray into the regional market.
“Considering how the capital markets (local and international) are generally bullish on the logistics market in tandem with the rise of e-commerce, there is a good probability that SiCepat’s public listing can gain considerable traction,” he added.