Malaysian on-demand logistics startup TheLorry has made headlines over the past few days for reasons more than one. First, it bagged $5.85 million in a Series B funding round, led by FirstFloor Capital in the first week of April. And then, it announced a strategic partnership with global FMCG giant Unilever in mid-April.
“It is no easy feat to have Unilever on board, Nadhir Ashafiq, co-founder and executive director at TheLorry told DEALSTREETASIA in a candid chat, reminiscing how the deal took around two-and-a-half years to be sealed.
“Unilever is very thorough. We talked about what kind of values that we could bring to the table and that’s technology, and from Unilever’s end, it was obviously branding and reputation,” said Nadhir. “We then went through some workshops with them, operational and pricing exercises. After that it was the pilot programme. We did a pilot with a sample volume of their businesses to see we can do it. Then it was due diligence and closing the deal. Now, it’s the time to execute,” he added.
By execution, Nadhir means consolidating the operations of TheLorry, expanding the team and executing its marketing strategies to generate more business leads from its B2B and B2C segments in the months to come.
TheLorry, co-founded in 2014 by Nadhir Ashafiq and Goh Chee Hau, offers on-demand cargo transportation services in countries such as Malaysia, Singapore, Thailand and Indonesia. Going forward, the deal with Unilever will not only help the startup strengthen its presence in the existing markets, but also pave the way for it to roll out its services in the newer ones.
As part of the deal, the FMCG major would support TheLorry to roll out its services across the startup’s four operational markets – Malaysia, Singapore, Thailand and Indonesia. The startup claims to be already profitable in Malaysia and Singapore, hence, Nadhir sees himself spending more time in Indonesia and Thailand in the coming months. However, he declined to reveal the growth rate of the startup.
“We will still focus on these four markets and then we will look into new markets later. For now we will focus on a few key cities [in Indonesia] and make our mark there. We will look at the more heavily-populated cities. Indonesia is a tough market so I’m trying to spend more time there,” he said.
Edited excerpts with TheLorry co-founder and executive director Nadhir Ashafiq:
What is next for TheLorry after the back-to-back funding rounds – your Series B and the strategic investment from Unilever?
From here on, it’s really all about growing our people and marketing. Obviously, because the people will lead to the improvement of our product and operations as well as create a thriving ecosystem of demand and supply. What I mean by that is we want to ensure we could generate more leads – whether it’s individuals or corporates. We would also like to have more suppliers to join our platform and retain their loyalty to TheLorry. We have several strategies to ensure loyalty and stickability.
One of the ways is to create an ancillary service to support both demand and supply. We want to partner with financial institutions, insurance companies, mechanic workshops, and related-companies so that we can acquire these products or services at a discounted rate through our network and then offer them to our drivers – that’s our goal. It’s to help them reduce their operating costs – then our demand side will benefit as well. On the customers’ side, partnerships with say, cleaning or renovation companies, could help us get commission or markup. It would also help us to add more value to our customers and improve our gross margin and growth.
You have definitely done something right in order to have Unilever on board as a strategic investor. Could you walk us through that journey?
The whole process from our first contact with Unilever to closing the deal took us about 2.5 years. Unilever is very thorough. We talked about what kind of values we could bring to the table and that’s technology, and from Unilever’s end, it’s obviously branding and reputation.
We feel it’s a right match there. We then went through some workshops with them, operational and pricing exercises. After that, it was the pilot programme. We did a pilot with a sample volume of their businesses to see we can do it. Then it was due diligence and closing the deal. Now it’s time to execute.
What’s the split between your B2B and B2C business?
Currently, B2B takes up majority of our business. B2C is more on house-moving and furniture transport. B2B is for corporates – distribution of goods, last-mile bulky item deliveries. B2C is something more one-off and lifetime value is not as high – but there’s a word-of-mouth factor there. Repeat rate [for B2C] is not very high. However, for us B2C is a cash business and it’s something that we use as a complementary job for our drivers. Because they do B2B on weekdays and on weekends they can do B2C, so they can maximise the utilisation of the truck. Some people asked why we do that – I’d say it’s a value-add to the drivers.
You’ll be focusing on your international expansion after the Series B round – so how are the four markets that you are already present in performing?
Malaysia and Singapore are already profitable. The other two are still very new and growing markets – it’s going to be another three to four years for them to be profitable. We’re profitable in Malaysia after four years of operations. For Singapore, it’s a relative small market so that’s why we achieved profitability in a faster pace. But for Indonesia and Thailand, it’s going to take a bit of time.
What’s the size of your current fleet?
We’re working with close to 10,000 registered drivers. About 70 per cent of them are owner-operators – meaning they are the drivers who own the truck themselves.
Is achieving unicorn status an important ambition for TheLorry?
I think at the end of the day, we want to grow our business. Whether we are a unicorn or not, it’s something secondary to us. Obviously, all startups want their valuations to be as high as possible but we look at the business – whether the money that we’re going to raise will add value to our business and allow us to grow even further.
How do you view your competitors like NinjaVan and Lalamove?
We’re not competing with NinjaVan. Their model is asset-heavy and the verticals that they’re in are more on the parcel side that are below 5kg. Lalamove, yes, they’re more or less our competitors but we’re friendly with them – they have a good team.
You have roped in quite a number of overseas investors in your current and last funding rounds. Some startups have said that the local VC landscape in Malaysia is not as active as markets like Indonesia and Singapore. What are your thoughts?
That’s definitely true. The thing about VC landscape in Malaysia is that most of the LPs are government-linked, so they’re public money. If you look at more developed markets like Japan, things are the other way round where the VC space is private-led. I think the Malaysian industry needs a bit more success stories to prove that VC investments make sense.
I would say, VC investments are not new but it only started to gain traction in 2012 and 2013 so we’re still at the beginning. There are not many exits and acquisitions done so it’s sort of up to my batch – the startups started in 2014 and 2015 – to prove to the industry that VC investments make sense.
The gig economy really helped global corporations to start looking at the VC space. When we started out, people asked us how many trucks we have and what’s the quality of our trucks etc. – which is typical. But now, people don’t ask us that question anymore because if we execute our operations well, it could be cost-effective versus an asset operator.
Are you looking to make any acquisitions or enter new markets in the near future?
We’re open but we have not identified anything yet. We will still focus on these four markets and then we will look into new markets later. For now, we will focus on a few key cities [in Indonesia] and make our mark there. We will look at the more heavily-populated cities. Indonesia is a tough market so I’m trying to spend more time there.