Way to go, GoGoVan! Unicorn reveals global goals after merger with 58 Suyun
The van-hailing app plans to expand in China and Southeast Asia as it aims to become the number one intra-city logistics platform in the world
GoGoVan and 58 Suyun plan to expand in mainland China and Southeast Asia after merging, aiming to become the number one intra-city logistics platform in the world, company officials said on Tuesday.
The merged company, which will use the name GoGoVan in English and 58 Suyun in Chinese, plans to extend its reach to 200 more Chinese cities. It said it will start providing services to corporate clients in 40 mainland cities, and step into more Southeast Asian markets in the next two to three years.
“The goal of our merged company is to become the world’s largest short-distance logistics platform,” said Steven Lam, co-founder and chief executive of GoGoVan.
The intra-city logistics market in mainland China is currently worth around 800 billion yuan (US$121 billion) for the business-to-business segment, and 400 billion yuan for business-to-consumer. These are expected to grow 20 and 15 per cent respectively annually over the next few years, according to research from Deloitte China.
The merged company would be a “unicorn,” a start-up valued at over US$1 billion, said Lam, declining to give a specific valuation.
The two firms were not competitive and will complement each other with strengths in different markets and service types, said Chen Xiaohua, chief executive of 58 Home, which owns the business unit 58 Suyun. 58 Home is operated by New York-listed 58.com, of which Chinese internet giant Tencent is the largest shareholder.
While 58 Suyun focuses on individual customers in over 100 mainland Chinese cities, GoGoVan operates in six Asian markets – Hong Kong, Singapore, South Korea, Taiwan, India and mainland China – where it has strong corporate client bases.
Founded in 2013 by five young Hongkongers with just HK$20,000, GoGoVan is an on-demand van hailing app which generates revenues from charging customers and drivers a fee. One of its main competitors in Hong Kong is Lalamove.
58 Suyun needs to have a better team to “embrace the larger international market,” said Chen. GoGoVan’s team was “undoubtedly our best choice” as they rapidly expanded from Hong Kong into Southeast Asia, a market difficult for Chinese young people to understand, he added.
“Both entities were leading players in their markets before they merged,” said John Song, consulting partner at Deloitte China, who leads the logistics and transportation sub-sector.
The merge could give them an edge, as “most of their competitors are either within mainland China or within other markets,” said Song.
58 Suyun will hold the majority stake in the combined company. 58 Home’s biggest institutional shareholder Alibaba Group, which runs the world’s largest online shopping platform, “provided a lot of support and actively facilitated the merger,” said Chen. Alibaba owns the South China Morning Post.
This matches well with Alibaba’s larger strategy of expanding into logistics and e-commerce in Southeast Asia and promoting “new retail,” or the integration of online, offline, logistics and data across a single value chain, Song said.
The merged company also plans to test new energy and self-driving vehicles in around three years, Chen said. “We might look like a logistics version of Uber now, but we may become the coolest hi-tech company in Asia Pacific in the future,” he said.
The new firm will “definitely choose Hong Kong” for a listing if it decides to go public one day, said Lam.