Local start-up GoGoVan is going places
A local start-up that matches freelance van drivers with customers in need of transport has taken off in the city, with plans to go global, writes Mark Sharp
In a cramped office in an old Kwun Tong Industrial building, Steven Lam Hoi-yuen and his partners toil for up to 19 hours a day, seven days a week, on their technology-driven logistics start-up. The 100 sq ft space is shared by several co-founders and employees.
This is the control hub of GoGoVan, a mobile application that hooks up freelance truck drivers with individuals or businesses that need goods moving. Customers can hire the services of a driver with anything from a light-goods vehicle to a 16-tonne truck within seconds.
It cuts out the need to phone any of the 100-plus call centres that drivers pay to use, and avoids the lengthy delays that ensue. Despite having its own fleet of vans, furniture and homeware chain PriceRite is now using GoGoVan for same-day deliveries.
"Small or medium-sized businesses move stuff around all the time," Lam, the CEO of GoGoVan, says. "As for households, they buy chairs, sofas, refrigerators, or they want to move something to another apartment. A 42-inch flat-screen TV doesn't fit in a taxi, so they need to rent a van. There's a lot of demand."
More than 12,000 drivers have downloaded the app since it was launched in July, and 7,000 have been vetted and registered. Around 100,000 potential users have also downloaded it.
"The drivers show us they are qualified, send us photos of their van, and we decide whether it's in suitable condition," Lam says. Team members then spend time on the road with the drivers to determine whether they are safe and reliable.
When an order is placed, GoGoVan's system uses GPS technology to locate and send a smartphone notification to all drivers within five kilometres of the customer's pick-up point, and the first to respond gets the job. If there is no response within 10 seconds, another alert is sent out across a wider range.
Lam and two of the co-founders, Nick Tang Kuen-wai and Reeve Kwan Chun-man, have been friends since studying at college in California, where they got their first experience in logistics - delivering meals for a Chinese restaurant to pay their tuition fees. But the idea for GoGoVan evolved in a roundabout way.
The restaurant meals were served in plain packaging, which got them thinking extra money could be made if they carried advertising. Back in Hong Kong in 2011, they followed through on the idea.
With seed money of HK$50,000, they set up a business delivering free cartons to restaurants, with advertising - from movie promotions to cosmetics products to radio stations - covering the costs.
More than 500 restaurants signed up, but it was a headache for the team to organise transport. "In the beginning, we were delivering 5,000 to 10,000 lunch boxes every day. But getting hold of a delivery van was often a problem, with call centres not answering or not having a van available.
"One day we needed to deliver 200,000 lunch boxes, so we knocked on doors of vans on the street. We asked drivers if they could deliver for us and they said, 'OK, why not?' The call centres had said they didn't have a van, but there were lots of them parked on the street."
They soon discovered the root of the problem: only a limited number of drivers could register with each call centre, with the largest serving 800 to 1,000. "You have to call a lot of call centres to get word out that you need a van. That's when we thought of GoGoVan," Lam says.
The effort began with a lot of pavement pounding. They combed industrial areas citywide where drivers congregate, gathering data on salaries, working hours, fuel costs and distances covered.
"At night, we distributed fliers, putting them under windscreen wipers. Each time, we received a couple of phone calls from interested drivers wanting to learn more."
In May, a prototype was ready, and they made the rounds again to inform drivers. The response was positive and, two months later, the app was officially launched.
They got the message out to potential customers in a similarly lo-tech fashion - handing out fliers at MTR stations from 6.30am. Customers started using the service from day one and usage has grown rapidly, Lam says.
Along the way, the trio was mentored by investor and philanthropist Kevin Yeung, who was their first backer and influenced others to invest in GoGoVan. His most influential introduction was Gabriel Fong, a private equity professional who has run the private investment group of one of the largest global hedge funds. Fong is now chairman of GoGoVan.
"What really attracted me is what I see as a really hard-working and determined bunch of upcoming entrepreneurs who have had to fight for everything in their lives, and this is another step in what they're trying to do," Fong says.
"I've been really impressed. They launched officially in July and the stats are through the roof. They went from 20 transactions on the first day to about 3,000 a day now in a very short period of time," he says.
The business model is a logistics solution, he says. GoGoVan is not doing anything new. It is applying technology to a fragmented and inefficient solution, and correcting it.
PriceRite offers GoGoVan's service to customers who don't want to wait three or four days for its own fleet to deliver purchases. "We offer the technology for them. They just click the mouse and our platform will notify all our drivers. The customer can usually arrange a van in 10 to 15 seconds," Lam says.
Now it has secured PriceRite as a corporate client, the team is courting other businesses. But Fong says they are also examining the possibility of taking GoGoVan global, because, "we believe that the problem exists not just here, but elsewhere as well".
"The major cities in China would qualify, so those are our priority. Southeast Asia is also quite a big market."
Fong says GoGoVan is a fair deal for drivers. "If someone makes HK$15,000 a month and they're paying HK$1,500 to a call centre - ignore the fixed costs - that is 10 per cent. We're charging anywhere between 5 and 8 per cent."
Lam illustrates the point. He was late for a lunch meeting because he booked a van, and the driver was more interested in talking about his good fortune, as he knew Lam was a GoGoVan co-founder.
"He told me that in the past 10 years, the average he had made every month was HK$10,000 to HK$12,000. In the past month, he had made HK$6,000 more. He had bought two more gifts for his daughter. Usually, he bought her just one gift a year," Lam says.