The Next Big Thing

Hong Kong-based O2O start-up Delivery Republic bags US$2 million to expand in Asia as young consumers lean more on Web

Food delivery service says its large network gives it an edge in city; plans to broaden portfolio to more on-demand deliveries

PUBLISHED : Tuesday, 24 November, 2015, 8:04pm
UPDATED : Thursday, 26 November, 2015, 1:05pm

Hong Kong-based online-to-offline start-up Delivery Republic has received US$2 million in funding from investors as it looks to expand its on-demand delivery services across Asia.

O2O services are rapidly picking up speed in Asia as younger consumers rely more on the internet for various services and new technology gives traditional delivery and logistics businesses a big boost.

As a result, O2O companies have become popular among venture capital investors betting on future billion-dollar start-ups.

Delivery Republic differentiates itself from rivals like FoodPanda and foodora by placing an emphasis on its delivery network and working directly with individual outlets and restaurant chains to get deliveries made within the hour.

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Large restaurant chains like KFC, one of Delivery Republic’s clients,rely on such third-party specialist services to save operational costs as the profit margins of food businesses shrink.

This makes the start-up a more business-to-business (B2B) focused company as customers do not place orders directly with Delivery Republic.

Instead, restaurants place orders with the company when they want it to send food to the customer. That can translate into huge manpower and logistics savings for small restaurant businesses that cannot afford their own transport fleets.

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“Operating a food delivery fleet is a very costly proposition if it’s not operated efficiently,” said George Kee, CEO of Delivery Republic.

“Because we have a wealth of logistics experience and a proprietary dispatching technology, we are able to offer a very cost effective on-demand delivery service instantly to any merchant.”

The year-old company, which started operations in August 2014, already had a network covering 85 per cent of populated areas in Hong Kong, with over 100 vehicles available to provide delivery services. That makes it the market leader with the most extensive coverage of delivery services in Hong Kong.

Its network has already attracted over 150 merchants including Itacho Sushi and California Pizza Kitchen.

The start-up also provides real-time delivery progress updates, allowing customers to see where and when their food will arrive.

“People are curious [about when their food will arrive]. Awareness of accurate delivery progress matters,” said Delivery Republic’s chief technology officer Howard Kwong.

“We constantly ask ourselves, ‘Can we reduce our delivery time from 60 to 59 minutes?” he said. “Sometimes, one minute matters a lot to our customers.”

Delivery Republic plans to further extend its network in Hong Kong and expand into other Asian countries.

READ MORE: German start-up foodora plans to take Hong Kong’s online food-courier services upmarket

It also aims to ramp up its logistics services, according to Kwong. Prior to joining the company this month, he was assistant director for technology at SCMP Group, publisher of the South China Morning Post.

“By focusing on the delivery network, we can expand into any business verticals that have a need for on-demand delivery,” he said.

Competition in the food delivery arena is heating up in Hong Kong, as more players join to grab a slice of the pie.

Foodora, owned by Berlin-based Delivery Hero, launched its services in the city last month, branding itself as ‘premium food delivery’ for upscale restaurants in Hong Kong.

UK-based food delivery start-up Deliveroo announced this week that it raised US$100 million to expand outside Europe, with plans to service Dubai, Hong Kong, Singapore, Melbourne and Sydney.