Loship moves toward 3rd generation e-commerce

Loship Co-founder and CEO Nguyen Hoang Trung

The company’s quick commerce platform Loship taps into the e-commerce potential of Vietnam’s almost 100 Million population, concentration of young and well-educated people in 20 cities on a single land mass, and 75% Internet penetration.

What is the unique selling point for Loship, sir?

We focus only on local business. We bring local sellers online and offer one-hour delivery in more than 15 cities nationwide in Vietnam. We operate a hyper-local business and work with 250,000 local merchants. We skip the warehouse and deliver directly from the merchandiser or fulfillment service to the customer. We call this “3rd generation e-commerce”: a small selection of merchandise from local stores or mini-warehouses, with speedy,  last-minute delivery often to single- person households.

As people have become busier and busier, they are willing to pay more for the extra convenience of fast delivery on a motorbike. We are the inventor of the quick commerce model in Southeast Asia.

What sorts of items do you deliver most often, sir?

Everything from food to cosmetics to medicine to flowers to pet supplies to laundry. We have a small selection of items so we can deliver fast. We’re the number one deliverer  in many categories, and the second- biggest food delivery service in  Vietnam. Ingredients are a big seller for us, as well as disposable utensils and beer. We negotiate with the manufacturers and merchants to get a volume discount on these items.

How has the business been during COVID?

Loship was the most downloaded app during the previous lockdown in Vietnam. Our business growth rate during Covid was 2.6 times. Now people have become used to shopping online. In addition, we are seeing a massive shift to e-commerce in Vietnam over the next five years from about 3% of the market now.

Our driver network. We have 70,000 drivers, no small number. Our drivers deliver directly to the consumer. Unlike other logistics services, we have a “driver first” strategy. We believe if we take care of the drivers well, they will take care of customers for us. We offer our drivers a revenue share of 85% of the delivery fee. This is not like the 35% Uber model for its drivers. We offer loyalty incentives such as providing credit to qualified drivers. Drivers also have free water, bike care and charging at stations around the city.

Loship has 70,000 drivers

How do you compete with other e-commerce businesses in Vietnam?

There’s fierce competition in this market. We have a local identity. We have the largest number of local merchants, with an 11% market share.  We offer merchants the quickest cash turnover. In comparison, other platforms freeze the merchant’s money for two to four weeks.

With our B2B ingredients business, merchants can buy ingredients through us directly from the manufacturer at the best price. We earn a high margin by cutting the multi-layer network. On average, merchants spend $50 a month to buy from Loship. To my knowledge, we are the only ones in Vietnam doing this upstream business.

What’s your revenue model and business roadmap?

Advertising from sellers is about 10% of our revenues, a 20% commission on sold items accounts for 89% of our total revenues, and the last 1% is from the delivery fee, based on distance. We take 15% of that delivery fee. 

We want to expand regionally into Laos and Cambodia. These are must-win markets. We want to be profitable, and we have big ambition to go public on the NYSE.

We have world-class angels and mentors such as a VP from Starbucks, a head of Alipay India, and a co-founder of Skype.