How Locad is driving the Asian e-commerce revolution

The beauty of e-commerce is the ability to sell to huge online audiences. In other words, you can harness the power of the internet to grow your business much faster. But this promise overlooks the practical difficulties of e-commerce. In particular, the orders from all these new customers must be fulfilled on time and cheaply, or else you risk jeopardizing the customer relationship before it even begins.

Joins logistics platform Locad, which today announced a £11m Series A funding round to grow its cloud-based logistics software platform in Asia. Locad takes on the difficult task of fulfilling an e-commerce business, explains his CEO and co-founder Constantin Robertz.

“We pride ourselves on providing the logistics engine for modern consumer brands in e-commerce,” says Robertz. “It’s a one-stop shop for infrastructure on the back end of our business.”

Locad has leased warehouse space in five Asia Pacific countries (Singapore, Philippines, Thailand, Hong Kong and Australia) and has established relationships with a wide range of logistics companies including delivery partners and last mile fulfillment agents. Ecommerce brands can store inventory in Locad’s warehouse facilities. Later, when one of his customers places an order, Locad packs the goods and arranges delivery through one of his partners. Items often arrive the next day.

Roberts and his co-founders launched Locad after a long career in several e-commerce businesses. “I saw the same problem over and over,” he recalls. “A lot of time and money wasted managing logistics, and we couldn’t focus on building our brand and selling more products.” What if a third party could take that frustration out? From there the Locad concept took shape and evolved into an end-to-end solution. Merchants can simply connect their selling engine to the platform and let the logistics be handled automatically.

Locad’s customers have certainly embraced the idea. Last year, the company worked with 200 of his brands and shipped more than 2 million orders on their behalf. Customers include well-known global retailers with established e-commerce presences in Asia (Havaianas, Reckitt Benckiser, Emma Sleep, etc.) and many SMEs, including e-commerce start-ups.

Using Locad, rather than developing its own logistics infrastructure, has three main advantages for e-commerce brands, Robertz argues.

First, the arrangement will give brands immediate access to a scalable and flexible logistics supply chain. Simply book more warehouse space with Locad as your sales grow. “Infrastructure scales up and down with the business,” he says.

Second, Locad makes it easier for brands to better serve their customers. You can choose the warehouse (or warehouses) closest to your customer, ensuring faster delivery. You can also choose carriers based on speed, price, or other factors of your choice. Alternatively, you can let Locad make these decisions for you. Locad’s software advises customers on the best way to organize inventory based on recent sales and the best shipping options.

Third, Roberts points out that Locad is an open platform. Customers can be linked to any sales channel that sells online, including themselves. “This is especially important in Asia, where the average e-commerce merchant sells through his four different channels,” he adds. “If you have to manage fulfillment separately for each of these channels, things can get really complicated.”

On the other hand, the potential downside of this arrangement is that it can get out of control. The merchant has handed over fulfillment responsibility to a third party. If Locad disappoints them, customers will blame the e-commerce brand they purchased from, rather than his little-knowing infrastructure provider.

To reassure this point, Locad points to the transparency that its software offers, allowing merchants to track what is happening with customer orders in real time. It also promises a service level agreement that promises better fulfillment performance than most brands target internally.

The company’s business model is based in part on a software-as-a-service concept, where e-commerce merchants pay a monthly subscription fee for access to the Locad platform. However, most costs are variable, with merchants paying for each item held in the warehouse and for each order fulfilled.

Robertz hopes today’s funding will help Locad develop further. Part of the cash has been allocated to expand the company’s infrastructure. The company hopes to open additional warehouse capacity in more countries in Asia, as well as those already in place. This will allow us to offer next-day delivery to a much larger number of our merchant customers. The cash will also be used for product development and recruitment support.

The funding round is led by Singaporean sovereign wealth fund Temasek and Reefknot Investments, a fund backed by logistics giant Kuehne & Nagel. Previous investors Sequoia India and Southeast Asia’s Surge, Febe Venture and Antler also participated, as did new investors Access Ventures, JG Summit and WTI. His Ervin Lim, vice president of Reefknot Investments, said: