The appeal of e-commerce is the ability to sell to a huge online audience – to grow your business much faster using the power of the internet. But this promise ignores the practical difficulties of e-commerce: specifically the need to fulfill all those new customers’ orders on time and cheaply, lest you risk jeopardizing your relationship with them before it even gets going. has come.
Enter the logistics platform Location, which today unveils a £11 million Series A round of funding to grow its cloud-based logistics software platform in Asia. Locad relieves e-commerce companies of the daunting task of fulfillment, explains CEO and co-founder Constantin Robertz.
“We describe ourselves as a logistics engine for the modern consumer brand in e-commerce,” says Robertz. “It’s a one-stop shop for the infrastructure at the back of your business.”
Locad has leased warehouse space in five countries in the Asia Pacific region – Singapore, the Philippines, Thailand, Hong Kong and Australia – and has built relationships with a wide range of logistics companies, such as shipping partners and last-mile fulfillment agents. E-commerce brands can store their inventory in Locad’s storage facilities; when one of their customers places an order, Locad will pack the goods and arrange shipping through one of its partners. Very often the goods can be delivered the next day.
Robertz and his co-founders launched Locad after a long career at various e-commerce companies. “We saw the same problem over and over again,” he recalls. “Managing the logistics took so much time and money that we couldn’t focus on building the brand and selling more products.” What if a third party could take away that frustration, they wondered. Locad’s concept took shape from there and evolved into an end-to-end solution: merchants simply plug their sales engines into the platform and it can handle logistics automatically.
Locad’s customers have certainly embraced the idea. Last year, the company worked with 200 brands and shipped more than 2 million orders on their behalf. Clients include large international retailers building their e-commerce presence in Asia – examples include Havaianas, Reckitt Benckiser and Emma Sleep – as well as many smaller companies, including e-commerce start-ups.
Using Locad, rather than developing their own logistics infrastructure, has three key benefits for e-commerce brands, according to Robertz.
Firstly, the scheme gives brands direct access to an easily scalable and highly flexible logistics supply chain. As their turnover grows, they simply book more warehouse space with Locad. “Your infrastructure grows and falls with your business,” says Robertz.
Second, Locad makes it easier for brands to better serve their customers. They can choose the warehouse – or warehouses – closest to their customers, ensuring faster delivery. And they can choose delivery drivers based on speed, price, or any other factor of their choosing. Alternatively, they can leave those decisions to Locad, whose software advises customers on the best way to organize their inventory, based on their recent sales, and the best shipping options.
Third, Robertz points out that Locad is an open platform. Customers can link it to any of the sales channels through which they sell online, including their own. “This is especially important in Asia, where the average merchant sells through four different channels,” added Robertz. “If you have to manage execution for each of those channels separately, it can get very complicated.”
The potential downside of this arrangement, on the other hand, is the loss of control. Sellers transfer responsibility for performance to a third party. If Locad lets them down, customers will blame the e-commerce brand they purchased, not the infrastructure provider they know little about.
To provide reassurance on this front, Locad points to the transparency offered by its software, allowing merchants to monitor in real time what is happening with their customers’ orders. It also commits to service level agreements that promise better execution performance than most brands could aspire to internally.
The company’s business model is partly based on the software-as-a-service concept, where merchants pay a monthly subscription to access the Locad platform. But most costs are variable, with sellers paying fees per item stored in the warehouse and per order fulfilled.
Today’s fundraising will help Locad develop further, Robertz expects. Part of the money is intended for the expansion of the company’s infrastructure. It wants to open additional storage capacity in more countries in Asia, as well as those where it already has a presence, so it can deliver next-day deliveries to a much larger number of merchant customers. Money will also be invested in product development and recruitment support.
The funding round is led by Reefknot Investments, a fund anchored by Singaporean sovereign wealth fund Temasek and logistics powerhouse Kuehne & Nagel. Previous Southeast Asian investors Sequoia India and Surge, Febe Venture and Antler also participated, along with new investors Access Ventures, JG Summit and WTI. “Locad’s unique business model of locating warehouses in the cities ensures inventory is kept close to customers, enabling significant cost and time savings for both the brand and consumers,” said Ervin Lim, Vice President of Reefknot Investments .