Abstract

Officially launched in July 2013, GoGoVan is a mobile application platform that connects individuals and businesses directly to thousands of drivers for fast and reliable last-mile deliveries. In August 2017, the company merged with 58 Suyun, one of China's largest intra-city logistics platforms, to become the first technology unicorn in Hong Kong. Since then, the company has extended its presence to more than 300 cities across Hong Kong, Singapore, South Korea, India, mainland China, and Taiwan. But what is their next move?

This case provides students with an opportunity to understand the business model of GoGoVan, to analyze customer needs in the context of transporting goods, and to identify risks in GoGoVan's strategic directives. How should GoGoVan mitigate these risks and move forward to become the world's number one intra-city logistics platform?

Case

Learning Outcomes

By the end of this case study, students should be able to:

• describe critical issues relating to a fast-growth venture;
• identify potential risk(s) of the startup venture and suggest ways to mitigate the risks;
• understand customer needs using the value proposition canvas;
• illustrate how to build a repeatable, scalable, and profitable business model by applying the business model canvas; and
• use pivots to scale up a business.

GoGoVan: Making Moving Goods Convenient and Efficient

GoGoVan began in July 2013 when Steven Lam Hoi-yuen, cofounder and Chief Executive, officially launched a mobile application platform for transporting goods in Hong Kong. The application connects customers and drivers to facilitate on-demand, same-day deliveries around the city. Whenever individual or business customers need to move furniture, supplies, goods, or even pets in Hong Kong, GoGoVan offers access to more than 30,000 drivers who operate a wide range of vehicles, such as vans and trucks, that can suit customer needs. The company aims to redefine the everyday logistics experience by providing convenient and efficient service at the customer's fingertips and to become the number one intra-city logistics platform in the world.

Prior to the establishment of GoGoVan, Lam had never dreamed of this level of success. He had a humble beginning. Born in a low-income family in Hong Kong, he grew up in a public housing. After dropping out of high school, he moved to the United States, where he had to support himself by working as a part-time deliveryman for a Chinese restaurant and later as an intern in investment banking. He graduated from HAAS School of Business at the University of California, Berkeley with a major in global management. Before studying at Berkeley, Lam attended Diablo Valley College in California. It was there that he met Nick Tang Kuen-wai and Reeve Kwan Chun-man, who later became cofounders of GoGoVan. The trio worked in a Chinese restaurant together as delivery boys after school in order to support their college life. Lam was also an eBay power vendor who sold a number of unlocked iPhones, automobile parts, and electronics. While studying at Berkeley, he worked as an intern at Bank of America Merrill Lynch, at the office of a California congressman, and also participated in an exchange programme at Fudan University, China.

In 2010, Lam moved back to Hong Kong after graduation, and with cofounders Tang and Kwan, he set up a venture called Boxad, which displayed advertisements on lunch boxes. The idea was inspired by the trio's delivery experience in California, where the takeout lunch boxes were in plain packaging. They put advertising stickers on the styrofoam takeout boxes. Although more than 500 restaurants signed up for their delivery service, it was very difficult for them to arrange transport with van drivers for delivery of 10,000 lunch boxes per day. Getting ahold of a delivery van was never an easy task, with call centres either not answering or responding that no van is available, while the trio noticed that there were many idling vans waiting for jobs on the street. In the end, they had to contact the call centres one by one until they successfully employed the available vans. Knowing that the market was so fragmented (there were many call centres, each having a small number of registered drivers; the largest call centre served only 800 to 1,000 drivers), Lam, Tang, and Kwan began to work on the concept for GoGoVan as the problems with Boxad mounted. They teamed up with a programmer and a graphic designer to build the mobile application and create the visuals.

What GoGoVan offers is not a radical new solution. It applies technology to improve a fragmented and inefficient logistics ecosystem. Building on a central data platform with information on more than 150,000 drivers globally, GoGoVan redefines the implementation of logistical information around the city it serves by matching the right fleet with the customer instantly, thus improving the last-mile efficiency. Using the mobile application, customers no longer need to contact call centers. Individual or business customers can save on transportation costs and improve distribution efficiency, without owning in-house fleets. Furniture and homeware chain PriceRite, though it had its own fleet of vans, commissioned GoGoVan for same-day deliveries in Hong Kong. Business customers may choose to pay monthly, as all records are shown on a dashboard, which provides flexibility for businesses, which in turn helps them better manage their cash flow. Some business customers may benefit from elimination of distribution centres or warehouses as well, reducing their operating costs. For drivers, they had to pay call centres monthly to get jobs. Now, the mobile application of GoGoVan allows them to tap into a citywide customer pool that was previously out of their reach, thus increasing utilisation of their transportation fleets. As a result, many drivers have seen their income increased by 20 or 30% after switching to work that uses the mobile application.

To enhance its competitive edge, GoGoVan is committed to providing quality services and is determined to get the best drivers. GoGoVan created the mobile application on its own and therefore can make any necessary enhancements quickly, while call centres outsource their mobile application design to a third party. As a part of its service quality control, GoGoVan has a detailed screening for each potential driver. Applicants must show they are qualified. They are also required to send photos of their vans for GoGoVan to assess whether they are in suitable condition and maintained in an excellent stateodorless, spotless, and comfortable. GoGoVan's team spends time on the road with the drivers to determine whether they are safe and reliable. A service guideline is provided for drivers as well. Upon every cancellation of an order to van drivers and/or for each customer complaint, GoGoVan carefully looks into each case so as to ensure continuous improvement.

GoGoVan aims to make the ordering process as simple and seamless as possible. In Hong Kong, for example, after simple registration, new users can start to book the delivery service online, using a mobile application, or by dialing *1234, and indicate their pick-up point and destination, and the vehicle type (e.g., van, 5.5-ton truck, or 9-ton truck) that suits their needs. If customers would like to use a 16-ton truck or other vehicle type, they can call the GoGoVan hotline. They are required to login to their account and choose the number of passengers, choice of tunnel (toll rates vary), and pick-up time. A quote will be generated in seconds, pending order confirmation from the customers. Customers can also choose to pay extra for some value-added services such as forklift rental, mover request, overtime waiting, midnight service, transporting pets, etc.

After an order is placed, the GoGoVan system uses Global Positioning System (GPS) technology to locate and send a notification to all drivers within five kilometres of the customer's pick-up point, and the first driver to respond will get the job order. If there is no response within 10 seconds, another alert will be dispatched in a wider range. Normally, customers can arrange a van in 10 to 15 seconds. In case drivers are not available during peak hours, customers may consider adding some "bonuses" when ordering, in order to make it more attractive to drivers and increase the chance of them accepting the order. Once a driver responds to the order request, customers will see the driver's information and real-time location on their device. They just need to wait for the driver's call to confirm the exact pickup point and destination and have the driver provide delivery and moving services. Upon completion of the order, customers pay the driver and can rate the driver from one to five stars. For every completed delivery order, GoGoVan charges approximately a 10% commission.

As with many other startups, GoGoVan was initially funded by the savings of its cofounders, who pooled their money and collectively gathered USD 2,564 (or HKD 20,000) as their startup capital. Just before their funding ran out, the company received USD 12,821 (or HKD 100,000) in seed capital from the Cyberport Creative Micro Fund provided by the Hong Kong government to continue their entrepreneurial journey. GoGoVan later joined the Hong Kong government-supported Cyberport Incubation Programme to further develop its business. Since then, it has pursued several other funding sources. In 2014 and 2015, the company raised a sum of USD 26.54 million. In May 2016, it received an undisclosed sum of funding led by Hong Kong private equity firm New Horizon Capital. In July 2018, the company further secured the large sum of USD 250 million, led by InnoVision Capital, a San Francisco-based venture capital firm. Additional funding was realized from several other investors, including the Alibaba logistics arm Cainiao, a Russia-China Investment Fund, Hongrun Capital, Qianhai Fund of Funds, and 58 Daojia Group.

Fueled by a series of growth capital investments, GoGoVan has sped up its expansion on a national and global scale. In August 2017, the company merged with 58 Suyun, one of the largest intra-city logistics platforms in China. This merger presents a complementary advantage to both companies. Whereas GoGoVan, with more business-to-business focus, has market presence beyond mainland China, including Taiwan, Singapore, South Korea, and India, 58 Suyun focuses more on smaller firms and individual segments in more than 100 mainland Chinese cities with more than one million registered drivers. After the merger, the combined company continues to be branded as 58 Suyun in China and GoGoVan outside of China, making it one of the leading online logistics platforms in Asia. The merger also marked a key milestone for GoGoVan, as it has become the first Hong Kongese technology unicornthat is, a startup company that reaches USD 1 billion or more in valuation.

Since the merger, GoGoVan has extended its footprint to more than 300 cities across Hong Kong, Singapore, South Korea, India, mainland China, and Taiwan. Its expansion efforts continue in full swing. In the next few years, the company will be moving beyond Asian markets, with Australia and Europe on the agenda. GoGoVan also hopes to list the company on a public market to finance growth directives and as an exit for investors who have placed big bets on the company. It plans to expand service offerings by rolling out door-to-door service in Hong Kong to fulfill customer demand in the small-item segmentcourier service that allows customers to request a "GoGoVan delivery partner" to pick up an item from Point A and deliver it to Point B. The delivery partner does not need to use a van or truck to deliver items. He or she could be a biker using a motorcycle or walker using a bicycle or even take the bus or train. Lam leaned against the office wall, staring at his feet and pondering the concept of pivots from Eric Ries' Lean Startup, one of his favorite books. How can his company become the number one intra-city logistics platform in the world?

Discussion Questions

1. What are the critical issues relating to a startup?

2. As GoGoVan builds a repeatable, scalable, and profitable business model, what are the potential risks in its expansion?

3. Given the risks you identified in Question 2, what strategies could GoGoVan employ to prevent, minimize, or respond to these risks?

4. How can you apply the value proposition canvas to understand customer needs in order to create value for them?

5. How can you apply the business model canvas to understand how GoGoVan creates, delivers, and captures value?

6. What pivots did the cofounders use to drive company growth?

7. What other pivot(s) would you suggest could help GoGoVan to stay competitive and move forward?

8. What would be the likely negative impacts of infusion of growth capital on ownership and control faced by the cofounders of GoGoVan?