Can Temasek-backed Scommerce beat a sea of rivals in Vietnam’s logistics race?

Singapore’s Temasek wants to back “aspiring unicorns” in Southeast Asia. Last year, Vietnam-based ecommerce logistics provider Scommerce apparently fit the bill.

The Temasek-led round of US$100 million was one of three mega deals that catapulted Vietnam’s tech ecosystem to new heights in 2019. A year earlier, Scommerce had reportedly also raised US$30 million from a private equity fund.

GHN is a brand under Scommerce. / Photo credit: Scommerce

The company specializes in last-mile express and on-demand delivery. Like other notable tech companies from Vietnam that prefer to dodge the regional limelight, such as VNG and the newly crowned unicorn payment company VNPay, Scommerce is squarely serving the domestic market.

It makes sense for it to do so: Vietnam has one of the highest logistics costs in the world, accounting for about 20% of its GDP. Plus, 98% of Vietnamese firms are small and medium enterprises (SMEs), and they’re craving for better delivery solutions.

According to the Vietnam Logistics Report 2019, the number of orders processed by fast-delivery logistics companies grew by 45% on average between 2015 and 2020 and could reach 530 million orders in 2020.

The latest Google, Temasek, and Bain & Company report projects that Vietnam’s digital economy could reach US$52 billion in GMV in 2025 (trailing only Thailand’s US$53 billion and Indonesia’s US$124 billion). And even during a pandemic, Vietnam’s ecommerce is still growing at a staggering pace of 46% as consumers flock to buy online, thus accelerating delivery demand.

That’s why regional competitors such as Ninja Van, Lalamove, and J&T Express have been crowding this space. Sea Group even quietly invested in a local logistics company in 2017. Grab and Gojek are also competing in the on-demand delivery segment.

So will Scommerce be able to defend its home-court advantage?

Getting started and ahead

Scommerce traces its origin to a startup called Giao Hang Nhanh (GHN), which means “fast delivery” in Vietnamese. GHN was founded in 2012 by a group of ex-employees from Mobile World, Vietnam’s leading electronics retailer.

Scommerce (short for “services for commerce”) was established in 2017 and subsequently subsumed GHN into a grander plan. By 2018, it crossed the US$100 million revenue mark, claimed CEO Luong Duy Hoai as per a local media report.

It achieved this by becoming the delivery partner for all of Vietnam’s largest platforms — Shopee, Tiki, Sendo, and Lazada — as well as more than 100,000 small and medium-sized online merchants.

A timely spin-off

A tipping point?

A threat to Scommerce?

Staying focused