Ninja Van eyes path beyond ecommerce as price war dents FY23 earnings

Singapore-based Ninja Van’s revenue fell 7% year on year and its operating losses widened 32% in the 12 months ending June 2023 (financial year 2023), as it bore the effects of an ongoing price war in the cutthroat ecommerce logistics sector.

Despite this, CEO Lai Chang Wen was optimistic in a media briefing ahead of Ninja Van’s earnings result, predicting that it would hit EBITDA breakeven in the next 12 months. After that, the last-mile delivery firm expects to break even on a net profit basis within another six months.

Ninja Van co-founder and CEO Lai Chang Wen / Photo credit: Patrice Maurein / Ninja Van

Lai played up Ninja Mart, a business-to-business service that delivers fast-moving consumer goods (FMCG) to small retailers in the non-urban regions of Vietnam and Malaysia. While Ninja Mart is still small, it is growing and has better unit economics than ecommerce logistics.

Competition drives prices down 20%

The revenue drop in FY 2023 was not due to a decrease in volume of parcels handled. Instead, Lai attributed it to the prices for Ninja Van’s last-mile delivery services, which went “down almost 20%” year on year.

Ninja Van also had to go head-to-head with rivals like Indonesia-based J&T Express, which pursued a “very aggressive” pricing strategy that allowed it to become the largest player in Southeast Asia. As a result, Ninja Van had to either match the lower prices or give up parcel volumes.

The tough pricing environment was reflected in J&T Express’ 2023 financial performance. The firm recorded a revenue per parcel of US$0.81 in Southeast Asia last year – 15% lower than in 2022.

See also: Key takeaways from J&T’s prospectus: rapid China growth offsets slowing SEA numbers

Ninja Van’s revenue by geography also reflected the intense competition it faced in Indonesia and the Philippines, which plunged by 33% and 45% year on year, respectively.

Ninja Van was one of many logistics companies that benefited from a rising ecommerce wave in Southeast Asia, which took off in around 2016. As users placed more orders on ecommerce platforms, firms offering fulfillment services grew alongside them. In 2021, ecommerce platforms accounted for around 70% of J&T Express’ total shipments in Indonesia.

That dynamic, however, has shifted in recent years as ecommerce firms like Shopee and Tokopedia formed in-house logistics fleets. In addition, the sheer volume of orders these ecommerce marketplaces now process has given them significantly more bargaining power in negotiating delivery rates.

Ecommerce platforms such as Shopee and Tokopedia are also part of larger publicly listed companies that have faced pressure from investors to cut costs. This has led them to squeeze suppliers, including providers of logistics services.

In late 2022, Ninja Van and Shopee Philippines mutually agreed to terminate their relationship, although the logistics firm continued to partner with the Sea Group subsidiary in other Southeast Asian markets. Shopee also ended its partnership with QuadX, another logistics provider, at around the same time.

However, between FY 2023 and FY 2022, Ninja Van’s top line rose by 93% in Singapore, 24% in Vietnam, and 11% in Malaysia.

New business lines

Cost-cutting doesn’t cut it

Need for cash

The road ahead