Lippo and Sumitomo muscle in on Go-Jek’s territory with last-mile logistics bet

Lippo Center, Hong Kong / Photo credit: Craddocktm

Japan’s Sumitomo Corporation has invested in Lippo Group’s last-mile subsidiary Red Carpet Logistics (RCL) as part of a wider strategic partnership with the Jakarta-based conglomerate.

RCL operates out of 53 hubs covering 172 cities and 2,400 districts across the island nation. It handles smaller deliveries, like ecommerce purchases and express courier jobs, and offers back-office services to merchants.

While the parties didn’t disclose the value of Sumitomo’s investment, the Nikkei Asian Review reported it at US$9 million. The Japanese trading house will acquire a 40 percent stake in RCL, which will use the funding for growth initiatives including the launch of RCL Express, a consumer-to-consumer express delivery platform.

[We] intend to build RCL into the industry leader.

As part of the deal, RCL will be able to lean on Sumitomo’s logistics experience and expertise, including its 200,000-strong network of agents throughout Indonesia. According to the Nikkei, Sumitomo’s small-business financing unit will recruit clients like mom-and-pop stores as RCL Express pick-up and drop-off points for packages. RCL will also use Lippo-operated shopping malls and stores as additional distribution hubs.

Ganging up on Go-Jek?

In a joint press release announcing the deal, Lippo and Sumitomo said that on-demand delivery has become “indispensable for finance, food, ecommerce, [and] automobile industries.” The two companies also said that they “intend to build RCL into the industry leader.”

One of RCL’s main competitors is ride-hailing firm Go-Jek, which provides an array of on-demand, logistics-related services including food delivery, couriering, and grocery shopping.

Photo credit: Go-Jek

Lippo’s partnership with Sumitomo is the latest in a string of deals that seem to indicate that the family-run Indonesian conglomerate is encroaching on Go-Jek’s territory.

Ovo – the cashless payments platform developed by Lippo – has been able to easily acquire a large number merchants by virtue of Lippo’s retail and property assets, overcoming one of the main hurdles facing Go-Jek’s Go-Pay service. It has also integrated with GrabPay, the e-wallet offered by Go-Jek’s archrival Grab, which counts Lippo’s VC arm Venturra Capital as a shareholder.

In addition to the Ovo wallet, Grab is offering loans and insurance to Indonesian micro-entrepreneurs through its Grab Financial unit – directly competing with similar products that Go-Jek offers through Go-Pay.

See: Grab’s latest play is to become lender and insurer to Southeast Asia’s ‘middle economy’