Delivery is reaching a fever pitch across the U.S., China, India, and Indonesia; logistics is highly fragmented, seeing less big players therein; vertically-focused supply chain players are much smaller.
Gojek driver waiting for passenger. Image Credit: Afif Kusuma/Unsplash
27 Supply chain, logistics, & delivery unicorns- startups that valued at USD 1 billion- scatter across eight countries, including the U.S., China, India, South Korea, United Kindom, and other emerging markets.
China produces more unicorns in this sector than the U.S., unsurprisingly, along with the cutthroat competition among the country's Internet and tech companies.
China, with its unprecedent consumer internet development, grabs the most unicorns in this sector, with nine unicorns valued at USD 16 billion as a whole. But the birthplace of decacorns (companies that valued at more than USD 10 billion) the U.S. sees higher valuation with less number of unicorns.
Seven among the 27 are born in 2019, spreading across the globe. While the majority of new unicorns appeared in the U.S., including logistics firm KeepTruckin, food delivery company ezCater and drone delivery firm Zipline International- others reflect the growing number of innovation globally, such as Delhivery and BigBasket in India, and iFood in Brazil.
Zipline, the California-based company operates globally and aims to serve 700 million people with its drones within the next five years. Despite fierce competition in the field, the drone delivery operator built its billion-dollar business selling drones and medical supply delivery services across Africa, the Americas, South Asia, and Southeast Asia. The high-tech delivery company started its Africa business in Rwanda three year ago to provide vital health products to people there and now is the world’s largest autonomous medical drone delivery service. Its autonomous systems can deliver a package within 30 minutes after a health-care worker places an order by text. Zipline’s drones take off and land from its distribution centers.
Despite being seen as a saturated market in some countries, delivery continued to attract massive investments that push firms to become unicorns in past few years, with 16 delivery firms in the unicorn club that valued at USD 50. 58 billion in total (average market valuation thus is USD 3.16 billion). Besides, it took the least time for delivery companies to get into the unicorn club, compared to logistics and Supply chain.
No doubt that delivery is reaching a fever pitch across the U.S., China, India, and Indonesia. Several big players are here, such as DoorDash and Go-Jek. Go-Jek (Indonesia, valued at USD 10 billion) repositioned itself from a ride-hailing platform to be a large super app to include local mobility services, grocery and medicine delivery and daily needs in one app, betting on the future of delivery.
The massive delivery unicorns concentrating on the U.S. likely reflect the highly fragmented and heating competition in markets that have been overlooked to date. Instacart and Postmates compete in the field of grocery delivery; DoorDash and ezCater compete in food delivery.
Logistics unicorns specialize in freight transportations. Similar to delivery sub-sector, Logistics is highly fragmented, only with less big players. Some focuses on intercity logistics (Manbang Group, China, valued at USD 6 billion) while some on intracity logistics (Lalamove, China, valued at USD 1 billion); some operates fleets, warehousing, and parcel transportation by themselves (Delhivery, India, valued at USD 1.6 billion) while some helps trucking companies manage their fleets and drivers with software (KeepTruckin, the U.S., valued at 1.2 billion).
In this sub-sector, the players raise money at a slower speed than the other two sub-sectors (delivery and supply chain), but with a fair average funding amount that leads to moderate average market valuation. To-business logistics/supply chain emphasize less on acquiring customers with large capex to become market leaders, nonetheless being forgotten by consumers.
Convoy’s intra-city logistics services connect shippers with nearby carriers and book jobs instantly. The firm and Uber's freight division launched fleets of trailers that shippers can preload with goods to speed up cargo transfers for drivers and shippers on their networks.
Supply chain players face a longer time to become a unicorn (compared with delivery firms), with less valuation achieved. Yiguo, Nxin, Meicai fall into the subsector of supply chain, coincidently all three focus on agriculture area. Yiguo is a B2B and B2C fresh food distributor in China, gaining traction from a “new retail” trends in the domestic market.
Beijing-based agriculture internet platform operator Nxin provides agriculture information-sharing, skills education, and agriculture means of production selling services. It took Nixin three years to become a unicorn with Series B round of funding.
Meicai’s B2B operating model patterns from Sysco in the U.S. and it follows JD.com’s “all-in logistics” strategy to provide fresh vegetables to small restaurants in China.
While the case of becoming a unicorn at a firm’s early stage is still rare, over time if the concept continues being widely accepted, it could have an impact on the primary market. Founded in 1997, YH Global provides transport distribution, international freight forwarding, and commerce logistics services. It became the first company to become a unicorn with just a Series A round of funding.
With its USD 100 billion Vision Fund, Softbank has made a number of significant investments and that built several unicorns in the field. Its attention focused on delivery firms across different categories and countries, including DoorDash (food delivery, the U.S.), Dada-JD Daojia (Grocery delivery, China), Loggi (Logistics, India), and Rappi (food delivery, Columbia). Manbang Group, which came into being with the merger of Truck Alliance and Yunmanman in December 2017, also got investment from Softbank. It raised a record-setting USD 1.9 billion in the last round of funding.
Corporate participation signifies industry evolution. In China, two unicorns are partly controlled by local e-commerce behemoths, JD.com (Dada-JD Daojia) and Alibaba Group (invested in FlashEx). Alibaba Group has made inroads in stepping into India market by investing in BigBasket, apart from its domestic strategic target Yiguo. Ant Financial, the subsidiary company of Alibaba Group, invested in India’s food delivery service Zomato. Watch out, e-commerce giants can still acquire many unicorns.
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