Transport startups winning over customers

Vietnam’s logistics costs remain high, at equal to more than 20 per cent of GDP compared to 9 to 14 per cent in developed countries, according to the Vietnam Logistics Association.

 While significant progress has been made in improving logistics services, there is still ample room for further improvement with modern technologies. Local and foreign startups have entered field and sparked tough competition. 

Room to enter

There have been many Vietnamese startups joining the logistics sector and providing a variety of services with the common aim of resolving market problems by using IT solutions. Some have been sufficiently successful to cover all their business costs while others are now in a poor financial state, yet more and more new startups are looking to join the game. 

Dichung is one such startup, developing ride-sharing technology to reduce traffic congestion. It focuses on various carpooling services based on online and mobile solutions that include sharing private means of transport or taxis.

According to Mr. Nguyen Thanh Nam, CEO of Dichung, it provides an online  platform for ride-sharing that allows users to communicate with each other and helps fill empty seats in vehicles. Dichung’s innovative online platform enables businesses and customers to save on costs and reduce the impact of motor vehicles on the environment. 

Passenger transport has also been the focus of AnVui. The startup was developed with the aim of exploiting the provision of management solutions for transport companies operating long-distance bus routes between provinces nationwide. A year after its launch, the platform has cooperated with 50 partners with more than 600 vehicles on 1,800 routes. By using the AnVui app, passengers can order tickets online and transport companies can manage their passenger numbers online to avoid any overload on their buses. “I realized that the traditional business model for passenger transport faces several obstacles that can be solved by modern technologies,” said Mr. Phan Ba Manh, CEO of Anvui. 

Ahamove, meanwhile, is a Vietnamese startup changing the way parcels get from Point A to Point B in the country. The new app-based service was launched three years ago and is on the move. E-commerce providers of fashion, cosmetics, souvenirs and F&B products count among its major customers. “Ahamove was founded with the mission of addressing inefficiencies and the high costs faced by consumers,” said CEO Mr. Nguyen Xuan Truong. “Similar to Uber, Ahamove serves as a platform connecting suppliers, drivers, and consumers.”

Surviving the competition  

Startups already in smart mobility or preparing to enter the market face various challenges in changing the habits of Vietnamese customers and the tough competition not only from local but also foreign startups. The most popular means of coping appear to be identifying a niche market or establishing partnerships with others. 

According to Mr. Nam, the greatest challenge is changing people’s attitudes, as most are wary of sharing a vehicle with strangers. Ride-sharing solutions are struggling to fully develop in Asia, even in developed countries such as Japan, South Korea and China. “Limited resources are an obstacle for Vietnamese startups in changing consumer habits,” he said. “In order to resolve this problem, we have tried to focus on the niche market of airport transport and the results have been promising.” 

Mr. Manh added that startups always face a host of hurdles. “Before creating AnVui, I had developed two other startups that both failed,” he explained. “I then realized that I can only be successful in using IT, which is also my strength. So I decided to compete in IT-based logistics services.” 

Mr. Truong, meanwhile, said that, once in the market, startups must decide whether to confront or cooperate with their competitors. “The later you join the race, the harder it is to cope,” he believes. “Persuading customers of traditional services to use a modern technology-based services is the biggest challenge for Ahamove. Instead of finding a way to win against our competitors, we are trying to change customer behavior as quickly as we can.” 

There are always niche markets for startups to enter and establish a presence. In the transportation sector, some smaller sub-segments are technologized while others remain less so. “The more mature a market is, the less opportunities there are,” Mr. Trong said. “Early on, there are only a few competitors. Startups don’t necessarily need to confront their competitors, and may be able to partner with them instead.”

Finding a potential niche is not overly difficult, and quickly gaining a cost-effective market share is the most important task. 

“Startups should not provide the same or similar services as other players,” said Mr. Manh. “To be confident amid the competition, we must define how to win. A startup adopting the same model as Uber will have less chance of winning. Instead of confronting the major players, young startups should identify niche markets where others are too big to enter. There are many startups in smart mobility but there are few, for example, in vehicle parking or cleaning services.”

VIR