Deal focus: Flash Express secures Thai corporate support for Series D

Within two years of launch, Flash Express has become Thailand's number two express delivery player, enjoying a 20% market share. Only Kerry Logistics, which has been in the market for more than a decade, is larger. Richard Tang, CFO of Flash Express, claims it is only a matter of time before Kerry is surpassed because the gap between the two is narrowing. However, he accepts there has been an influx of new competition, notably Alibaba Group-backed Best Inc.

Mindful about consolidating its market position, Flash Express has raised $200 million in Series D funding, featuring three of Thailand's most prominent conglomerates. Energy giant Oil & Retail Business (OR) led the round, with participation from Durbell, a unit of consumer goods player TCP Group, and Krungsri Finnovate, the venture capital arm of Bank of Ayudhya (Krungsri). The company has now raised approximately $400 million to date.

Several existing investors re-upped. Chinese investors have been prominent in Flash Express' shareholder base since the Series B, including Gaorong Capital and the Electronic World Trade Platform (eWTP) Ecosystem Fund, which is backed by Alibaba and Ant Financial.

The China connection is not mere coincidence. Komsan Saelee, the company's co-founder and CEO, was inspired by his experiences in the country. "He saw that e-commerce and related infrastructure in China had developed strongly and there was huge market potential in Thailand and other Southeast Asian countries," says Tang. "There were not too many sizeable express players here apart from Thai Post and Kerry Logistics. He thought there would be many opportunities."

Saelee, a serial entrepreneur who had already launched one logistics start-up, met Weijie Di during his exploratory trips to China. Di, co-founder and now COO of Flash Express, had spent eight years at Alibaba, where his responsibilities included developing the Alipay QR code payment system. Recognizing that their knowledge and experience were complementary, they agreed to team up.

Flash Express has made the most of its early-mover advantage. The company delivers one million parcels a day – it estimates the entire market amounts to five million parcels, hence the 20% share – through a network of more than 5,000 branches across all Thailand's 77 provinces. Efforts have been made to standardize and digitize the delivery process, offering greater transparency and more competitive pricing to customers, as well as delivering more internal efficiencies.

However, being a pioneer isn't necessarily easy. Best Express, the parcel delivery business of Best Inc, has more than 5,400 franchisee partners running 33,000 service stations throughout China. Flash Express had no pre-existing infrastructure to rely on in Thailand. It was hard to find suitable locations for sorting hubs – facilities often required substantial renovations – and there were no third parties to handle last-mile delivery.

"You need experienced people who can set up distribution centers by themselves but there wasn't much of this talent in the market," Tang explains. "We had to establish the network ourselves, recruiting distribution center heads and providing training so they could run the business."

Flash Express is now exploring expansion within Southeast Asia, but there is still more growth to be realized at home. "There are still opportunities to get market share from other players and then the market is growing quickly. E-commerce is expected to grow more than 30% per annum over the next five years. At the same time, parcels are getting smaller, but the number of parcels is growing at a faster rate than e-commerce. Growth will be 50% per annum over the next five years," Tang says.

He believes Flash Express could expand its network to tens of thousands of franchisee-run centers as the service ecosystem matures. This will help the company deepen its penetration of provinces in which it is currently lacking. While the Thai corporates participating in the Series D expect Flash Express to support their supply chains, the benefits could flow both ways with Tang raising the prospect of co-developing services for existing customers.

"We were founded in Thailand, but most of our shareholders come from the China market. As a Thai company – or in the future a Southeast Asian company – we want more partners from Southeast Asia," he adds. "We are currently second in Thailand and our aim is to become number one, so we need partners to help us achieve that. We will continue to diversify our shareholder base."

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• Topics
• Southeast Asia
• Expansion
• Support services
• Thailand
• Gaorong Capital
• Alibaba Group
• Logistics