Recently, Tongcheng freight technology platform GOGOX (GOGOX) (hereinafter referred to as “Fast Dog Taxi”) submitted a listing application to the main board of the Hong Kong Stock Exchange. CICC, UBS, BOCOM International, and Agricultural Bank International were co-sponsors.
Fast Dog Taxi was founded in 2014 and is part of the Arrivals Group. Formerly known as 58 Express, it focuses on urban short-distance freight. At the end of August 2017, it merged with GOGOX (previously known as GOGOVAN) and deepened its global business layout in Southeast Asia under the GOGOX brand. In August 2018, it officially changed its name to “Fast Dog Taxi” and positioned as a “taxi platform for pulling goods”. It mainly provides users with a short-distance goods delivery and transaction service platform for pulling goods, moving, and transporting goods anytime, anywhere.
According to public data, as Asia's leading logistics technology platform in the same city, the Fast Dog platform now has nearly 4.5 million registered drivers. Its business scope has covered 340 cities in 5 countries and regions, and has delivered hundreds of millions of times.
Meanwhile, star shareholder teams such as 58 Tongcheng, Danjia Group, Hongrun Capital, Huaxin Investment, China-Russia Fund, Cainiao Network, Qianhaimo Fund, Cyberport Investment Venture Fund, and BOCOM International Holdings have helped it attract a lot of attention in the investment market.
Whether active or passive, the logistics station in Tongcheng was tested in the spotlight in 2021. Whether it was the “cargo pickup incident where the cargo owner jumped” at the beginning of the year, or the aggressive entry of Didi trucks into the market, or the gradual tightening of various regulatory policies. Under such a background and time point, Fastdog Taxi still had the courage to choose to go public in Hong Kong. Where is TA's motivation?
Revenue grew steadily, and B-side business and overseas markets continued to gain strength
In the logistics market in the same city, Fast Dog taxis are definitely a special case; they are quite like lone rangers.
The operation of big and small giants frantically burning money after entering the market and grabbing shares in a horse racing rodeo is quite different. Fast Dog taxis seem to know how to subsidize, but “after all, burning money is a moment of relief, and the capital chain is broken at the crematorium.” Instead of blindly burning money to grab the market, it is better to save money and optimize driver and user services that are more valuable and of long-term significance.
According to information, shippers in the logistics market in the same city can be divided into three categories: large enterprises, small and medium-sized enterprises, and individuals. According to Frost & Sullivan's data, in terms of total transactions, large enterprises and small and medium-sized enterprises jointly accounted for 85% of the logistics market in mainland China in the same city in 2020. For this group of consumers, a good service experience will eventually win brand loyalty.
According to the prospectus, as of April 30, 2021, Fastdog Taxi has established business relationships with more than 33,000+ corporate customers. In 2018, 2019, 2020, and the first four months ending April 30, 2021, approximately 1.06 million, 1.27 million, 1.26 million, and 440,000 consignment orders were delivered through Fastdog Taxi's corporate services, respectively, accounting for 61.6%, 53.2%, 54.5% and 57.8% of total revenue, respectively.
In addition, the company's revenue also achieved steady growth. As of April 30, 2020 and April 30, 2021, the overall transaction order volume increased from 5.92 million to 7.98 million yuan, GTV increased from 618.4 million yuan to 798.7 million yuan, and revenue increased from RMB 128.2 million to RMB 193.4 million, up 34.7%, 29.1% and 50.9% respectively.
It is worth noting that the gross margin of Fast Dog taxis continues to grow. According to the prospectus, gross profit for 2018, 2019 and 2020 was RMB 104 million, RMB 173 million and RMB 183 million respectively. The gross margins for the same period were 23.0%, 31.6% and 34.6% respectively. As of the first four months of April 30, 2021, gross profit was RMB 68.64 million, an increase of 111.2% over RMB 32.5 million in the same period last year.
The growth rate of overseas markets is also the best tool to boost confidence in the listing of Fast Dog taxis. The prospectus shows that in 2018, 2019, and 2020, GOGOX's revenue was RMB 120 million, 194 million yuan, and 250 million yuan respectively, with a compound growth rate of 44.2%.
How to relax told the media earlier that long-term doctrine is the way to win. As for burning money, Fast Dog taxis are “not strategically compensated; tactics are another matter.”
Seven years of persistence eventually became the “head start” of the competition
Looking back at its development history, it is easy to see that in the seven years since it was founded, Fast Dog Taxi has always insisted on two things. One is establishing industry standardization, and the other is actively embracing policy changes.
As we all know, Tongcheng Logistics has huge market potential. iR Consulting once reported that the Tongcheng logistics market has a space of more than one trillion dollars, but the industry penetration rate and concentration are low. Currently, the market share of the top 10 enterprises in the industry is only 3.5%, and more than 90% of the space still needs to be explored.
However, it is important to note that due to the inherent nature of the industry, same-city logistics is inherently a non-standard service. In addition, the service targets B-side merchants as well as C-side moving users. The scenario is complicated, demand is scattered, and it is difficult to manage. Furthermore, there is no affiliation between the platform and the driver, making it difficult to define all kinds of risks and safety.
The “car jumping” incident at the beginning of the year revealed issues such as non-standard attributes and mismanagement. For all industry participants, there is an urgent need to speed up the “standardization” of the industry.
Fast Dog taxis, on the other hand, are leading the way into the “Standardization 2.0” stage. If 2015 to 2019 is defined as the “standardization 1.0” stage of Fastdog taxis, it solved the standardization of platform vehicles and the standardization of freight rates, while at the same time accumulating a strong “capacity pool” and “freight big data”, laying a solid foundation for subsequent standardization advancement.
According to previous reports, in order to ensure the safety of cargo owners, drivers, and cargo during vehicle use, Fast Dog launched 12 safety and security measures, including measures such as one-click alarms, real-time itinerary sharing, and screening of drivers' social credit and misconduct records. Furthermore, the dispatch model launched in 2020 enhances the overall service experience at the source and creates a specialized and standardized cargo transportation service model.
While implementing “standardization”, Fast Dog Taxi is more actively promoting the industry's exploration of new energy freight.
According to data, fuel consumption in China's transportation sector accounts for more than 60% of the country's total consumption. Judging from the carbon emissions of the transportation industry segment, road transport accounts for 85% of carbon emissions, of which 40% comes from road freight. In the process of achieving the “double carbon” target, the low-carbon transformation of the freight industry is particularly critical.
As early as 2018, Fast Dog Taxi proposed the goal of building an efficient, safe and green new open cargo travel platform in the future. However, in the face of the “carbon neutrality” test, Fast Dog taxis have accelerated the pace of low-carbon freight transformation.
On the one hand, Fast Dog Taxi uses an intelligent scheduling system of Internet+big data to accurately match social capacity with market demand, greatly reducing the idle rate of trucks and improving energy utilization efficiency at the source. On the other hand, Fast Dog Taxi has actively established cooperative relationships with new energy vehicle manufacturers, namely 4S stores, to provide car services for driverless drivers, and can rent or purchase new energy trucks. This approach not only reduces the burden on drivers, but also minimizes resource consumption while speeding up the development of green logistics.
Over the past two years, with the support of local governments, Fast Dog Taxi has continued to rapidly improve the construction of a green ecological supply chain system. It has carried out in-depth cooperation with many new energy vehicle manufacturers such as Carry New Energy to fully promote the use of new energy vehicles in logistics in the same city, so that drivers can enjoy wider entry conditions than fuel vehicles, as well as preferential policies such as subsidies.
In Shenzhen, the proportion of orders completed by NEVs on the Fast Dog taxi platform rose from 54.7% in January 2021 to 81.1% in July 2021. In Singapore and Korea, the platform provided zero-emission delivery to several enterprise customers through the use of new energy vehicles to promote their sustainable development vision.
The continuous promotion of standardization and green freight has distanced Fastdog taxis from their competitors. The strategies that were not favored back then have long become the differentiated advantage and accumulation of Fast Dog taxis.
Building a technology-driven ecosystem for sustainable development
In 2020, Fastdog Taxi reached strategic cooperation with a number of OEMs to launch a new “person+car+service” model, focusing on cargo owners and drivers, and participating in the full life cycle service of vehicles, further lowering the employment threshold for truck drivers. Just what you call it, step by step, step by step. Fast Dog Taxi has begun a “order to ecology” layout to build a full closed loop model of “person+car+service”.
The so-called “person+car+service” means that Fast Dog organically combines “people, vehicles, and goods” to provide freight drivers with one-stop solutions for transportation orders, car purchase/leasing, car maintenance, etc., to help chauffeurs reduce various transportation costs, and also effectively revitalize all links in the entire ecological chain of the freight forwarding industry.
In addition, Fast Dog Taxi has collaborated with industry partners to create diversified drivers' job search channels, enabling drivers to earn stable income while improving overall freight efficiency and service experience through innovative models. As of April 30, 2021, Fastdog Taxi has reached strategic partnerships with more than 107 car sales and service stores, covering more than 7 mainland Chinese car brands.
All superstructures must have a solid foundation built on the underlying technology. In 2019 and 2020 alone, Fast Dog Taxi invested hundreds of millions of yuan in technology and product development to dynamically match big data algorithms, transportation efficiency, cost efficiency and driver/cargo owners' needs, providing diversified value-added services to all parties to create a high-value ecosystem.
In the second half, Fast Dog Taxi will continue to increase technological innovation, maintain a high level of investment in cutting-edge technologies such as machine learning and intelligent algorithms, ensure continuous technological upgrades and updates, and realize the digital transformation of freight.
Judging from recent trends, the penetration rate of online intercity logistics platforms in Asia increased from 0.21% in 2016 to 2.02% in 2020, and is expected to continue to increase to 14.3% in 2025. It can be seen that the future of the online intercity logistics circuit is wireless. However, Fast Dog Taxi also sent a positive signal to the capital market this time, confirming the new direction of long-term development of logistics platforms in the same city. With the entry of subsequent capital, competitive advantage was further expanded and a solid brand moat was established.