Hundreds of sellers, thousands of buyers, nobody trusting anyone. And of top of that, a very poor postal service. That’s the mess Foxpress aims to fix in Laos with its fast delivery service!
It’s the second day in Vientiane and the second start-up in Laos. One day after interviewing Keo about his start-up 108JOB, I met Souliyo, one of the co-founders of Foxpress.
We were talking about the messy e-commerce situation in Laos for almost two hours! Having lived in China for more than two years and gotten used to coming across dozens of express delivery guys (more known as “kuaidi”) every day, it was hard to believe such a big contrast exists between the two neighbour countries.
But let’s stop talking about me; it’s time to meet Souliyo and the speedy Foxpress!
Who is behind the express delivery in Laos?
Let’s start with the interviewee. Souliyo Vongdala, 25 years old, Lao national. He went to Seattle University to study, but soon after graduating from Electrical Engineering he realized his place wasn’t in the United States:
“Going abroad changed my mindset. I realized in Laos people need people like us, people that want to build things. I realized that if we didn’t do it, nobody was going to do it. That’s the reason why I came back.
When I told my mum I had a job offer of $94,000 per year and I turned it down to came back to Laos, she was screaming at me! After all the time and money spent in the US and now I was going to quit and come to Laos!
I don’t think money is important. I think making an impact is important. Of course, if you can make money and an impact at the same time, that’s great!”
And now let’s introduce the rest of the team. From left to right, Jettana Viengsaly, Souliyo Vongdala, and from right to left, Keovisouk Dalasane, Malivahn Xaynorath and Johnny Sayyasane.
“All the co-founders come from the same community, the IT developer community in Laos. At first, four of us founded a very small start-up that didn’t make any money at all called 856NOW.
This first start-up was an app for foreigners coming to Laos to find ATMs, gas stations, those kinds of things. But then Maps.Me entered into Laos. It was a better location app and it was open source. So we decided to stop updating ours.
Then we met Keo (the owner of 108JOB) and we started a small project together, building a food delivery app similar to Yelp. We did that for one year, but at the same time we also had 2000 ideas to do something new.”
Switching from food to e-commerce
“We were facing a problem with food delivery. If we wanted to deliver a hundred meals at noon we would need at least 10 people to deliver all of them in less than 2 hours. That means hiring 10 or more people to just work three times per day, and that costs a lot. We also realized in Laos people don’t have problem a accessing food, wherever you go there’s food, it doesn’t take a lot of effort to get it.”
At this point, they decided to completely change their product and target customers. They had to solve a real problem if they wanted to succeed!
“What is a bigger problem than food in Laos? It’s e-commerce. There are a lot of sellers on-line, mainly on Facebook. These people are working full time and they sell stuff part time. The problem we see is that the buyer doesn’t trust the seller and the seller doesn’t trust the buyer.
Another problem is that in Laos the post office is very bad. That’s why in Vientiane, people don’t use it to deliver a package across the city. They’d rather do it themselves. But if they have a full time job, they can only do it either in the early morning or after work. That limits the way they can make money.
We interviewed people and observed that one seller can deliver a maximum of five items per day. So the sales volume is really low. And it is also hard for them to make an appointment and find the right time to meet the customer.
We believed we could solve this problem and make money out of it. So we planned it for a year: how it was going to be, how many people, how much budget, things like that. And then we started.”
So what does Foxpress do exactly?
“You sell online, on Facebook, collect all the orders, put everything in a bag, and then in the morning just take it to the office. We call the customer, make an appointment, deliver the product and collect the money. In the past month we collected about $40000 for the seller.
Another sector is corporations. In Laos there are a lot of small offices, which can’t afford to hire a messenger just to deliver a package a few times per month. If they don’t have a big volume, they can call us at any time and select if they want it to be delivered within 24 hours or 45 minutes. If they have more volume, they can sign a contract with us.”
Overcoming the challenges
“The main challenge was to find delivery people. It’s very hard to find them in Laos. When we set up the company we tried to hire one, but we didn’t find them for a month. Malivahn had to deliver the packages herself. After one month she got sick, so we actually had to shut down the company for two weeks.
To solve the problem, we tried to pay more to the drivers. They earn a base salary plus a bonus for each delivery, so they can make more money than people working at the banks.
But in Laos the mindset is different. You make $300 working for a bank, and you are very proud of yourself. But if you work for a low qualification job and make $300, you aren’t proud, your family isn’t proud, your girlfriend isn’t proud and the parents of your girlfriends see you with less potential.”
So people are afraid of losing face. Well, no wonder as the environment out there also helps!
“When the delivery guys go outside at noon, the temperature is super-hot. And it is also very risky, people drive super-crazy. Ten people, ten different driving styles. Sometimes coming from the right, sometimes from the left. In Vientiane the number of accidents is increasing. We are concerned about it.”
But the drivers were not the only ones challenging Foxpress:
“The other big challenge is people, the buyer and the seller. At first the buyer thought that we were the seller. And when they complained about the product they complained to us. We had to buy jackets and caps for advertisement and make it clear that Foxpress was the delivery service.
Also, different people work differently. It is really hard to systemize it. The original idea was to build an app first, and then start. But we decided to launch first, keep it simple, see what sellers are doing and then try to systemize.
Now we are working basically on Messaging apps, mostly Facebook, Whatsapp and Line. People contact us through these options. We want to build the app to be much more efficient.”
“We are very lucky. We started at a time when people are using Facebook a lot, and it’s a much cheaper promotion channel. Most of our advertisement is there and most of our clients come from there.
Lao people don’t know how to use a browser. If you tell them to go to your website, they don’t know how to type it. But if you have a Facebook page, they know how to get there. People here don’t use computers a lot. They cost twice as much as the phone, and then you also need to buy an Internet plan to connect to the Internet. With the phone you just buy a SIM card and you have everything in there.”
Growth and future of Foxpress
Do you want to know how Foxpress has performed so far?
“We funded Foxpress all by ourselves, and Keo was the main investor. We injected the money necessary to cover the initial monthly operation costs. The first year the revenue doubled every month. We lost a little bit, but the sales were higher than expected. We planned to break even in March 2017, but we achieved it in December 2016. Now we are not losing any money at all.
The growth has been very regular, except for one month when the tax policy at the border changed, so people who were importing from Thailand couldn’t import because they had to pay very high taxes.
Last year we had a very high demand, but we didn’t have enough people to attend it. We work with just 20 sellers. It is not a lot if you take into account the number of sellers in Asia, but we don’t want to have 300 at a time and then not being able to serve them properly. We want to grow slowly and strongly.”
They have some plans for trying to maintain the growth rate:
“Last year we collected a lot of data that now needs to be analyzed. One way to use it may be for advertising, like putting a brochure of new products inside the delivery packages. With the data we have, we can reach the right people with the right purchasing power for every product. This is much better than giving away brochures in the street.
We have now added a new service: surprise on demand. We go out and send flowers, cakes, or similar. We can also buy these things if people don’t have time to do it themselves.”
“There are two goals on Foxpress’ Master plan. The first one is that everything moving from A to B is going through Foxpress. And the second one is to expand all around Laos. We also want to go to other regions, like Cambodia, Thailand, China or Vietnam. The idea is that if they want to ship products to Laos, Foxpress is their right partner.”
Parents of Laos, listen to Souliyo!
“We are in the newspapers here, so people know us and our startup model. They often come and ask for advice. Most of the times, they say: ‘I want to do it, but my parents…’
I tell them to study whatever they want to study. So if you want to study banking, then study banking. But in the meantime, you can use your banking skills to try to improve the banking system in Laos. You can build your own startup to do so.
Other advice is looking at all the problems that exist here. It doesn’t matter what they study, everything needs to be solved in Laos. There are tons of opportunities!”
Thank you Souliyo for showing Foxpress to us and helping us to keep learning about Laos!
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