AirAsia revealed on August 18 that its logistics arm, Teleport, will acquire Penang-founded delivery platform Delivereat for US$9.8 million. The deal values Teleport at US$300 million, and the logistics company will welcome venture capital firm Gobi Partners onboard.
“This is a 100% acquisition where Delivereat will transition to being fully under the Teleport umbrella,” stated Pete Chareonwongsak, CEO of Teleport to Vulcan Post. “We will work with the airasia food team to transition and onboard Delivereat’s food merchants onto airasia’s food platform as seamlessly as we can by Q4.”
This means that Delivereat’s customers will still be able to order from their favourite merchants on airasia food, and Pete shared that the startup’s fleet of approximately 4,000 riders will also be onboarded to Teleport’s fleet by September 2021.
Delivereat founders Leong Shir Mein and Tan Suan Sear will be joining the management team at Teleport and airasia digital too.
On a more level playing field as a super app
It’s a well-known fact that AirAsia’s goal is to become ASEAN’s leading super app for quite a while now, accelerated by the pandemic halting its airline services. But to get there, they need to capture a significant market share in Malaysia with popular offerings, and the Delivereat acquisition will play an important role in that plan.
“Delivereat brings an extensive and cost-competitive delivery network as quickly as possible in major cities, where Teleport does not have a strong presence, i.e. Penang,” described Pete. “The goal is to not only expand in the food delivery space, but also to connect Penang with its growing potential to the rest of ASEAN with our ability to deliver cross-border within 24-hours”.
Founded in 2012, Delivereat grew to deliver more than one million orders to date, and offered food and express delivery services on an on-demand basis. Its 4,000 merchants comprise restaurants, wet markets, pharmacies, and groceries, sectors that saw increased demand for e-commerce in the pandemic.
Through Delivereat, airasia Super App will be able to enhance its existing offerings in those sectors. The app is now on a more level playing field with its largest competitor, Grab, thanks to this acquisition, a partnership with PolicyStreet to offer auto insurance, and its most recent ride-hailing launch.
Making quicker deliveries possible
At the moment, Teleport’s cross-border deliveries from KL to Penang require wait times between an hour, 4 hours, and 24 hours. By expanding its rider pool, Teleport has the potential to strengthen its footprint in Malaysia, and fulfil last-mile deliveries quicker.
While fresh produce and hot food remains a domestic service, Teleport’s hope is to cross-utilise last-mile capabilities to enable cross-border parcel deliveries as well. Ultimately, Teleport’s plan is to move things across Southeast Asia as efficiently as possible, no matter the parcel.
“We want to have consumers in any of the 232 cities across Southeast Asia to be within reach of 1-hour in-city delivery and 24-hour cross-border delivery at flat and transparent prices,” hoped the ever-ambitious AirAsia subsidiary.
“Who knows, maybe one day hot food will become a luxury you can enjoy even cross-border,” mused Pete. It’s difficult to imagine such a world where cross-border food deliveries are viable as drivers are still limited by traffic and weather conditions. Could this point to a potential launch of its drone deliveries soon?
Not resting on its laurels
To track the results of this acquisition, the team will be looking at Teleport’s revenue and growth. Pete told Vulcan Post that the Delivereat acquisition is forecasted to contribute an additional 20% in revenue to Teleport’s current 6-9% week-on-week growth by the end of 2021.
He added that airasia digital is set to expand to Melaka and Johor Bahru by August 24 and Ipoh by the end of this quarter while further nationwide expansions will be announced in the months to come.
As with any business, AirAsia and its subsidiaries have received a fair share of criticisms for their operational efficiency. However, the main takeaway from what AirAsia has achieved during the pandemic with its airplanes grounded is proof that the company isn’t one to rest on its laurels.
It’s already mulling over the idea of splitting airasia digital from its core airlines business, which would lessen the complexity of running both segments and ensuring that its super app can grow with fewer restrictions.
Considering Grab’s monopoly as the preferred super app for years now, it’s an exciting time as a consumer to see the airasia Super App coming in with confidence that it has what it takes to stack the odds in its favour.
Featured Image Credit: Pete Chareonwongsak, CEO of Teleport / Tan Suan Sear and Leong Shir Mein, Co-Founders of Delivereat