As online shopping is growing at a mammoth scale, Sagawa group is all set to buy Phat Loc Express, which is Vietnam’s fifth-largest delivery service, gaining a foothold to expand operations nationwide.
Japan’s SG Holdings, the parent of Sagawa Express, will buy all of Phat Loc’s shares from management. Phat Loc logged sales of over $9 million in 2015, and the purchase price likely will be a similar amount. With a market share of just a few percent, the company is dwarfed by Vietnam’s two major delivery services.
SG Holdings began deliveries in Vietnam via a local subsidiary in 2012. The company handles its own deliveries in Ho Chi Minh City and Hanoi, but contracts local businesses for other regions.
Vietnam’s service quality remains rather low, and packages sometimes arrive late or damaged. The Sagawa group will tap its Japanese know-how to try to boost the quality of Phat Loc’s service in order to challenge Vietnam’s delivery leaders.
SG Holdings teamed with major Vietnamese real estate and retail company Vingroup in November. The delivery company is accelerating its Southeast Asian expansion, partnering this year with companies in Indonesia and the Philippines. The Japanese business will deliver products for the group’s supermarkets and convenience stores.