Life for Hong Kong residents is cramped. The city is the fifth most densely populated urban area in the world, and the third most expensive to buy real estate. As a result, both the rich and the poor are packed like sardines. Either you live in a tiny apartment and can’t fit anything in it, or you live in a tiny apartment because you’re too broke to begin with.
So it comes as no surprise that Hong Kong entrepreneurs are taking on-demand goods storage, a concept slowly spreading across the United States, and bringing it to the fragrant harbour. Norman Cheung, CEO of Boxful, hopes to introduce a new model for warehouse despository that gives city residents a little more space. He and co-founder Carl Wu have scored US$1.5 million in funding for the venture, from angel investors that haven’t been revealed to the public.
Upon request through Boxful’s web or mobile apps, the company delivers weather-proof, stackable boxes sized 22 x 15 x 12.7 inches to customers looking to pack up their stuff. Boxful team members then drive the boxes to a warehouse facility. The company charges a monthly rental fee of HK$49 (about US$6) per box stored, along with a flat fee of HK$100 + HK$25 (US$13 + US$3) per box upon retrieval. The company does not charge for initial pickup.
According to Cheung, Boxful’s business model differs from Hong Kong’s traditional storage model because most warehouses set rental rates of about HK$1000 (US$ 130) for a minimum three-month storage period. Pick-up and drop-off services, while optional, can cost up to HK$500 (US$65) per trip. Customers must also either purchase paper boxes or provide them themselves.
Cheung says that Boxful can price out Hong Kong’s incumbents through two main means. First, its warehouses are strategically placed in quieter parts of the island, which lowers overhead in rent.
“We have a warehouse in the south of Hong Kong Island where we’ll store everything,” says Cheung. “We’re able to do this because we have our own fleet. So our cost savings are massive compared to the traditional warehouse guys, since most of them are strategically located near the subway.”
Second, by managing space allocation completely in-house, Boxful can ensure that no storage space is wasted. This entails using standardized, stackable boxes. It also leaves the storing to the pros, whereas traditional storage facilities let customers fill designated space on their own. Often, that means rooms full of hastily stacked boxes of all sizes – and space wasted is money wasted.
“We only charge their customers for what they actually use, whereas with a traditional storage provider you have to rent the entire room even if you don’t use the whole space,” says Cheung. “So even if you only have one box, we can work with you.”
In essence, Boxful opens the market for storage by streamlining parts of the booking and management processes. It likely spends more on labor, logistics, and technology than traditional facilities and makes less money per customer. But by making storage more feasible for the average consumer, more customers will hopefully shell out.
However, it’s possible that moving the logistics part of self-storage in house might impede scalability. Fleets are expensive to maintain (that’s one reason why Uber exists), and labor requires training. Cheung hopes that retaining first-mover advantage will give the company breathing room on this front.
“The logistics will be the largest fixed cost for the business. The barriers to entry for this business are quite high because it requires lots of fixed infrastructure,” says Wu. “The first mover and market leader will have the benefit of economies of scale,” he adds.
Boxful has moved at lightning speed. Cheung founded the company in October 2014 after departing from ZOOQ, a Shanghai-based ecommerce company that remains active. He says he moved on because they wanted to return to Hong Kong. After securing funding before Christmas, he launched Boxful just last week. Its services are up and running, but the company has yet to release mobile apps for iOS or Android.
Boxful is not first company to come up with this premise. In the US, a handful of startups have emerged with the exact same mission, many of whom have scored respectable funding. Makespace, which has raised over US$10 million to date, primarily serves customers in New York City, but made its first play at going national through a partnership with United Parcel Service. Boxbee, which has raised US$7.3 million, mainly serves California. Seattle’s Storrage and LA’s Clutter have also entered this vertical.
In Asia, Boxful will face competition from Vault Dragon, a Singapore-based startup that scored seed funding after graduating from JFDI’s accelerator program. According to its website, the company is active in Hong Kong, and it’s priced roughly the same Boxful – monthly storage rates start at HK$88 (US$11) per box, and return delivery costs at HK$99 plus HK$20 (US$13 plus US$2.50) per box. Unless these two companies can differentiate on service, price will likely be the prime differentiator for on-demand storage startups in a single market. If Hong Kong dwellers find these services useful, expect investors to place big bets on their favorite horses very soon.
This post Boxful wants to help cramped Hong Kong residents store their stuff, on-demand style appeared first on Tech in Asia.
Boxful wants to help cramped Hong Kong residents store their stuff, on-demand style
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