As the tech race heats up, self-storage startup Boxful is primed for a strong showing. CEO Norman Cheung tells Duan Ting the company knows HK well and understands the agony of living in a jam-packed city.
Norman Cheung, chief executive officer of Boxful, believes that competition is a good thing, and the self-storage business holds great promise as Hong Kong apartments continue to shrink in size. (PARKER ZHENG / CHINA DAILY)
Boxful — Asia’s largest on-demand valet storage and logistics tech startup — feels it’s not punching above its weight despite the rapid proliferation of locally and foreign-funded industry players in Hong Kong.
Its rallying cry is “we know Hong Kong” and, in the words of company co-founder and Chief Executive Officer Norman Cheung, “we’re familiar with the pain of grappling with the lack of space” in an overcrowded city.
Cheung, who launched the company along with partner Carl Wu in early 2015, recalls that hailing from a middle-class family in congested Hong Kong had very much dictated his entrepreneurial concept and desire to bring it to fruition.
“Growing up in Hong Kong, my two younger brothers and I had to squeeze ourselves into a small bedroom with a bunk bed and pull-out mattress, so I understand the pain of lack of space and I really wanted to find a way to solve this huge social problem,” he tells China Daily.
When we came up with the plan to get Boxful off the ground, I talked to about 10 people, and half of them didn’t like the idea
Norman Cheung, co-founder and chief executive officer of Boxful
Boxful, with warehouses dotted across Hong Kong, entered the fray in the valet storage business, charging customers as little as HK$29 a month for one storage box, along with free door-to-door pickup service, for the upkeep of one’s assortment of household paraphernalia.
The company’s base concept is not that new, Cheung admits. But, in terms of storing documents, a service that has been around for more than two decades, what’s new is they’ve switched from the “To Business” to the “To Clients” idea and, instead of using paper boxes, they use plastic boxes, with everything done online.
Competition has grown more intense from two years ago when Boxful debuted and was among the trailblazers in the field, with more than 20 companies now in the tussle for a slice of the pie.
“The user experience we provide with the valet model is new, more affordable and superior and that’s how we differentiate ourselves from others,” explains Cheung, adding that user experience starts from the notion of “being simpler is better”, including developing an app, free drop-offs and pick-ups, next-day delivery and customer service, and moving teams to provide the best services, plus an abundant investment pool.
Boxful has its own technology team, says Cheung, as he demonstrates how to use his phone app to store things like CDs, basketball stuff and documents.
“Our service is very convenient and Hong Kong people enjoy convenience. It’s like storage right in your pocket. You click a button to order our service without leaving your home or office, and you can schedule and track everything online, our delivery team does all the moving for you.
“In order to use traditional mini-storage, customers need, firstly, to know which mini-storage company they want to use and then locate a mini-storage facility closest to you. You’ll need to visit the facility and move everything yourself in and out of your unit. After all the trouble of searching for an ideal unit, you may find that the facility you were looking at is no longer available.”
Judging from the way things are going, Boxful is looking for more staff atop its current 40 employees.
Cheung believes their operation differs greatly from that of the traditional mini-storages as they provide door-to-door and next-day deliveries and, in most cases, it’s cheaper in terms of per square foot of space used.
“We save a lot in rental cost as the rent for our warehouses in the New Territories are considerably lower, probably one-third or half that of other mini-storage operators. We also serve large corporate clients and offer customized service plans. We’re able to cater to customers who want to store just one box all the way up to hundreds of square feet, and this is another difference.”
In terms of the safety issues traditional mini-storages often face, Cheung says all of their storage facilities are equipped with security tools, including 24/7 CCTV monitors and fire safety installations like fire detection alarms, automatic fire sprinkler systems, fire hose reels and fire extinguishers.
Access to the company’s storage facilities is restricted to staff members and these facilities operate in an open space environment free of partitioning or cubicles.
Cheung adds that they provide free insurance coverage to all of their customers’ stored items against fire and other types of damages, and customers are not allowed to store prohibited items including flammable items. They also have a dog patrol team deployed to regularly sniff out and identify potentially prohibited items including explosives.
Looking into his crystal ball, Cheung sees abundant opportunities for the industry in Hong Kong compared with Japan or the United States.
The self-storage business in the US, he notes, has been around for two to three decades and people in the US have the habit of using self-storage, while many Japanese are minimalists.
“New York city is only slightly larger than Hong Kong population-wise, but if you look at the self-storage supply and demand there, it’s six to seven times more than here. In New York city, there are about 30 million square feet of self-storage space but, in Hong Kong, it’s only about 4 to 5 million square feet.”
And, the storage space ratio for each person in the US is around 5 to 10 — 10 times higher than Hong Kong’s — according to Cheung.
“Hong Kong is just getting started in terms of storage usage,” he says. “If you look at the property price-to-income ratio in Hong Kong, we consistently rank top three globally. For the average household in Hong Kong, each person has just 160 square feet of living space, not much more than a typical prison cell in Hong Kong which provides 80 square feet for each inmate. If you look at the limited land supply and high development costs, the situation isn’t likely to change and apartments will continue to be smaller and without dedicated storage space.”
“In my view, releasing space in the flat through storage, thereby maximizing living space and minimizing unwanted items in the flat, is one of the few sustainable ways to live more comfortably,” says Cheung.
“We want to grow the pie. In the first year after our company got started, we did a lot of education and promotion telling others who we are and building up the ecosystem and, in the second year, we saw increased competition.”
In terms of local market share, Cheung reveals that, since 2015, for every five new net users of mini-storage space, one of them is a Boxful customer.
In his view, the economy of scale is important. Otherwise, the business will be very difficult to sustain. The trade also needs technology and a system to maintain the fleet, vans and tracks as logistics is a costly operation.
Boxful has spread its tentacles overseas, opening a branch in Taipei last year. “We’re also seeing very strong growth in Taipei and we’ll continue to invest in the market and other regions. We would like to develop both locally and internationally in future.”
The self-storage sector is also growing very fast on the Chinese mainland and many Asian countries, including Japan. Key industry players have popped up out of nowhere in Shenzhen, Shanghai and Beijing. Cheung believes that, in the next five years, the number of users in first-tier cities will grow rapidly as living space has been decreasing, and the business model will grow from the traditional 1.0 to the 2.0 version.
Boxful has so far raised US$8.1 million in two rounds of venture funding, and the money will be used to invest in areas like lifestyle branding, logistics and innovation.
Boxful isn’t the first startup company Cheung founded. He set up e-commerce business ZOQ in Shanghai from 2012 to 2014, but a lack of funds and fierce market competition eventually led to its demise.
He sees strong competition coming from Taobao and many other players in the market, but Boxful is confident of its own strength in the business.
“Competition is always a good thing for consumers and a huge challenge for companies. But, I’ve learned a lot about storage and inventory management from my past startup experience on the mainland.”
Chasing after the rewards, but it’s all a very painful experience
Boxful Chief Executive Officer Normal Cheung had been in the financial industry for eight years, having worked for UBS Investment Bank and PwC, before launching his startup.
“It’s a great and invaluable experience having worked at a large financial institution. I would not trade that experience for anything else even though I had to work very long hours. But, the great thing is that you do learn a lot, including corporate finance and accounting, which is critical for anyone running his or her own business.”
“But after the experience, I decided that it’s time to try something new, a new challenge,” he says.
“I’ve always wanted to be an entrepreneur,” says Cheung, adding that many of the most successful people in the world are entrepreneurs, so, he thought, why not give it a shot?
The challenge, curiosity and thrill of being an entrepreneur attract him, he says.
“It’s thrilling and exciting knowing that you are working on something you feel passionate about and you truly believe in.”
But, starting a business just for the sake of doing it could be a quite painful experience, he cautions.
“When you have an idea, talk to as many people as you can and get more feedback from people in the industry, which could potentially save you months or years going down a wrong path.”
“Don’t be afraid that your ideas will be stolen as there are plenty of ideas out there, but it’s the execution that makes the difference. Also, don’t give up so easily just because some people don’t buy into your ideas.”
“When we came up with the plan to get Boxful off the ground, I talked to about 10 people, and half of them didn’t like the idea,” the entrepreneur recalls.
In terms of management, Cheung reckons that people are always the most critical assets.
He works about 12 to 15 hours each day, checks his emails after dinner and does some strategic thinking.
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