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Uber seems to be doing well after its abrupt exit from the competitive Southeast Asia market after selling to local competitor Grab. The ride-hailing company made $2.5 billion in profit on $2.6 billion revenue in Q1 2018.

“Uber gained $2.9 billion after it merged its businesses in Russia and Southeast Asia with local competitors.” – Recode

How has Grab spent this time and opportunistic time to grow market share?

Well, the Singaporean based, ride-hailing Grab celebrates its sixth birthday this year and its founder and CEO Anthony Tan recently took the occasion to announce the launch of its new investment arm: Grab Innovate.

This is a good sign pointing to healthy coffers and without Uber, the company has a relatively a smooth path to a ride-hail/all-in-one super app monopoly in Southeast Asia markets (that are not Indonesia).

A lot has changed since Uber’s exit two months ago.

Grab’s Timeline Following Uber’s Exit

March 25th – Uber exits from Southeast Asia, sells to Grab
May 7th – Grab rolls back discounts for customers and incentives for drivers
May 7th – Grab Singapore launches three new services: GrabAssist, GrabCar Plus and GrabFamily
May 7th – Grab allows cash top up feature in the Philippines
May 17th – Motorbike taxi drivers protest in front of Grab Bike office in Bangkok
May 28th – Grab launches GrabFood in Singapore
June 4th – Grab announces launch of Grab&Go allowing riders to try up to four free samples such as cereal bars, shampoo, etc. during their rides
June 5th – Grab announces launch of Grab Ventures and Velocity

But there has been backlash from various communities – rider and drivers alike – who are disappointed with the company’s recent performance, user experience after only now being forced to use the Grab app.

What are customers unhappy about?

Based on an ecommerceIQ Community survey, the top two ride-hailing providers preferred by customers remain Grab and Uber.

ecommerceIQ

It is also important to keep in mind the top respondents reside in Singapore, Indonesia and Thailand that can skew the results as LINE and Go-Jek aren’t available in Singapore.

When asked about the other value-added services used in addition to ride-hailing, customers chose “Food delivery” and “Package delivery” in second and third place, respectively. Results also revealed the adoption of built-in e-wallets aren’t popular.

ecommerceIQ

And all hell broke loose when customers were asked to ‘speak their mind’ about Grab services in Southeast Asia. These were a few of the replies:

“Functionality not as good as Uber, but improving. Maps not as accurate, main gripe is timings – the estimated times are totally off so really hard to know when to book. Wallet has been useful at hawkers / festivals a couple of times, would use more if that expands.”

“Cannot change the pickup location (sometimes GPS is not accurate) – tried ordering food at 11AM and it said rider not available – got a lot more expensive and waiting got much worse after Uber’s exit.”

Prices has increased dramatically since the merger with Uber; what’s worse is, driver availability has also gone down since.”

Too expensive now. Confusing fare structure and flat rate charged before the trip are more expensive than taking a taxi. Losing UberEATS for GrabFood is the bigger disappointment though – at least Grab’s transport works, the GrabFood UX/UI is the worst app I’ve opened for four years and completely unfriendly to non Thais.”

And a single positive reply:

“Awesome.”

Most common complaints? Terrible UX, inaccurate Maps, lack of drivers and more expensive than before.

Go-Jek to the rescue?

Not quite.

While on-demand in Indonesia is essentially untouchable due to Go-Jek’s market dominance and customer loyalty, the company will struggle to convince other Southeast Asians to download yet another on-demand app when they expand.

But a window of opportunity may be wide open for them if Grab doesn’t improve its user experience (and quickly given Go-Jek’s long-awaited expansion).

ecommerceIQ

Source: GrabFood Apple Store reviews

During our intimate interviews with Jakartians who surprisingly use multiple digital payments, we discovered it is all due to convenience. Because they already use Go-Jek to order everything else on one platform – one app. They don’t want to install more applications on their mobile phones.

Let’s say Go-Jek is able to overcome tricky government regulations, assemble driver fleets, and jump through talent pool hoops, customers trying Go-Jek, already well-known in Indonesia for its superior UX/UI, have access to the company’s all-in-one app services – all in one.

This is an already added plus considering users need to download a separate GrabFood app to order food versus the built in function in Go-Jek’s app.

GoJek’s expansion will also mean users can enjoy lower prices as companies will likely revert back to heavy subsidies to win customers and leading to Grab dropping prices once again.

ecommerceIQ, Consumer Pulse

Source: ecommerceIQ Ride Hailing Survey 2018

Competition is a good thing

Competition encourages businesses to improve the quality of goods and services they sell to attract more customers and expand market share.

“Preparations are well under way and within the next few weeks our first new country launch will be announced. This will be followed by three other countries in Southeast Asia by the middle of the year.” – Nadiem Makarim, CEO and founder of Go-Jek.

Citing the financial and strategic backing of its local and global partners, he added: “We are confident that we have more than enough support to take one of the most amazing growth stories in the world from being an Indonesian phenomenon to a global one.”

Grab should be taking advantage of this brief moment of competitor-less time to become even more user friendly, push revenue limits and popularise its e-wallet, but based on survey results, forgotten to optimise its core value proposition – a seamless ride-hailing experience.

Brace yourselves everyone, we’re in for another on-demand showdown.

China’s Didi Chuxing and SoftBank Group Corp. are leading a new round of funding in the Southeast Asian ride-sharing service Grab that could exceed $600 million, according to Bloomberg. Grab is also seeking to raise a separate $400 million in the following weeks.

The talks signal that the truce between Didi and Uber Technologies Inc. in China this week is far from a global accord. Didi bought out Uber’s operations in the country and became a shareholder in the US company but the Chinese firm’s investment in Grab shows it will continue to clash with Uber in Southeast Asia and perhaps other regions.

Now Didi will be able to put the reserves in new growth markets like Southeast Asia and back a player they believe has a strong chance.

Grab CEO Anthony Tan said he expected Uber to concentrate on the relatively untapped Southeast Asian market after agreeing to sell its China business. Grab currently operates in 30 cities across six countries, and was valued at $1.5 billion in 2014. It is not clear yet what the company’s current valuation will be.

The alliance that Didi forged last year with Grab also included India’s Ola and the US’s Lyft Inc. It’s unclear what impact the Didi-Uber deal will have on the other members of that tie-up.

It seems that Didi is making a very complex, interwoven play at the ride hailing app market, no official word has been announced from Didi, regarding the operations of both deals. Didi’s move in Southeast Asia is perhaps a counter move to fight against Uber, which is poised for a more aggressive strategy in Southeast Asia following the sale of its business in China.

A version of this appeared in Bloomberg on August 3. Read the full version here.

Indonesia’s most popular ride-hailing app Go-Jek is in negotiations with two of the world’s largest investment firms, KKR and Warburg Pincus, to raise funds totaling $400 million. This financing round will see Go-Jek’s valuation increase to an estimated $1.2 billion, making it the biggest startup to date in Indonesia, as well as the largest fund-raising round in Southeast Asia. 

According to Wall Street Journal, Private equity major Kohlberg Kravis Roberts (KKR) is set to be part of this round, and may invest $100 million in the region for a minority stake in the Indonesian startup. Industry executive said the bulk of the remaining amount for this financing round is slated to come from Warburg Pincus.

The market buzzed about the company’s latest funding for the last two weeks, but Go-Jek remained silent on the issue. KKR’s investment in Go-Jek is likely to come from its $6 billion pan-Asian fund, which it closed in 2013. This would be the first time for both KKR and Warburg to invest in the ridesharing market, which until now was dominated by venture capital firms. 

Since the app is launched in 2015, Go-Jek is now estimated to have more than 200,000 drivers operating in 10 cities.

It offers more than just motorcycle taxis, and has been expanding services to on-demand groceries, cleaning, door-to-door masseuses, and couriers among others.

Go-Jek has been facing stiffer competition from Singapore-based transportation service app Grab, a regional transport service major which has also been intensively expanding its services and network, via partnerships with local companies. This week, Grab signed an agreement with Indonesia’s Lippo Group to develop an e-money payments platform. The partnership is an extension of a strategic deal signed between the two companies in March this year.

Go-Jek generates revenue from a commission charged for fares; a common model across most ride-hailing service providers. In addition, they often offer drivers cash incentives to maintain low fares and retain them on their platform. However, such subsidies have also driven up customer acquisition costs and expenditures, with many transport services seeking to reduce the subsidies paid out. Grab’s CEO, Anthony Tan, has already reported that its services in some cities are seeing profitability.

A version of this appeared in Deal Street Asia on July 27. Read the full article here.

Anthony Tan, group chief executive and co-founder of ride-hailing service Grab said his company will be in Indonesia for the long term to provide multi-platform services to help solve the country’s perennial problems related to inadequate transportation infrastructure.

Grab operates in 30 cities in six countries in the region – Indonesia, Singapore, the Philippines, Malaysia, Thailand and Vietnam. The company competes against United States-based ride-hailing service Uber and local app-based service Go-Jek to provide services using private cars, taxis and motorcycle taxis.

Sustainability means removing subsidies

Indonesian drivers who are partners of Grab, like many other ride-hailing services, receive subsidies from their companies to ensure that they earn enough money, while also keeping customers happy with affordable fares. But Tan said he fully realizes that Grab must gradually remove the subsidies.

“How do you build a sustainable business model? The only way [to operate] without subsidies is to ensure [there are] many jobs for drivers,” said Tan, who prior to founding Grab, was the head of supply chain and marketing at Malaysia-listed automotive giant of Tan Chong Group. Tan appeared happy when he explained that his company’s business model did not involve burning huge amounts of cash to attract regular users.

“How much cash someone can burn is not a good relevant example to building a long-term solution. We have to solve a long-term problem,” – Grab Co-Founder

GrabBike in particular, he said, has seen 300%growth in its business since January, despite a 50% cut in its fare subsidies.

The key aspects of the business are technology and people

In his illustration of how he prioritizes Grab’s spending, he said, “if we have $100, we have to put $90 in IT,” referring to Grab’s back-end technology business that includes its consumer application team, application design team, database team, engineering and infrastructure engineering. He also mentioned Grab’s partnership with the World Bank to provide real-time traffic data to improve the startup’s mapping technology.

Tan said Grab is also not forgetting about security aspects. He was proud to reveal that he snatched his IT team from Palantir Technologies, an American software and services firm, which has served clients, including the US government and the Central Intelligence Agency (CIA), National Security Agency (NSA) and Federal Bureau of Investigation (FBI).

Grab is not shaken by regulatory challenges

Offering what he calls “constructive disruptive” technology, Tan is fully aware that Grab must maintain a good relationship with the government and calm discontent among traditional players in the industry who feel that their businesses are under threat. Protests have occurred in Indonesia, with people employed in the taxi industry, and those working as traditional motorcycle taxi, or ojek, drivers, accusing the company of introducing unfair business practices.

The deadline for this controversial regulation, expected to discourage driver partners from participating in the business, is Oct. 31 this year. When asked about the regulatory hurdles, Tan was largely unshaken by the challenge. “In the end, I believe the Indonesian government wants the best for the people of Indonesia. In the higher principle, I believe you are aligned, it is no longer me against you […] we both want to help Indonesian people have a much more efficient transportation system,” he said.

A version of this interview appeared in Jakarta Globe on July 26. Find the full version here