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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.

Over the last few days, major moves have been made by a handful of top ecommerce players in Southeast Asia in efforts to cement a position in payments. Each company is already well aware: if you want people to buy or use your services, it makes sense to have direct influence over their spending.

Owning the payments chain has become so important (thanks to what was witnessed in China), that Amazon announced it would pass discounts to retailers if they used its online payment service.

Earlier this week, ShopBack, a cash back ecommerce aggregator, acquired Singaporean personal finance startup for an undisclosed amount. The stated reason being it wanted to help millennials ‘better handle their money‘, but with a new team of developers, no doubt the company is looking to optimise its existing system.

What was more interesting this past week were the new discoveries made by Go-Jek and Grab users in Southeast Asian markets.

Go-Pay

The on-demand market leader in Indonesia has expanded its reach to the most unexpected locations – street food vendors.

Tweet translation: “Interesting find this afternoon: Some street vendors on the alley beside Bank BNI Kebon Sirih have accepted payment with Go-Pay. When I bought ayam penyet [fried chicken] at my regular place, I just have to scan a QR code, show the payment slip, and that’s it. So cool!”

ecommerceIQ

The popularity of Go-Jek in Indonesia is almost legendary and this example shows how far its reach goes. The difficulty for Go-Jek will be expansion outside of Indonesia to other markets in the region, where similar on-demand companies exist.

GrabPay

With Uber officially out of the picture, Grab is doubling efforts to increase the adoption of its e-wallet, GrabPay. On a trip to Manila May 7th, an ecommerceIQ Community member shared with us app screenshots of Grab promoting a new cash ‘top up’ feature. Riders can add money to their Grab accounts by simply handing their drivers cash.

This is hardly innovative as Go-Jek has offered cash top ups since 2016, a large contributing factor to its success in Indonesia, but it shows Grab’s seriousness in evolving its payments product to the local market.

 

ecommerceIQ

 

This new feature follows Grab’s launch of three other services the company introduced to the Singapore market: GrabAssist, GrabCar Plus, and GrabFamily.

“Grab’s vision is to be an everyday app for consumers,” said Tarin Thaniyavarn, country head of Grab Thailand.

Regulations stand in the way of Grab’s vision in Southeast Asia as most countries lack any solid regulations to ride-hailing companies. Currently, the company is unsuccessfully trying to acquire a microfinance licence from the Bank of Thailand.

What drives the adoption of new technology?

Grab is targeting hawker stalls in Singapore, Go-Jek has already successfully penetrated local vendors in Jakarta. Grab is offering cash top ups, Go-Jek has been doing so for the past two years. They both offer on-demand services, taxis, cars, bikes and the technology and mechanics of an e-wallet are not all that different player to player. They are essentially going toe to toe, what is going to push further adoption?

The real winner will be the company’s capability in effectively communicating the benefits of its payments service to users. How aware are users of its existence and its importance? How can it make their lives easier versus using good old fashioned cash or swiping a credit card?

In developed markets like the US, Apple Pay, Samsung Pay, Google Wallet have single digit adoption rates compared to credit card usage. Why? Because the country already fares well with credit cards, there is no reason to change habits.

The same case can be made for relatively cash-less markets like Singapore. The real opportunity to dominate payments is in developing markets like Indonesia and Thailand, where credit card ownership floats around only 4 percent and majority of the population owns a smartphone.

ecommerceIQ

 

“To enhance awareness, you really need advertising — one thing that’s not well understood [by consumers] about Samsung Pay is that it has more utility the Apple Pay; you can use it at a non-NFC terminal and that’s a huge advantage I don’t think Samsung is doing a good job of promoting.”

250 million Indonesians have rapidly embraced the rise of ride-hailing apps to add convenience to their lives.

The three largest players in Indonesia – Go-Jek, Grab, and Uber – not only lower congestion on the roads by connecting drivers to multiple riders, they also offer food delivery, payments via e-wallet features, and almost any service you can think of on-demand.  

These value-added features are possible thanks to each player’s treasure chest topped up with billions of dollars from venture capital funds and massive corporates like Alibaba, Honda, and SoftBank.

But which app do users in the archipelago actually prefer and why?

Indonesians judge their favourite ride-hailing apps

Consumer Pulse by ecommerceIQ is a new series that dives into the minds of consumers to translate their trends and habits into actionable business strategies.

The team conducted an online survey answered by 515 people (46 percent men, 54 percent women) in major cities in Indonesia – Sumatra, Java, Kalimantan, Sulawesi, Bali, West Nusa Tenggara, to Papua – to find out which ride hailing application (Uber, Go-Jek and Grab) they use the most on a daily basis.

A general consensus is that price and number of promo codes are the two key factors that impact adoption in Indonesia, but, our results indicate otherwise.

The majority of respondents pointed to safety as the primary factor when choosing which ride-hailing application to use. It’s not hard to decipher when you consider Jakarta traffic and the thought of weaving through the streets on a high-speed motorcycle.

Indonesians choose safety as the primary factor when choosing which ride-hailing application to use. Image source: ecommerceIQ team.

According to the Head of Indonesia’s Traffic Police Unit, traffic related deaths in the country have hit worrisome levels at roughly 30,000 per year – higher than crime related and terrorism caused deaths combined.

He also added that the number of traffic incidents in Indonesia is the highest among ASEAN countries.  

“Think of the approximately 28,000 to 30,000 people who die on the road per year because of accidents. Compared to terrorism and crime (the difference) is huge,” — National Traffic Police Chief Royke Lumowa

Providers should focus on improving the quality of their riders and vehicles, protective gear and insurance policies to capture more users. Both online and offline elements should be considered during product development as they are equally crucial when it comes to consumer purchase decisions.

For added assurance to both passengers and drivers, the three major ride-hailing apps in the country offer insurance:

  • Go-Jek offers up to 10 million IDR ($751 USD) for death and 5 million IDR ($375,50 USD) for an injury.
  • Grab provides up to 50 million IDR ($3,755 USD) for deaths, and 25 million IDR ($1,877.50 USD) is given to users with severe injuries.
  • Uber provides the most; up to 100 million IDR ($7.510 USD) for deaths, and 10 million IDR ($751 USD) for the treatment.

In 2016, Grab Indonesia promoted a controversial ad campaign to highlight the importance of road safety and how standards in Indonesia can improve. Unfortunately, the images were too graphic and the video was removed but it succeeded in bringing awareness to safe driving practices.

Grab’s ad campaign in Indonesia received a less-than-positive reaction from netizens, with many calling it too gory and disrespectful but it did its job in increasing awareness. Image source: Brandingasia.com

The second most popular reason why people used one ride-hailing app over the others was (unsurprisingly) the ease of finding a driver (23 percent). The rest of the reasons are as follows:

  • Frequent promotions and discounts (22 percent)
  • Easy navigation within the app (16 percent)
  • Many payment options (5 percent)
  • Wide food delivery options (3 percent)
  • Helpful customer service (3 percent)
  • Loyalty rewards (2 percent)

Consumers also indicated that they’re not excited about e-wallet features. Unsurprising as there’s no widespread use apart from the apps own services.

Nevertheless, payments remain a priority area for senior management looking to build a super app like WeChat in China.

CEO and co-founder of Go-Jek, Nadiem Makarim, mentioned he wanted to separate Go-Pay from the Go-Jek ecosystem during an interview with CNBC,

“Payments will be our core focus in 2018, and it will become the year of Go-Pay leaves the Go-Jek app ecosystem and it goes online and offline and to start fulfilling its mission to be the number one financial inclusion tool for Indonesians to gain access to these digital goods and variety of financial services, that frankly they have been deprived of this thought.” — Nadiem Makarim

So which ride-hailing player wins Indonesia?

What’s the app used on a daily basis among our respondents?

First position goes to homegrown unicorn Go-Jek.

Working under the slogan, “Karya Anak Bangsa” (Made by Indonesians), the company has become a favorite among the survey respondents (56 percent) and Indonesians since its establishment in 2010.

The country’s first tech unicorn scaled from a call centre and fleet of 20 riders to more than 654,000 drivers in 50 cities.

Later entrants in the space benefitted from Go-Jek’s investments in marketing and awareness. Consumers, now educated about ride hailing and startups didn’t need to be persuaded too much to try a new option.

  • Grab placed second at 33 percent
  • Uber place last at 8 percent
  • 3 percent of the respondents reported they don’t use ride-hailing apps at all

When considering these results, there are a few factors that impact the ranking:

  • First mover advantage (Go-Jek)
  • Largest reach in the country (Grab)
  • Time of entry into the country (Go-Jek October 2010, Grab June 2014, Uber August 2014)
  • Location of the respondents

A couple of months ago, Grab announced its expansion to 100 cities in Indonesia, making it the dominant player in the country. Meanwhile, Go-Jek and Uber can be accessed in only 50 cities and 34 Indonesian cities, respectively.

Price and promos also carry more weight after the Indonesian Ministry of Transportation announced basic rates for all online car-hailing services; 3,000 – 6,000 IDR ($0.23 – $0.45 USD) per kilometer in the areas of Java, Bali, and Sumatra. For Kalimantan, Sulawesi, Nusa Tenggara, Maluku, and Papua, the rate is more at 3,700 – 6,500 IDR ($0.28 – $0.49 USD) per kilometer.

Meanwhile, the Indonesian government hasn’t announced any regulations for online motorcycle taxis. Based on eIQ research, rates vary between each app.

*The rates are based on a 15 kilometer trip that eIQ personally hailed on each app during rush hour.

46 percent of respondents admitted they have two ride-hailing applications installed on their smartphones. 23 percent of respondents had three applications installed, 29 percent owned one application and 2 percent didn’t use any apps.

Final takeaway

It’s not difficult to understand why residents in each city prioritize certain features over others. Respondents from Semarang, Surabaya and Greater Jakarta value discounts and promotions more than any other option, probably because they have more access to transportation choices.

The KRL Jabodetabek (Jakarta Commuter Line) and TransJakarta in Jakarta; TransJateng and BRT in Semarang; and TransSuroboyo in Surabaya.

Based on the data collected, providing a helmet, hairnet, and insurance is a safety standard all ride-hailing apps should meet.  

The other takeaway from this piece is that being first mover in an industry may not always guarantee an advantage. Go-Jek was the first company to introduce ride-hailing in Indonesia, seizing a head start on later entrants but Grab has been quick to develop and expand its operations in Indonesia and become the dominant player in the country.  

Growing your business without understanding your market and competitors is risky. Consumer Pulse by ecommerceIQ helps collect and analyze information about consumer behavior to help you to hone your marketing strategy.

Here’s what you should know:

1. Fighting counterfeit products, Shell Malaysia goes online with Lazada

Shell partnered with Lazada in Malaysia to launch an official store to sell motor oil products online.

Customers from throughout the country can now order the motor oil products on the Lazada Malaysia store. The company hopes the access will help deter the sale of counterfeit products.

Shell will also provide engine oil service packages in its online store for customers at selected authorised workshops in the Klang Valley and Johor.

Read the full story here.

2. Ofo launches its bike-sharing service in Malaysia and Thailand

Ofo introduced its service in Malaysia after lowkey launched its service in Thailand earlier this week.

In Malaysia, the company is running a trial phase in Melaka city center, where during the period each ride will cost $0.23 per hour, and users will not have to pay a deposit as would usually be the case. The trial will last until August 20.

Ofo already has 500 cycles in the downtown area, with a plan of deploying another 1,500 set by the end of this month.

The company will compete with Singapore’s Obike who also has presence in Malaysia and Thailand.

Read the full story here

3. Financial statements reveal EMTEK’s minority shares in Grab

One of Indonesia’s largest media conglomerat EMTEK is said to have a minority investment in Grab as revealed in the recently released company’s quarterly financial statement.

The financial statements mentioned that EMTEK owns 1.684.445 (0.003%) shares in the ride-hailing app that was made through its subsidiary KMK.

The company is also confirmed to have sold 25% of its stakes in Kudo following the company’s acquisition by Grab.

Read the full story here.

When ecommerce first boomed in Indonesia around 2014, Albert Lucius saw many companies racing to serve the top 20% of the urban population while ignoring the rest.

“What about the people unfamiliar with the internet, let alone shopping online? And what about those living in rural areas?” Lucius mused. “Ecommerce players at that time were doing almost nothing to educate this demographic.”

Seeing this gap, Lucius teamed up with a fellow schoolmate from the University of Berkeley’s Haas School of Business, Agung Nugroho, to build Kudo – the online to offline (O2O) technology platform that connects online merchants with offline customers and was acquired by Grab in April. TechCrunch estimated the deal is worth $80 – $100 million but no confirmation has been made by either party.

Lucius acts as CEO, while Nugroho takes care of operations as COO and through its platform, Kudo wants to ensure all Indonesians are included in the online revolution and benefit from an economy that boasts a $157 billion potential.

Product-market fit: Tales of trial and error

Currently, the company is using individuals, mom and pop shops, and small store owners as Kudo agents to act as medium between online merchants and hard to reach customers.

Through these agents and a tech platform, the company enables the unbanked or those with low financial literacy to perform digital transactions. How?

  • The agent invests capital into their Kudo agent account, which can be as low as IDR 10,000 or $0.75
  • The customer views a list of products on the Kudo platform on mobile or a tablet provided by the agent
  • The customer chooses what they want to buy and pays the agent in cash
  • The agent makes a commission based on the product category sold (3%-20%) – the more they sell, the more they make

Although currently a well-functioning system, this was not how things were always done at Kudo. The company pivoted two times before finding a model that complemented Indonesians buying behavior.

kudo micro-entrepreneur indonesia

Kudo platform, facilitated through its agent, is bridging the gap between offline customers and online merchants.

 

Kudo is an acronym for ‘kios untuk dagang online’ or ‘kiosk for online trading’, and funnily enough, the business’s first model was literally a kiosk.

The company installed machines loaded with the Kudo platform in office complexes, shopping centers and convenience stores in Indonesian suburbs, as well as second-tier malls in the city, in hopes people would use it to place orders for various things such as food, tickets, and other goods.

They soon discovered that majority of citizens are wary about using unknown machines, afraid to break it seeing as they didn’t know how to operate it.

Kudo later redefined its business by creating a tablet-friendly platform and employed the help of sales promotion girls (SPG) to educate the people about its buying process. The second attempt worked well but hiring so much (wo)man power was not sustainable nor scalable.

The two broken models taught the founders a valuable lesson.

“Most Indonesians still need the element of trust in order for commerce to work. They need the personal and social touch in order to purchase something.”

Kudo’s agents of change

Through its present-day network of more than 500,000 agents across 500 cities and rural areas in Indonesia, offline customers once disconnected from the digital world now have access to products from Kudo partners like Lazada, BukaLapak, Berrybenka and Unilever to name a few.

The platform not only offers commerce but also facilitates bill-payments, phone credit top up, and purchase of financial products such as insurance.

The most popular transactions are top-ups that make up 30% of total transactions, followed by purchase of goods, especially cheap electronics, fashion, and bill payments.

kudo micro-entrepreneur indonesia

Kudo’s team explaining how the platform works to potential agent.

 

There are millions of customers that have used Kudo in Indonesia and the company credits its Kudo agents for partially solving three main roadblocks commonly encountered in emerging ecommerce markets like Indonesia – trust, payment, and logistics.

“Our agents are all familiar faces in the neighborhood, so even if initially the community does not understand nor trust the internet, they’re more willing to try out a new technology if it comes from someone they know,” explain Lucius.

From a logistics perspective, agents act as the drop-ship points for ecommerce players who can either have pick ups from their store or deliver straight to the customer. This highly reduces the chance of failed deliveries.

Kudo agents also decrease shipping costs for retailers when they order customer purchases in bulk.

“We know it’s not the most sophisticated system in the world and it’s not perfect, but it works for our market as it utilizes Kudo’s network of agents to solve a real logistics problem in Indonesia,” remarks Lucius.

Grooming a generation of micro-entrepreneurs

By taking a traditional route and using real people to educate and share new technology within communities, Kudo is not only speeding up the race to e-retail adoption but empowering individuals to dabble in “micro-entrepreneurship”.

“People only need a smartphone to become an agent and it doesn’t need to be an expensive one because our app works on every Android phone,” said Lucius.

There are two kinds of agents in Kudo’s network right now; store-owner agents and non-store agents, with the share of 40% store owners and 60% non-store agents or individuals. On average, the store owners agents could doubled their normal income through Kudo.

Building an inclusive economy with a giant

The company’s principle is and has always been to improve the lives of people.

Under its current model, Kudo aims to slowly convert more people to try online shopping by maturing the country’s payments literacy and understanding of ecommerce.

Its acquisition by Grab takes the company’s mission a step further as the Kudo platform will be integrated with Grab’s mobile payments platform, GrabPay and both companies are invested in a collaborative R&D lab in Kudo’s office called Kudoplex.

Kudo’s agents are also offering services like GrabPay credit top-ups and recruiting drivers for Grab to interconnect the two already-large networks into one expansive and all-encompassing payments infrastructure.

“We are very excited to work with Grab as we share the same mission to empower the unbanked to benefit from the rapid growth of digital economy,” closed Lucius. “There are a lot of good things to come.”

 

 

kudo micro-entrepreneur indonesia

Left to right: CEO Kudo Albert Lucius, CEO Grab Anthony Tan, and COO Kudo Agung Nugroho

Here’s what you should know:

1. Grab starts full operations in Myanmar

After four-month trial period, Grab has begun full operations in Myanmar by launching localised apps with new safety and technology features.

Myanmar is the seventh market for Grab where it already has 5,000 drivers registered in its Myanmar’s network. The drivers is said to have seen 30% growth in their average income during the trial period.

Grab is also rolling out GrabVenue terminals at major shopping malls in Yangon that will allow customers without a smartphone to access the service.

The company claimed to have more than 1.1 million drivers in 65 cities across the seven countries and has recently raised $2 billion to strengthen its operations in Southeast Asia.

Read the full story here.

2. Malaysia’s parliament passed two bills legalizing e-hailing services 

Malaysia’s parliament passed two bills that will legalize the e-hailing services like Grab and Uber in the country.

The amendments will allow the services to operate on an “intermediation business license”, a new category specific for the service.

The new license will regulate “the business of facilitating arrangements, bookings or transactions of an e-hailing vehicle whether for any valuable consideration or money’s worth or otherwise”, according to Malaysia’s Land Public Transport Act and the Commercial Vehicles Licensing Board (CVLB) bill.

The bill is supported by the cabinet even as taxi driver associations protested. The CVLB had previously declared that both Uber and Grab drivers were operating illegally in the country.

Read the full story here.

3. Amazon’s entry into Singapore marred by delivery problem

The company is unable to deliver goods to customers in Singapore after introducing its Prime Now two-hour delivery service in the state-country.

As of Friday afternoon, its Prime Now app was telling users that “delivery is currently sold out. Check back soon.” The service appeared to go down hours after its official launch on Thursday, according to media reports.

The company launched Prime Now app for customers in Singapore where they can shop and get tens of thousands of items delivered to their door with free delivery on orders of more than S$40 ($29). The service is available for trial for free for a limited time in Singapore, before the company rolls out its Prime membership program.

Read the full story here.