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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.

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.

ecommerceIQ, together with Sasin SEC, created the Leadership Ecommerce Accelerator Program (LEAP) to provide the fundamental knowledge and skills needed to successfully run an ecommerce business in the world’s fastest growing market.

A shopper tapping the ‘buy now’ button is often seen as the last stage in the ecommerce funnel, but companies should understand that it doesn’t stop there.

The warehouse hustle bustle, weight of package, and even presentation of the delivery man not to mention the possibility of a return all can determine the extent of local success a company finds and whether if their operations make expansion plausible.

In the eighth week of eIQ x Sasin: LEAP, lecturers stress the details that make e-fulfillment successful and how each tiny misstep can lead to additional man power, longer work hours and missed deadline.

1. Setting Up a Fulfillment Center Requires A Lot Data and Elbow Grease

Kenneth Thean, aCommerce Regional Director of Solutions Design

 

LEAP2017, ecommerceIQ, aCommerce

Ask anyone about a warehouse and they’ll probably draw a building with some shelves and people in it. While these elements exist, creating the right framework to manage the flow of inbound and outbound goods means companies need accurate data.

ecommerceIQ, LEAP2017

First step in designing a fulfillment center, analyze. Source: aCommerce

Before investing in a large costly warehouse, sophisticated technology and assets, use data to assess your actual requirements. Kenneth shares a few mistakes clients often make when planning.

“Very commonly, companies expect to see exponential growth and overestimate order volumes. Always consider the accuracy of your data, do a check to avoid unrealistic forecasts to ensure the sustainability of your fulfillment center.”

2. Kerry Express: How We Grew From Nobody to Somebody

Alex Ng, Kerry Express Executive Director

 

LEAP2017, ecommerceIQ

Kerry Express launched in Thailand in 2013 and in four short years, the company ships 500,000 packages a day, operates 500 distribution centers and is the number one parcel delivery company in the country.

How did they grow and ensure customer satisfaction at the same time? Alex attributes it to having the best people and keeping it ‘stupid simple’.

ecommerceIQ

The growth of Kerry Express in five years. Source: Kerry Express

A student asked Alex, “how do you ensure that the workplace environment is genuinely a happy one?”

“Reduce the mundane routines, bureaucracies and eliminate workplace politics. There is no room for politics at Kerry, only for real work.”

3. Market Expansion? It’s Ok to Copy and Paste

Kawin Prachanukul, Country Head and Co-founder ShopBack Thailand

 

LEAP2017, ecommerceIQ

The components Kawin had to assess when launching UberX in Thailand in only 10 days.

 

“Uber has its ups and downs, but what they have been able to accomplish in terms of market expansion is admirable,” says Kawin, ex-Uber Thailand Operations Manager.

While at Uber, Kawin shared how his first major task was to launch UberX in only 10 days. How?

“It was only possible because the company’s global team has documented and tracked each and every one of their multiple steps when launching a new market, including learnings and failures. It makes expansion easier because all the local market needs to do is copy and implement.”

The last in-class session of the program will finish on Thursday November 9th, covering payments with case studies by global unicorn, Adyen. Stay tuned for next week’s takeaways!

[LEAP Week 1] eIQ Insights: The New Ecommerce Opportunity in Thailand
[LEAP Week 2] eIQ Insights: Refinement of an Ecommerce Channel Strategy
[LEAP Week 3] eIQ Insights: Market-Product Fit First Before Anything
[LEAP Week4] eIQ Insights: Central Marketing Group’s Shares Phase II of Digital Strategy
[LEAP Week 5] eIQ Insights: Startups Need to Have an Independent Source of Income to Survive
[LEAP Week 6] eIQ Insights: In Mobile Commerce, App Install is Only the Starting Point
[LEAP Week 7] eIQ Insights: Logistics and Fulfillment, The Other Side of The Ecommerce Coin

The name Dara Khosrowshahi has been everywhere in the news lately. Why? The Expedia CEO of 12 years has officially confirmed reports that he will be joining Uber as its new CEO.

The ride-hailing platform has had its fair share and sometimes self-inflicted misfortunes. In Southeast Asia alone, it is under high scrutiny from the Thai transport authorities calling for a crackdown, it recently paid $9.6 million in fines after the Land Transportation Franchising and Regulatory Board in the Philippines banned it, and is going up against Grab, the region’s unicorn soon to close an investment round of $2.5 billion backed by Toyota, Softbank, and Didi Chuxing.

Who is Mr. Khosrowshahi and what does he bring to one of the world’s most valuable and troubled startups?

A great answer was shared by angel investor Terrence Yang, excerpt below:

In a perfect world, Uber would just hire Sheryl Sandberg. But in the real world, there’s no way Sheryl would ever join Uber. If you were Sheryl, would you? Becoming Uber CEO poses massive downside risk and and only moderate upside for Sheryl.

Among other things, former CEO Travis Kalanick keeps meddling/trying to come back, Uber has massive problems with recruitment and retention, Uber is highly unprofitable and probably needs (not wants) driverless cars to happen sooner than later to make the economics work (but Alphabet’s Waymo is suing Uber for, shall we say, inappropriately appropriating and basically colluding with Lewandowski to steal Waymo’s self-driving tech).

Here’s what’s great about Dara:

  • Dara is a grown-up Travis. Like Travis, Dara was and remains ruthless, smart, tough. But unlike Travis, Dara developed empathy and soft skills that Travis failed to do for years. Dara is also much more humble and learns fast, including learning soft skills.
  • Travis was the right person to lead Uber when he did. Uber was the fastest growing big startup company in the world by some measures. It’s a truly impressive accomplishment. Travis will go down in history for that. But Travis also went down – because Travis never evolved. Dara did. That’s why Dara is the best realistic choice for Uber.
  • Jeff Immelt and Meg Whitman just don’t know much about the travel industry. I don’t see how leading GE, eBay or HP is very relevant to leading Uber. Dara’s experience is much more relevant (and, no, you are not going to be able to hire the CEO of Lyft right now).
  • Dara bought HomeAway, which competes with Airbnb. Expedia also tried to compete with Airbnb directly. Airbnb is a good model of how to technically violate laws (e.g. turning homes into hotels) without pissing off so many people. Unlike Uber. And Dara is even an investor in freight startup Convoy. Uber is trying to make UberFreight a success.
  • Dara started as an investor in Expedia and CFO of that investor. Benchmark is suing Travis in part over Uber’s lack of CFO.
  • Dara learned to be a great CEO of Expedia. He’s been ranked in the top 100 CEOs in 2015 and 2016. Expedia stock and revenues are doing great.

Southeast Asian startups need…adults?

The lack of experienced digital professionals, coined the talent challenge, has always been a looming backdrop to the bustling nature of startups, especially in emerging markets like Southeast Asia. As long as someone was able to get the job done, they were hired. Age was just a number.

But given the growth of these companies from a team of 10 to 300 in the span of a few short months, businesses need leadership and maturity, two things that usually stem from experience. This is not to say that older means better but that a great leader is able to recognize what a company needs at Stage 1 is completely different than what it needs at Stage 3 and willing to implement the necessary changes.

Dara Khosrowshahi Humility

Source: Medium, Al Doan

Given the 48-year old’s track record leading Expedia to become “one of the largest online travel companies in the world” and positive reviews by Expedia senior execs, it isn’t surprising that 93% of employees told company review site Glassdoor that they currently approved of his leadership.

How many startups in the region can confidently say their leaders are this well-received?

Probably one of the biggest indicators of his maturity and most importantly, humility, is witnessed from the memo he wrote to Expedia staff regarding his departure obtained by Recode.

“This has been one of the toughest decisions of my life. I’ve had the privilege to run Expedia for 12+ years now, and most of you who have been on this journey with me know it has not been easy going.”

“I have to tell you I am scared. I’ve been here at Expedia for so long that I’ve forgotten what life is like outside this place,” he added.

Best of luck Dara.

Here’s ecommerce news you should know:

1. Airbnb seeks Thai Government’s support for its presence in Thailand

The co-founder and chief strategy of Airbnb, Nate Blecharczyk, recently met with Thailand’s Tourism and Sports Minister to discuss how Airbnb can help strengthen the local economy and generate more income to the communities.

Although the online service that allows property owners to lend out their places to others directly remains illegal in Thailand, there are about 55,000 Airbnb listings in the country with an annual growth of 150% from 2016.

Its business model is believed to drive tourism in Thailand and Asia alike as the region is Airbnb’s fastest-growing region in 2016 in terms of inbound travel.

Read the full story here.

2. Offline infrastructure is still essential for China’s growing ecommerce

Boston Consulting Group stresses the importance of offline infrastructure to avoid the future bottleneck of the rapidly-growing China’s ecommerce.

No matter how advanced the online trade is, you always need offline support to fulfill the orders and deliver goods.

The consulting firms foresee delivery companies to become more capital-intensive, expecting a big improvement in offline infrastructure in China. Both Boston Consulting Group and Colliers International agree that the question now is what is the most effective and efficient distribution mechanism and warehousing.

Read the full story here.

3. Didi Chuxing invests in Taxify

After forcing Uber out of China, the ride-sharing company has made an investment in Taxify, an Uber-like service that operates in Europe and Africa.

The investment will hopefully connect transport services in Asia with those in Europe and Africa. With Didi’s 400 million users in China, it will help Taxify to grow its presence in its regions.

Founded in Estonia, Taxify has always shown interest in the emerging markets while claiming to have 2.5 million users and its services span private cars and licensed taxis.

Read the full story here.

Here’s what you should know today:

1. Google Indonesia: 81 million out of 100 million internet users in Indonesia shop online

Google Indonesia revealed the number of people in the country who shop through online marketplaces has reached about 81 million.

The numbers are quite high, especially compared to Indonesia’s internet population of 100 million users. The country’s population is some 250 million people.

The market will continues to grow as mobile devices play more important role in the way of Indonesian shop in the future.

Read the full story here.

2. Ecommerce is one of the top five activities for Thai mobile users 

Latest survey by the Electronic Transactions Development Agency (ETDA) found ecommerce has replaced e-learning as one of the top five most popular activities in Thailand.

This is the first time ecommerce cracked to the top five. For years, the five most popular activities on mobile devices were communications, entertainment, gaming, online news and information searches, and e-learning.

60% of ecommerce transactions in the country are made on the mobile platform.

Read the full story here.

3. Uber is lining up investors including Softbank and Didi Chuxing

Uber is in exclusive talks for an estimated $12 billion funding round from four investors including Softbank and Didi Chuxing.

US equity firms Dragoneer Investment Group and General Atlantic are said to be the other two investors. Tencent is reportedly also exploring the opportunity to contribute.

The deal, if happened, would allow the company to retain its valuation of about $70 billion on paper.

Read the full story here.