Grab pushes digital innovation to stay ahead of the game
With over 710,000 drivers and more than 36 million users, Grab, a technology company that offers ride-hailing and logistic services as well as payments in Southeast Asia, has claimed market leadership in the region. It also operates in 39 cities across six countries in Southeast Asia – twice as many as Uber.
UBS estimates the value of the ride-hailing market to be S$55.61 billion (US$40 billion), while analysts reckon there is room for two larger players and a few smaller ones.
Other companies across Asia are eyeing this market potential too, including India’s Ola, China’s Didi Kuaidi and Singapore’s Strides Transportation, a private car hire service launched by SMRT Corporation.
As competitors snap at Grab’s heels, the company’s strategy is predicated on using the disruptive force of technology to stay ahead of the pack.
Using technology for a ‘hyperlocal’ strategy
Grab first launched in 2012 in Malaysia, one year before Uber’s roll-out in Asian markets such as India and Singapore. The head start put Grab in a unique position – the ability to amass extensive data and information about the markets it serves. This was critical in a region as diverse as Southeast Asia.
Arul Kumaravel, vice president of engineering at Grab, explained that Southeast Asia is a complex region, as all the six countries have different levels of infrastructure – whether it's mobile network connectivity or the amount of geographically mapped data available between cities.
"Our technology plays an important role in identifying areas where transportation and congestion can be improved,” Kumaravel said. “The data enables us to continuously offer services that effectively fulfil a specific need in each city for the right price.”
Grab calls it being ‘hyperlocal’. Services in Indonesia and Vietnam are examples of this hyperlocal strategy. Commuters in cities like Jakarta and Ho Chi Minh spend hours commuting, and often use motorbike taxis to beat traffic congestion. Understanding this, Grab introduced a service called GrabBike, which offers safe on-demand motorbike rides, in these markets.
Their hyperlocal strategy is bringing returns. Indonesia became the largest market for Grab in terms of “completed rides” in Southeast Asia in 2016, with a 250 per cent growth in the first half of the year from 2015.
Another example of being hyperlocal is GrabHitch, which is a social carpooling platform for commuters wanting to hitch a ride with someone driving their car or riding their motorbike in the same direction. The service has helped thousands of people safely commute daily in and out of megacities like Jakarta. It is also a step forward in moving more people with fewer vehicles to ease traffic congestion and to reduce pollution.
In the same manner, Kumaravel explained that Grab’s ride-hailing services, GrabCar and GrabShare, are a strong fit for Singapore. These services complement Singapore’s world-class public transport systems, allowing commuters to go anywhere across the island, in particular for first and last mile travel.
To this end, Grab’s taxi-hailing service, GrabTaxi, is built on exclusive partnerships with three Singapore taxi companies – Trans-Cab, Silver Cab and Premier Taxis – which enable taxi drivers to accept bookings on the Grab platform. Such partnerships give Grab exclusive access to the fleets of these taxi companies. Competitors coming into the market will need to match the sheer number of taxis that Grab partners with, achieved solely through organic growth and driver recruitment.
Data analytics as an enabler of better customer service
For companies such as Grab that function on the bedrock of technological competitiveness, the use of data analytics can completely transform customer service. Grab analyses vast amounts of data on its customers to glean a better understanding of their needs.
Given that Grab clocks up to 1.5 million bookings every day, its data can be used to track parameters such as frequency of trips and popular pick-up and drop-off locations.
Applying machine learning to the platform allows Grab to route its drivers to areas that may have high demand at particular times during the day. For example, in Singapore, Grab will direct taxis before-hand to the Tanah Merah Ferry Terminal to address the surge in bookings when the ferries dock.
In addition, the richness of data also helps augment third-party addresses with more information. For example, Grab Indonesia has enhanced third-party maps by adding warungs – local food stalls – as pick-up and drop-off points. Usually, such locations would not have a postcode or an accurate address.
Kumaravel said, “These are locations that people commute to often. Even if the rider makes an error in entering the address at first, our platform recognises that it is an incorrect address and the system adjusts the map to the exact location the rider intends to go, then learns and adapts to this information.”
Driving usage of cashless payment systems
Grab also recognises that the rate of credit card use and access to banking in Southeast Asia (outside of Singapore) are still low. Staying true to its ‘hyperlocal’ approach, Grab offers payment options that locals prefer, as oppose to operating with a singular payment platform. It also launched GrabPay Credits late last year for a cashless stored value option allowing top-ups via ATM networks, local convenience stores and e-Money accounts like Doku Wallet.
In Indonesia, for example, people use Mandiri e-cash and top up their cards at 7-Eleven stores. Kumaravel explained: “We are working with major payment providers in our different markets to offer mobile payment options that complement each customers’ lifestyle. The future is cashless, and we are therefore enabling access to cashless payments for millions of unbanked individuals.”
Last year, Grab added AliPay – China’s largest third-party payment platform – which allows Chinese travellers in Singapore and Thailand to pay in renminbi through their AliPay accounts. Previously, Chinese travellers could only pay for taxi rides in cash or dual-currency credit cards.
“Eventually we will expand GrabPay so that it becomes a convenient mobile wallet with access to a wide range of products and services,” said Kumaravel, and that means a certain alacrity for payment systems innovation is paramount for Grab.
An environment that supports innovation
Grab’s objectives can only be achieved in an environment that actively nurtures innovation.
The company’s hunt for a supportive innovative ecosystem led to the establishment of its US$100 million research and development (R&D) centre in Singapore, similar to its R&D centres in Beijing and Seattle. “Singapore has a government supportive of technology companies that shift the way we live,” said Kumaravel.
Singapore is the company’s global hub for technology. Grab hopes to use the promise of working in a paradigm changing business in a city ranked high on quality of living indicators, to attract engineering and IT talent from all over the world.
As Grab continues to innovate to make sure it stays ahead of the game, how quickly can rivals mirror these unique propositions and services?
“Unless a company is in Southeast Asia and well embedded in it, it is very hard,” said Kumaravel. “We understand the nuances of Southeast Asia; we prioritise and deliver services much faster. I’m not saying that nobody can do it, but it is a matter of who can do it faster and who can do it better."
Grab’s future direction is relentless expansion in a winner-takes-all game with competitors such as Uber. The company is aggressively pursuing partnerships to continually expand, including a tie-up with Japan’s Honda Motor Co to jointly create a motorbike-hailing service, and another one with Japan’s Tokyo Century Corporation, to expand leasing options for cars.
Will this be enough for Grab to retain pole? As with all technologically disruptive industries, it will all depend on Grab’s ability to continue to innovate to meet the region’s changing needs and make transport freedom a reality for 620 million people in Southeast Asia.
Edited by Sophie Chen and Goh Wei Ting