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On Demand Businesses 101

Grab: On-Demand Taxi Battles

The Service

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GrabTaxi, now rechristened ‘Grab’ because of the company’s expansion into general transportation, is a noteworthy contender in the on-demand transportation market. With market giant Uber dominating the scene, a lot of these start-ups go unnoticed. Grab wishes to make its presence known. This is indicated by its recent tie-ups with Lyft and Ola, trying to take a chunk out of Uber’s share which is now valued at $51 billion.

Grab works pretty much the same way Uber does – it is an on-demand, mobile-first service that is a ride aggregator in over 20 countries, concentrated in the south Asian region. (Thailand, Singapore, Malaysia, Philippines, Indonesia and Vietnam)

However, Grab has other operational differences that give it an edge as far as the on-demand battle goes. Apart from examining their funding cycles are a little bit of background, we shall be discussing these differences as they are key to understanding Grab’s market domination.

The Story

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Company founder Anthony Tan’s classmate experienced an unpleasant Taxi ride in Malaysia, which led to Tan thinking about taxi services in the country, and the scope for improvement. Having a family in the automotive industry, with his grandson being a taxi driver to boot, one could say Tan was somewhat predisposed. He took his idea to Harvard, and produced an app that assigned available taxis nearby to passengers by using online mapping and location sharing. He was given an award for it in the Harvard 2011 business plan contest.

Tan wasted no time, launching ‘MyTeksi’ in Malaysia, in June 2012. While his earlier efforts to on-board Taxi drivers were futile (he was often re-directed to the family business fall-back plan), Tan worked like a bonafide bootstrapped founder, going from one taxi-company to another. Finally, one possessing a fleet of 30 agreed to implement his app.

By 2014, Grab secured  financial  funds  of  over  90  million  USD, with 2.5 million mobile app  downloads, 500,000 monthly  active  users,  and  60,000  taxi  drivers  counted  on  the  GrabTaxi  system. Grab also recorded an average of three bookings per second made from somewhere in the operating countries, according to a study by Ferguson in 2014.

Enter 2016. Grab has now raised $1.43 billion in 6 Rounds from 10 Investors, with the latest funding round contributing $750 million. The Japanese Technological giant Softbank, and Tiger Global Management are major contributors for the most recent round – even Uber’s fearsome competitor Didi Chuxing has contributed to Grab’s efforts earlier.

The figures at this stage are formidable. Grab records two bookings every second on the app adding up to 5.1 million bookings a month 50,000 registered drivers. Grab also now operates in 16 cities (Adding more to their arsenal) and boasts 2.1 million app downloads, which leads this page to guess 400,000 monthly active users. (https://www.techinasia.com/grabtaxi-southeast-asias-hottest-startups-kicking-ass)

Grab is not overambitious, and has other things in mind when pitching themselves as the go-to agency for transportation needs. Its growth can be attributed to several factors, most of which were targeted measures taken by the company itself.

Grabbing the Edge

Local, Hyperlocal Focus

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Grab focuses extensively on the South Asian region, making their campaign less tedious to execute – focused resources result in more in-depth branding. While a lot of opposition initially ensued in the form of taxi agencies boycotting the use of their app, Gab directly approached the drivers themselves, bypassing middlemen and other pressures. Their aggressive campaigning has also spawned anecdotes, indicating its efficacy. Gab’s kiosks can be found in areas where taxi-drivers congregate – including natural gas stations and other points.

Grab not only engages in heavy on-ground marketing surveys (tracking word-of-mouth spreads and the like) but also makes a dedicated effort to educate drivers in terms of app and smartphone operation. In these developing countries, smartphones are acquiring a holy-grail status in the job market, so this is immensely favourable.

A company that has feet on the ground, as well as a digital presence can be very powerful in terms of creating an impression in the minds of both – the drivers and the customers.

This also makes a unique supply-first focus made by a start-up, as compared to Uber, who focused more on signing up users.

In countries where it operates, Grab has tie-ups with brands that are doing well regionally, boosting brand awareness. Globe (Philippines), AirAsia (Thailand) KitKat, Revive Isotonic and Wonda Coffee are a few names in their partnership repertoire, with innovative campaigns for the same.

Friendliness and Safety, All Round

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While Uber has had several problems with both, governments and passenger based complaints, Grab decided to improve on both fronts. A simple glance through their website gives dedicated focus to safety and security for consumers. It also equally focuses on improving their drivers’ lifestyles. This sends a clear message – Grab takes responsibility for its enterprise, ride quality and security included – despite it not actually owning any of the cars.

Passenger safety is amped with Grab’s sign-up process, where the driver has to be physically present for the appointment. Focusing on word-of-mouth referrals and reputation, Grab may not be the most time-sensitive in terms of on-boarding. However, it’s ultimately a small price to pay for the ‘clean and safe’ reputation that they have acquired.

Grab also works closely with governments and their policies, with the Malaysian Public Land Transport Commission giving them extensive support. Singapore’s prime minister also made favourable comments about Grab’s track record, marking it to be one of the truly more consumer friendly companies that didn’t just seem to care about profiteering – but also providing added safety. These consonant approaches create less hurdles for Grab – while Uber fights legal battles in several countries.

A last noteworthy mention in this category is their bond with their workforce. While their drivers are merely contractors, Grab does not give them the expendable treatment; they undertake a variety of driver-focused campaigns. This includes a Driver Day carnival open to drivers and their friends, to getting insurance for drivers. They also have an education program for their drivers in the making. As if that weren’t enough, they’ve thrown in chair massages and medical tests!

All of these measures cannot be deemed ‘necessary’. It simply goes on to show that both, the driver and the consumer are kept happy by Grab’s attitude toward them, bolstering a brand image worth its weight in on-demand gold.

Battles and Beyond

Singapore, Grab’s largest revenue hub, also happens to be one of the fastest growing markets in the South Asian region. Uber lost its battle in China to Didi Chuxing, a battle that allegedly cost them over 2 billion. (https://www.cnbc.com/2016/08/01/5-reasons-why-uber-sold-its-china-business-to-didi-chuxing.html)

Now that China is no longer a viable option, Uber has concentrated its efforts in Singapore and other countries, signalling some danger for Grab, as Uber’s coffers are indefinitely deeper. Their outspending strategy did not work in China because they were matched with an enemy who had resources of their own – but that may not be the case everywhere. Uber has already amped up their game in Singapore by declaring new services and features, from upfront pricing to food-delivery.

While the battle may look grim, Grab does not plan to bow down. Its name change signifies its increasing ambition. Now, it has tied up with Lyft and Ola, linking their services by allowing users from their respective home countries to switch to a partner’s network while traveling.

Grab also plans to invest in mobile payments to for the sake of geographical expansion, and will not limit itself to taxi-based transport, but plans to emerge as a leader in all segments, like the biking segment.

Thus, all we can do is highlight their ingenuity and wait, as the battle for the on-demand transportation sector brews in South Asia – regardless of the outcome.

 

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1 Comment »

One Response to “Grab: On-Demand Taxi Battles“

  1. Aowladhossain chowdhury says:

    Yes its a good idea for a app like grab is doing good over southeast region and we need a similar type of app at the east coast: nj,ny etc

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