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The factors driving the success of Grab and what it took to become a market leader

 

On September 28th, 2019, I joined the StartupViet (Hosted by VnExpress.net)’s Bootcamp for top 80 startups as the Moderator for the Panel discussion “Go Global”.

It was a sweet coincidence that before our panel session, the startups had an in-depth dialogue with Grab’s representative in Vietnam. The discussion really brought me back to an article idea that I have had for quite some time, what are the key components to Grab’s success in Vietnam?

Recently, Grab, Southeast Asia’s leading start-up with an estimated valuation of about USD$14 billion, just announced a plan to invest USD$500 million into Vietnam this September to spur development of the country’s digital economy.

Last year, I was amazed when I had the chance to attend the launch of Grab’s R&D centre in Ho Chi Minh city: their large-scale system integrates emerging technologies such as Big Data, AI, and Human-Data Interaction to improve the in-app user experiences (UX) and tailor the UX to Vietnamese users.

A look at the ride-hailing market

According to a recent report by ABI Research, the automotive industry has continued to slow down while the ride-hailing market has continued to grow considerably. Another recent report by Google estimates that the ride-hailing sector will reach a valuation of USD$30 billion by 2025 with services expanding to more than 500 cities in Southeast Asia.

Yet, despite such growth, some vendors are experiencing significant losses. GoJek lost its 2nd Vietnam CEO within 5 months and Uber has had infamous struggles with a reported net loss of USD$1.1 billion for Q1 2019 and its widely publicized exit from Asia last year following Grab’s acquisition of its Asia operations.

Meanwhile, Grab was Vietnam’s most downloaded ride-sharing app from January to July, followed by GoViet (GoJek), Be and FastGo. According to ABI Research, Grab had over 70 per cent of Vietnam’s ride-hailing market in the first half of the year, compared with Go-Jek at 10 per cent.

Also Read: Today’s top tech news: GrabKitchen launches cloud kitchens in Thailand, Vietnam, accelerating regional expansions

Let’s see how Grab can maintain its dominance in the APAC region!

Grab’s phenomenal growth

Grab entered Vietnam in 2014 as a taxi aggregator well before it added private car services, which of course took a page from Uber’s playbook.

At the beginning of 2018, Grab tapped into Vietnam’s tech talent with its new R&D centre in Ho Chi Minh City. This conveys the company’s philosophy of developing highly localized products to target consumers in their countries while tapping the best-specialized tech talent from around the world to enhance UX and platform efficiency.

Later, they entered Vietnam’s online payment industry by partnering with the Vietnamese fintech firm Moca to launch a digital wallet. Grab also formed a joint venture with Credit Saison, a Japanese credit card company, to offer loans and credit analysis to consumers and micro-entrepreneurs across Southeast Asia.

These movements pushed the total payment volume on Grab’s mobile application more than doubled% in the first half of 2019 and GrabPay mobile active users grew by more than 65 per cent.

As mentioned above, in 2018, Uber sells SEA business to Grab, this helped Grab reach over 160 million downloads with more than 9 million drivers and agents for its fintech services. The deal put Grab in absolute control of Southeast Asia’s ride-sharing market.

Within the same time period, GrabFood saw a gross merchandise value rise 3 times with average daily orders hitting 300,000 in Vietnam. Grab has also shown a willingness to localize for local eaters, for example, GrabFood has signed contracts with Lotterria and other popular Vietnamese cafes and chains to bring them their favourite foods.

Earlier this month, Grab signed a partnership with Vietjet and Swift247 in which the company will provide a “super express delivery service” to provide expedited deliveries in cities in Vietnam with the potential for future international expansion

By the end of 2019, Grab will have fulfilled its plan to become the one-stop app to offer services and solutions for daily needs from transportation, to food, to entertainment, and seamless cashless payments similar to the role WeChat plays in China.

The factors driving the success of Grab

The result is obvious to see. The real question is, how could Grab do that – the thing that Uber left and Go-Jek couldn’t do?

1. Grab mastered the super app 

The very first factor is the so-called ‘super apps’ – the one-stop app that satisfies a range of daily services.  For Grab, this includes services such as transportation, paying bills, ordering food, and even booking hotels. This factor is a key component behind the success of both Go-Jek and Grab and it is what Uber left behind in South East Asia one year ago.

Grab, like all such super-apps, provides enough benefits and functionality to keep its users from ever needing to close the app.  It can cover everything at every step at any time. Today, users in Vietnam can pay bills, book hotels, order food and send parcels all from the Grab app.

2. Grab has rewards and subscriptions 

Reward programs are also helping to build customer loyalty. Grab now offers points for spending on its app. Users can redeem points for cash vouchers at KFC, coffee shops, or for free Grab bikes.

3. R&D as a differentiator 

Grab has shown its serious and long-term commitment to Vietnam. Grab now has more than 1,000 staff members in Vietnam which include more than 100 engineers in its R&D centre. This is a smart move.

As we all know, Vietnam is one of the emerging hot spots for tech talent in the region. Plus, hiring the local tech staff brings the company an unprecedented opportunity to deliver a platform catering to the region’s mobile-first environment needs. With this, they can gain a combination of deep local understanding and best-in-class engineering.

Also Read: Grab reportedly wants to merge OVO with Ant Financials DANA. What does it mean for the rest of us?

Last but not least, the focus on customer experience! As I mentioned above, their Ho Chi Minh R&D Center is like a “futuristic room” where their large-scale system meets emerging technologies such as Big Data, AI, and Human-Data Interaction to improve the in-app UX and tailor the UX to Vietnamese users. This is Grab’s way to fully understand and penetrate markets while providing the best possible experiences.

4. Hyper localisation

Just look at the way Grab managed to master each Southeast Asian market’s transportation needs: GrabBike in Vietnam, GrabBajay (three-wheeled motorized vehicles) in Indonesia, ThoneBane in Myanmar, Tuktuks in Thailand, and Remorque in Cambodia.

“Our strategy has always been, and will continue to be, to focus on Grab services in a country, our customers — and providing what we think and what we hope to be outstanding customer experience.” – Russell Cohen, Grab’s head of regional operations, told the Nikkei Asian Review.

Grab is truly among the giant tech companies and they clearly understand the power of ABCD Technology. These benefits gave Grab valuable data insight into its customers and drivers on its network which leads to the promotion of traditional transportation modes in several markets. For business, real-time unified data can be used to unlock automation functions and enable them to fully understand the market needs of customers.

These above characteristics are, for me, the most important characteristics for a startup to go global and become a unicorn.

As Vietnam ranks third among Grab’s top markets and the Southeast Asia Internet economy is expected to exceed USD$240 billion USD by 2025, this is just the beginning for Grab and I am excited to see how far they will grow beyond ride-hailing towards the daily super app.

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Image Credit:  Afif Kusuma

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