Editor's choice
7 Aug 18

Grab buys UBER SEA, complexity and new competition arise

When GRAB announced, end of March 2018, its acquisition of Uber’s South-East Asian operations, the general idea was pretty clear. GRAB would take over the Uber drivers, Uber offices would be rebranded to GRAB, the Uber app would disappear after a transition period and Uber users would be transferred to become Grab users. In reality, almost every Singaporean has already both apps installed on their mobile phones. Especially when it’s raining, they’ll bet on the 2 ride hailing services and confirm whomever is the first to show up, cancelling the other ride.

JustGrab and UberFlash in Singapore

It all becomes a bit more complex when partnership agreements enter into consideration. Both Uber and Grab have launched a collaboration service with taxi companies. This service, called JustGrab and UberFlash, increases dramatically the number of available drivers; not only the regular Grab and Uber riders are solicited, but also the taxi drivers from the affiliated partners. In case of UberFlash, the number of cars increased from 14K to 28K.

In order to offer the JustGrab services, Grab has a pricing agreement in place with 5 Singaporean taxi companies, whilst Uber entered, beginning 2018, into an agreement with ComfortDelGro, Singapore’s largest taxi company, operating 13,695 vehicles. In addition and as part of the deal between ComfortDelGro and Uber, the taxi company would acquire a 51% stake, worth well over SGD 300 million, in Uber’s fully owned subsidiary Lion City Holdings – the company that provides for leasing services to Uber drivers.

Cancel the deal

End of May, ComfortDelGro’s CEO, Yang Ban Seng cancelled the acquisition, saying that: “the operating environment has changed and the basis on which we were supposed to form the partnership is no longer relevant given that Uber has exited the region.”

But what about UberFlash? The agreement between Comfort and Uber has not been transferred to Grab, which leaves 14,000 taxi drivers without the option to make some extra cash operating as a ride hailing driver. Grab did offer the option to ComfortDelGro cabbies to join the JustGrab, but as the pricing model is based on flat fares rather than on metered fares, the lack of an agreement between Grab and ComfortDelGro resulted in Grab eventually removing all the Comfort cabbies from its network

UberEats becomes GrabFood

UberEats phased out mid-May in Singapore to become GrabFoods. Grab’s service offering is similar to Uber’s and is offering GrabRewards, which can be used to purchase lifestyle products and services. Eventually, GrabFood will be rolled out in all the countries where UberEats used to be available (Indonesia, Thailand, Vietnam, Malaysia, and the Philippines).

The future according to Grab

Grab is combining more and more services into its application, akin to China’s WeChat. Next to the ride hailing offering, Grab is working hard on its electronic Wallet, that allows the user to make daily payments, transfer money and eventually even use as a savings account. Furthermore, Grab will be promoting its shared bicycle collaboration with obike, offering EV charging station payments and delivery services. Its goal is to cover all recurrent lifestyle actions: move, eat and pay. A YouTube video explains what the future will look like according to Grab: https://youtu.be/XpzQ8a4xmgk

Go-Jek

Now Uber is out of Grab’s way in South-East Asia, business will not become easier for the Singapore based ride hailer. Indonesia’s Go-Jek has announced a USD 500 million expansion plan into Singapore, Thailand, Vietnam and Philippines, all of which are Grab success countries.

Go-Jek, valued at USD 5 billion, is hugely popular in Indonesia, where it offers a multi-service business model, from car and motorcycle ride hailing to concierge services (food and grocery deliveries, cleaning, massage). The company has received financial support from Google, Tencent and Singapore’s Temasek. Again, the real battle is not between Go-Jek and Grab, but between Google/Tencent and Grab’s funders Softbank and Didi.

An interesting rumor was spread by the Singaporean news website “The Straits Times”; Go-Jek is said to be in talks with… ComfortDelGro. It looks like the cycle has reached its starting point again!

Authored by: Yves Helven