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ride-hailing

How Grab is Becoming an Everyday, Everything App in Southeast Asia

A glimpse of the ride-hailing powerhouse's forays into various consumer services sectors
How Grab is Becoming an Everyday, Everything App in Southeast Asia
Image credit: Shutterstock
Senior Correspondent, Entrepreneur Asia Pacific
6 min read
Opinions expressed by Entrepreneur contributors are their own.

Anthony Tan and Tan Hooi Ling spun the idea of building a ride-hailing company, Grab, while pursuing MBA at Harvard Business School. Grab was initially conceived as a college project and had bagged US$25,000 in prize money from the pitch contest organised by the school.

Hailing from Malaysia, the duo was aware of the chaotic and unorganised scene the Southeast Asian countries’ transportation sector  faced. Moreover, rolling out a ride-hailing service in the region would give them first-mover advantage. Bringing together their knowledge in business administration and general management, the two started jotting down a business plan and built the application with the prize money they won from the pitch contest.

After sleepless nights and countless brainstorming sessions, Anthony and Tan rolled out GrabTaxi in 2012 in Malaysia—just a year before Uber launched its ride-hailing service in Singapore and two years after Go-Jek in Indonesia.

Like in any developed and developing nations, ride-hailing has become an everyday app in the SEA countries as well. The region’s online economy is driven heavily by a large, growing, and incredibly engaged internet user base. A 2018 report by Google and Temasek suggests the Southeast Asian internet economy has reached US$72 billion in (GMV). And, taking the lead position are online travel, e-commerce, online media, and ride hailing sectors, the same report suggests.

Fast Forward to 2019

Within a span of seven years, Grab has taken its mobile-based ride-hailing service to an exponential growth across eight countries in the SEA region. The big moment for Grab came last year when it acquired its rival Uber’s entire ride-hailing service in the region. So much so that Grab has now become a “decacorn” with a valuation of close to US$14 billion, after securing US$1.46 billion for its ongoing Series H round of funding from SoftBank’s Vision Fund in March, this year.

With Grab, basically, one can swipe into its mobile-based application to hire anything that rides on wheels. It has introduced more than 10 on-demand ride-hailing services — including taxis, private cars, car-pooling, bicycle sharing, shuttle services, and bike taxis — with more than 2.8 million drivers processing over six million ride orders everyday. In fact, Grab is mulling into the mantra of providing everything in the consumer services sector, too.

Touted as the super app model, Grab has forayed into multiple consumer services sectors such as hotel booking service, on-demand video platform, ticket purchasing, food ordering, grocery shopping, besides offering financial services. The model is believed to have been first pioneered by Chinese multinational conglomerates, Alibaba’s Alipay and Tencent’s WeChat. For now, Grab is among the front-line companies spearheading this model. It generated a revenue of more than US$1 billion in 2018, and hopes to double it in 2019. In January 2016, GrabTaxi was rebranded to Grab, with the cofounders maintaining that the change in name will reflect all the industries it operates with. Let’s look at these industries Tans have their eyes set upon.

Grab’s Fintech Offering

As part of its financial offering, Grab launched its QR-code based mobile payments service, GrabPay, in January 2016. The service is currently available in six Southeast asian nations: Singapore, Indonesia, Philippines, Malaysia, Thailand, and Vietnam. This payment service, besides accepting payments for Grab rides, it can also be used while making in-store purchase, food delivery, and fund transfer.

Grab has also forayed into providing loans and insurance services as part of its “Grow with Grab’ roadmap” strategy. It currently provides loans to small-medium enterprises (SMEs) and micro-insurance for drivers in Singapore. Grab claims to have built a merchant network comprising more than 600,000 merchants. The SEA insurance market is the six largest with a valuation of US$100 billion. GrabPay already allows consumers to pay online for making a purchase on e-commerce platforms such as Qoo10, 11Street, etc.

Finally, GrabPay has extended its financial services towards offering ‘Pay Later’, a post-paid and instalment payment service in Singapore. This service allows customers to pay for Grab services at the end of the month without bearing an additional cost!

Dine With Grab

Grab officially launched its food delivery business, GrabFood, in May 2018, as part of its strategy to become an everyday super app. The company aims to have taken a dominant position in Southeast Asia’s food delivery market, which it expects will grow over six times into a US$13 billion market by 2022. Tans were able to grow GrabFood exponentially after taking over UberEats’ Southeast Asia operations.

GrabFood is currently available across 200 cities in six major SEA countries — and uses GrabPay for checkout. Grab driver-partners are often seen doubling their earning by becoming GrabFood delivery-partners. One of the company’s top executives claim that GrabFood’s revenue has grown 45 times during the period between March 2018 and December 2018.

Shop for your Groceries with Grab

Grab’s success in the food business was immediately followed with the launch of a grocery delivery service, GrabFresh, in July 2018, in collaboration with Indonesia-headquartered Southeast Asian grocery delivery provider, HappyFresh. Similar to food delivery, Grab’s partner-drivers can also choose to deliver groceries between passenger trips. Through GrabFresh, consumers can select from a wide selection of products. At the launch, the company said to be offering over 20,000 grocery items.

What’s More

In April this year, Grab added four new industries – hotel booking, on-demand video streaming, ticket purchasing and trip planning – to its app in Singapore. The company plans on rolling out these services to all users in its open, super app by June 2019. The company has partnered with hospitality and OTA platforms, Agoda and Booking.com; and with Singaporean video on-demand streaming platform HOOQ, and India-headquartered BookMyShow, for its latest initiative.

Fight for Super App: Grab vs Go-Jek

It is interesting to note that both Grab and Go-Jek are fierce competitors in the SEA region, and founders of both companies were amicably known to each other since their Harvard days. Launched by Kevin Aluwi, Michaelangelo Moran and Nadiem Makarim in 2010, the Indonesia-headquartered ride-hailing and logistics provider, Go-Jek, has now on-boarded more than 18 products.

In its bid to become a super app, similar to Grab, Go-Jek, which started operations as a motorcycle ride-hailing phone service, is now offering services from foodtech to fintech to hyper local delivery as well as massage services. According to Techcrunch’s sources, Go-Jek ’s current valuation is just shy of the US$10 billion mark.

Ever since Grab acquired Uber’s SEA operations, these two companies have been  battling for supremacy in the region with their “Super App”. For many years, Grab and Go-Jek are likely to take the dormant position in the consumer industry, while offering everything on one-stop platform, super app.

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