Grab expands operations to take on Go-Jek

April 09, 2018 | 22:00
Grab has conducted M&A deals in the fields of finance and services to diversify its activities as well as improve service quality to be ready for the competition with the heavyweight Go-Jek.
grab expands operations to take on go jek
Grab expands its operation to compete with Go-Jek

Grab: Ambition to dominate

“When people wake up, they will book vehicles via Grab’s ride-hailing app, and then pay the fare via the Grab Financial app. At noon, they will pay for lunch via Grab Pay and book dinner via Grab Food.”

This idyllic scenario was painted by Grab CEO Anthony Tan, when talking about M&A deals to expand the firm’s operations via launching a series of services, including Grab Food, Grab Pay, and Grab Financial.

Notably, after receiving $2 billion from Didi Chuxing, the Chinese ride-hailing company, and SoftBank from Japan in July 2017 to expand its operations, Grab has connected millions of people with its financial services. Notably, the Grab Pay app was launched in all countries of Southeast Asia.

When people wake up, they will book vehicle via Grab’s ride-hailing service app, and then pay the fare via Grab Financial app. At noon, they will pay for lunch via Grab Pay and book deals for dinners via Grab Food

Besides, it co-operated with Credit Saison from Japan to establish Grab Financial Services and co-operate with insurance giant Chubb.

Earlier this year, Grab announced that it acquired India-based payments startup iKaaz to strengthen its payments platform.

Grab expected that, "The rich functionality of the iKaaz mobile payments platform and its experienced leadership team will accelerate the feature development and partner integration of GrabPay (its payments platform).”

Grab Pay created a flush in development with 3.5 million transactions conducted per day, equalling over one billion transactions per year.

Go-Jek appears

With careful preparation to expand its operations, Grab will not be challenged by other ride-hailing service apps in its markets, excluding the heavyweight Go-Jek, the motorcycle ride-hailing transportation provider from Indonesia.

The withdrawal of Uber from Southeast Asia motivated Go-Jek to accelerate the plan to expand operations to overseas markets, including Vietnam.

Grab and Go-Jek are the heavyweights with each other in the race to gain the market share in the ride-hailing service. Both of them are backed by financial giants, notably Didi Chuxing from China and Softbank from Japan stood behind to supply financial support to Grab, while Go-Jek receives capital from Google and Tencent.

According to Go-Jek, Vietnam is considered an ideal destination to invest in motorcycle ride-hailing services as it has a population of 90 million and 45 million registered motorcycles. Besides, operating expenses in Vietnam are cheaper than in markets like Singapore and Malaysia.

Thus, in March, Go-Jek started to recruit experts to advise for its expansion in Vietnam to break the dominance of Grab.

In order to realise the strategy to set foot in other markets in Southeast Asia, Go-Jek has been collecting capital.

According to the latest movements, it succeeded in raising $1.5 billion in the latest round from a dozen investors including Google, Temasek, Chinese tech giant Tencent, and BlackRock.

Besides, Go-Jek has been investing in the finance technology sector and launched Go-Pay, with the aim to lure in a large volume of people customers with demand for finance technology services.

“2018 will be the year of Go-Pay,” announced Nadiem Makarim, CEO of Go-Jek.

Established in 2010 as a phone-based motorcycle ride-hailing service, Go-Jek has evolved into an on-demand mobile platform and a cutting-edge app, providing a wide range of services that include transportation, logistics, mobile payments, food delivery, and many other on-demand services. Go-Jek is valued at $5 billion.

With balanced financial potentials, Grab and Go-Jek are looking at an even race for market share in ride-hailing services. Both of them are backed by financial giants, notably Didi Chuxing from China and Softbank from Japan standing behind Grab, and Google and Tencent behind Go-Jek.

However, their business strategy sets them apart. Grab currently dominates the ride-hailing markets thanks to its deep understanding of the demands of residents and flexible technology applications. While with the advantage in terms of delivery speed, Go-Jek is known as the app meeting almost all demands faster than Grab.

Grab’s purchase of Uber in Southeast Asia raised concerns about a potential monopoly in the region.

Accordingly, the Competition and Consumer Commission of Singapore (CCCS) asked Grab and Uber to postpone the merger so that the authority can have more time to review the merger plan.

CCCS asked the companies to maintain pre-transaction conditions, such as independent pricing and service options, as well as not to take any action that might lead to business integration in Singapore until the commission completes its review of the matter.

Grab and Uber agreed to postpone the merger of their ride-hailing apps in the city-state for seven days, until April 15.

In another movement, the Philippines has ordered Uber to keep its local service active while antitrust investigators review the merger.

In Vietnam, Grab Vietnam affirmed that after the merger, the market share of Grab will still be below 30 per cent, which is not a monopoly in Vietnam. However, at the working session with the Vietnam Competition Authority under the Ministry of Industry and Trade, the representative of Grab has failed to provide evidence to support this claim.

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