Congratulation to Group 3 for the successfully presentation. The ideas elaborated were quite inspiring.
In my opinion, the best part of the presentation came with the question: how will Grab compete with Uber in Southeast Asia? The answer was localisation. For example, GrabBike at Indonesia offers a new solution to the pain caused by Jakarta's terrible traffic jam. It reminds me of how KFC out-powered McDonalds in China by selling chicken rice during lunch hours. It is great that Grab make use of the resources it already acquired to server different needs. Such action is likely to bring customers for all services it provided.
As a user of Grab myself, I cannot agree more that Grab should provide more information to users and update data at real time. Otherwise, users will keep complaining about information asymmetry deals which may leads to trust issues.
On the other hand, I am afraid that involving bidding into such business model is a risky move. It is true that during peak hours there will be mismatch between demand and supply in certain areas and involving bidding is likely to increase the amount of supply. But considering that more cars means more traffic jam and more traffic jam means longer waiting time. Users may end up paying extra money without saving much time. Besides, with the large amount of demand daily, taxi is more like a kind of necessity good. It is unfair to have customers bidding on necessity good.
The idea of GrabHitch Deals - Sharing 1-for-1 Deals was very interesting (e.g. grab a strange to share the Starbuck 1-for-1 offer). The idea proves the value of information. But I am wondering what kind of commercial potential does the service have for Grab. Please leave comments if you have any ideas =)
Many thanks to Group 3 for uncovering the valuable ideas for us.
Hi Bohan, thanks for the evaluation!
ReplyDeleteYou do make a good point about traffic jams, I hadn't considered that point. I realize now that the bidding model could potentially lead to a "tragedy-of-the-commons" problem, much like cars do now.
I'm surprised, though, that you would consider taxis a necessity good. While transport itself, certainly, is necessary, I feel that public transport exists in order to provide a baseline of transport at an affordable price. Taxis and personal cars, in effect, serve as "upgrades" on that experience, providing convenience and saving time, at additional cost.
And apparently nobody understood the GrabHitch + Starbucks 1-for-1 idea. It was inspired by GrabHitch (and as such has nothing to do with Grab omg). It's simply proposing a service (INDEPENDENT OF GRAB) that offers to match people that want to combine their consumption of a particular deal (such as Starbucks 1-for-1).
Hi Yu Chuan, thanks for the comment =)
DeleteSorry for geting the GrabHitch + Starbucks thing wrong. But I think independent of Grab or not, the shiny part about the idea is to make profit through information sharing.
As for the "taxis is a necessity good" part. Actually what I am trying to say is that taxi is something with very high and consistent demand. It is like we never bid for seats in restaurant. It just sounds wrong to bid a seat in cabs ><
On the point of localization, I think you found a good example of KFC vs MacDonald's. Indeed, when TNCs are competing with each other, the one that does better in terms of localization tends to win. It is the same in the case of Didi vs Uber in China.
ReplyDeleteHowever, that does not mean the TNCs must compete head-on with each other. I believe it is possible for TNCs to identify their own unique market segments and avoid directly competing with others for the entire market.
For example, in Singapore, KFC and MacDonald's have distinctive marketing directions. KFC is more focused on selling fried chickens whereas MacDonald's is more focused on Burgers. Their localization strategies are also different. KFC sells curry rice as their localization whereas MacDonald's sells their signature curry source and more recently salted egg burger.
Hence, even if companies are competing against each other with the same type of service, they can differ in their market segment and localization strategies to make win-win situation.
Hi Bohan,
ReplyDeleteVery agree that localisation is the main thing to improve competitiveness of local companies like Grab towards international companies like Uber. Local companies may "copy" the business model from the more established international cooperations, but apply it in a different way to local market based on their comprehensive knowledge. In some cases, a good understanding on the local market really plays very important role and a successful local company may acquire the original international one as well. An good example for this would be Uber China and Didi & Kuaidi. Uber knows the mode but Didi & Kuaidi knows the market. Additionally, I guess the population where the employees are from also matters. In local companies, employees are making products for their own society. They know the pain well so they can solve it well. In contrast, in a MNC, employees usually make products for people live in the other side of the world. The developers, designer at ground level may not familiar with the living style of their target user.
Cheers,
Jinghan
Nice writing!
ReplyDeleteAs a start up rooted is SEA, I think Grab may still understand the market better than others. Uber's business model is great for customers, but may not increase the money earned by the driver (many sg uber driver complains that). Just like how Didi acquired Uber China, as Didi is a Chinese company, they allow driver to pick the order before accept the customer. And hence their driver actually earn slightly more than Uber driver.
Who will win eventually? It's very hard to tell now, let's see →_→
Jiang Sheng
Thanks for the review Bohan!
ReplyDeleteYou claim that "how will Grab compete with Uber in Southeast Asia? The answer was localisation". I quite agree with this statement but feel that localisation is not the most important solution. In Indonesia for example, it faces tough competition from its rival GoJek (an Indonesian company) that many Indonesians claim to be a more local, homegrown company. And GoJek has been much more successful than Grab in Indonesia. I feel the reason for this is that:
1. GoJek had the first mover's advantage
2. GoJek is much more local than Grab (they pioneered the motor-bike as taxi service)
3. GoJek has much better customer support
Although localisation is important, I feel that marketing and offering incentives to users and drivers is a lot more important for ride-sharing applications like Grab. Grab and Uber have been able to dominate in South East Asia simply because they were able to offer enough promotions and incentives to eliminate their competition. In Singapore they were able to make EasyTaxi exit.
Another interesting insight I have which differs from your post is that I think drivers are more important to Grab than its customers are. You claim that "users will have trust issues", "users will end up paying a lot more money" etc. Although these are valid concerns for Grab to take note and improve upon (after all they are a service company), I know that for Grab to succeed, they need to acquire the driver base before its competition like Uber. In this ride-sharing economy, the demand for taxis is pretty much high but the controlling the supply is a more tricky business.
Controlling a larger fleet of drivers in the region means more power for Grab to earn higher revenue because they serve more customers and better user experience because riders find rides faster.
Ultimately, I feel the battle between Grab and Uber eventually comes down to who spends more money (incentives for passengers and drivers).