What Uber Left Behind in Asia
bloomberg.com
bloomberg.com
Before leaving the market, Uber had a really intensive price war with Grab (for a few months I was getting SG$5 discounts for 5 rides a week by each company).
While one might argue that they could have stayed longer and expand their application into a super-app (like Gojek, ICBC or Wechat), it seems they preferred to instead invest in a local company that knows that market better. I think it's still too early to say whether it was a good decision, and definitely too early to say whether it was a mistake.
[0] https://thenextweb.com/asia/2018/03/26/ubers-southeast-asia-...
So it wasn't 100% up to Uber to quit and take this stake.
1: http://fortune.com/2018/03/12/data-sheet-uber-softbank-grab/
https://www.google.com/amp/s/www.bloomberg.com/amp/opinion/a...
(apologies for the amp link)
Ola is now refusing to take further investments from Softbank as it had went behind Ola CEO's back to acquire its initial investors.
Uber basically had a choice between a 27.5% stake in Grab or 0% in the entire Asian rideshare market.
There's no second guessing this decision IMO. It was the right decision at the time.
Even with the much-lauded ASEAN, I think Southeast Asia is much less integrated than, say, South America. Or even Africa(n Union). Might be because all the diversity in language, religion, and culture here.
[There's push to make Malay a working language of ASEAN, if the non-Austronesians agree this would make much sense than using English which is only spoken by the elite few of each countries (minus Singlish and perhaps Malaysian... Or Filipinos.)]
Uber was basically pioneering a new model of doing business. You can't really patent a new business model. (Though companies try.) One can only try to compete in it.
I live in US and from Thailand. Grab in Thailand is much worse than Uber/Lyft in US in terms of experience. The fundamentals don't work well. I used Grab 5 times in Bangkok and only succeeded once (e.g. the driver accepted but never came, the driver almost arrived but turned away). In the success case, I waited 20+ mins (which is normal for Bangkok's traffic, I guess). In US, the reliability has been 100% for me, and the wait time is like 10 mins max.
During a recent couple of months in Vietnam, however, Grab was a mess. Drivers would regularly refuse to both pick me or cancel, and I was left stranded (if I canceled more than a couple of times, I would be blocked from using the service for a few days). I spent more than a couple of evenings sitting on the side of the road, playing a game of chicken with the driver on the other end of the service, seeing how many hours it would take them to cancel.
So, kinda like yellow cabs in New York.
Some ads have no "escape" button and you have to make a choice between two options in a foreign language. You pick one blindly and there is a 50% chance you will be shopping for fast-food instead of going to your appointment.
All of which to sell you something you don't want and "save" you $0.50.
From my perspective though both Uber and Grab offered similar level of service in SEA. Uber had better mobile application, but prices were very similar and often drivers used to drive for both companies, so there was really little difference between both services.
I lived in Thailand for 3 months and overall Grab, Grab Food, and Grab Groceries was pretty good.
1) Grab treated drivers better than Uber - e.g. the Grab app displays the destination so drivers who don't want to go far out of their way or into congestion can reject fares (whereas Uber used to hide destinations and heavily penalise drivers who reject trips).
2) Prices went up immediately after Uber exited, even now Grab has moved to a floating arbitrary pricing rather than mileage/time x $X. So both companies were providing significant subsidies which were unlikely to be unsustainable. Also Uber had defined hot-spots and if drivers idles in those areas with their app open they would receive an hourly wage (topped up with fares that they get). Grab doesn't do this currently according to drivers I've spoken to, its another form of subsidy to get customers a car faster and snatch market share.
3) Related to (1) above, Grab played the politics better. They got the taxi drivers on-side (Grab was originally MyTeksi and just used to hail a licensed taxi) and also navigated govt legislation better vs Uber strategy of just ignoring/skirting laws and trying to force their way through with market share and popularity. I was in an uber a few years ago and the car was pulled over by airport police, I was told to get out and find another ride - wasn't clear if the driver was getting fined or a warning.
4) The super app is annoying garbage. Now I need 3 laggy clicks to book a car rather than one tap on the app. Everyone wants to be WeChat and is failing with bad software.
5) Malaysia's govt is cracking down with new regulations. E.g. from later this year all Grab drivers will need to register their cars as a public service vehicle. This has implications for insurance but since it is a public record will also cause devaluation of used vehicles that have been driven for Grab (since any potential buyer can look up this record and negotiate a better price - Malaysians don't like heavily used second-hand goods). A few drivers I have spoken to have said they will quit driving for Grab before the legislation comes in since they are only part-time and their estimated loss of car value out-weighs all the money they could earn driving grab a few nights a week. So this will pull supply out of the market.
6) Grab was earlier than uber in allowing cash payments which anecdotally I've heard users and drivers really like. One curious anomaly is that Grab is now also charging cancellation fees. But if you booked a car with cash payment and then cancel, then the next time you book a car the fee will be added onto your fare. And the driver has the responsibility to advise you and collect the fare. A driver was telling me he keeps getting 1 star reviews from riders who get angry at him adding on the late fee (which could have been from days earlier).
Every single driver would cancel or just sit there and not move, waiting for me to cancel. It's such a crappy experience for passengers.
FWIW I'd never wait an hour - manually add a tip, increasing the amount until you get a ride. It's like your own personal surge pricing :D
Sounds like they just undervalued the trip.
>The Andaman and Nicobar Islands of India are geographically considered part of Maritime Southeast Asia. Eastern Bangladesh and Northeast India have strong cultural ties with Southeast Asia and sometimes considered both South Asian and Southeast Asian.
The recommended minimum wage in South Africa is $173 per month. Of course things are cheaper in South Africa, so that doesn't tell you anything by itself. But we can use Purchasing Power Parity measurements to make it mean something! South Africa's PPP is 0.455 [1]. What that means is that a basket of goods worth $1 in America would cost $0.455 in South Africa. So we now can use about a 2.2x multipler to start ballparking buying power.
So 5.1x the minimum wage works out to 173 * 5.1 * 2.2 = $1,941 in US dollar equivalent purchasing power per month. Now let's assume full time work of a basic 40 hour week to get this into an hourly rate. $1,941 / 160 = $12.13. Lo and behold, their "5.1x the minimum wage" works out to almost an identical market rate for drivers as in the US. They earn about $0.20 less per hour, in adjusted spending power, than they'd earn in the US. Whenever a datum leaves you wondering what it really means, it's often one that's been chosen to present a sensationalized image to what's often a pretty boring reality.
[1] - https://data.worldbank.org/indicator/PA.NUS.PPPC.RF?location...
FB trying to merge many messaging apps seems similar, but for only one service (messaging), and Uber has a credit card, Eats, and transport but they are more of an app constellation than a super app (perhaps a super app from the driver side, but am curious about consumer case in western markets).
[1] https://www.google.com/amp/s/www.forbes.com/sites/michelleev...
The reason they do well in China is that:
1. Most users use android and there is no reliable & trustworthy single popular App Store. 2. So people at scale rely on the apps that came preinstalled. WeChat famously is! 3. Since it’s hard to get people to install new apps, devs through all products into their one app that has distribution
In the west the preconditions are very different, hence there is no force driving this behavior.
And lastly, user experience, apps in the west need to mind the laws and media, but in China tech companies basically can do whatever they want, so it's always the race to the bottom coz that's where the winner will be. So you have Wechat filled to brim with hawkers/salesmen/marketers with unfettered false ads, its "self-media" platform feeding people the most eye-catching junk articles. User experience doesn't mean much when the popualation is so big they can just lock as many people on their apps as quick as possible, then the picky ones are forced to deal with it as it's a "superapp" - everybody is using it and they are not going to change.
So there you have it, the superapp experience: your boss and coworkers messaging you at night and weekends; the local police where you rent your room asking you to register ID and verify face on their Wechat applet; your acquaintances and parents sharing the latest self-media top story about stoping drinking coffee immediately coz Americans found it's carcinogenic.
https://skift.com/2019/04/16/google-maps-is-ready-to-transfo...
Most of the author's arguments are compelling, but I am very skeptical if any app in the west will ever reach super app status.
Regulators are already considering actions against FANG, although, if compared to Tencent, neither Google's or Facebook's positions in the market seem that threatening at all ...
Building a "real" super app might actually be dangerous for any company int the west.
Wechat pay is quite popular even outside of China, seen some tiny mom and pop stores in rural Thailand/Malaysia accepting it. I've spoken to Chinese tourists who say they barely bother carrying cash to most cities in SEA.
You have to be a Chinese tourist to use it. It isn't used by locals or tourists from other countries.
Other countries solved the cashless problem long ago with credit cards, which just never caught on (mainly because of horrible banks, ICBC AmEx places the burden of proof on card holders for fraud).
I've only been to an ATM twice since leaving China in late 2016. As a foreigner, WeChat never worked very well for me (they want a copy of my Chinese ID card????), so I had to carry lots of cash. Heck, before around 2012, I was even paying the rent with cash (pay once every 3 months, need 20k+ RMB...ATM has withdraw limit of 3K RMB per transaction...ugh).
Works great for the Chinese, not so much anyone else. They really dropped the ball on that. I see local alternatives springing up all around the place. Grab probably will win out in South East Asia.
I'm quite used to contactless payments in Australia but work over there a lot and going back to card + pin is painful. I'd happily use the QR code payments given the chance but legacy banking is struggling to adapt.
Companies that prioritize this--Walgreens comes to mind as an obvious example--have chip auth under ten seconds. It isn't optimal, but it's improving.
Whereas in Australia, it is just "tap and go." Starbucks works similarly with their QR code buying (but the money is onloaded to a digital gift card; but then I never use it anymore since mobile ordering is so damned convenient).
(I agree it's less than ten, I just couldn't remember any off the top of my head that I felt confident asserting.)
Their developer and RnD departments has to be way too bloated and the ambitions way too high.
Thailand: Grab (car)
Cambodia: Pass (tuk Tuk)
Vietnam: Grab (motorbike)
Indonesia: Go-Jek (bike)
Singapore: Grab (car)
Every few months, a new competitor seems to pop-up in every major city.
Now I use Grab as a price gauge and usually haggle a taxi for lower if he doesn't want to use a meter. Can usually always get a taxi cheaper, GrabBike is the only thing that beats it.