Grab Indonesia bets on hyperlocal strategy with strong customer focus to lead market share

Ridzki Kamadibrata, managing director of Grab Indonesia. Photo by Grab Indonesia

In a heated race to become Southeast Asia’s super-app, Grab Indonesia managing director Ridzki Kramadibrata said the startup is “on good track” towards achieving that goal.

“We are on a good track towards becoming a super-app. We have expanded massively in Indonesia since 2017. From 12 cities in early 2017, our services are now available in 222 cities across the country, spanning Sabang and Merauke. In Indonesia, we offer a wide range of Grab services, from GrabFood to GrabExpress and GrabFresh, and we are adding more all the time,” he told DEALSTREETASIA in an interaction.

Kramdibrata declined to share the market share breakdown of its business by vertical, but claimed that Grab currently leads the ride-hailing market in Indonesia with a 62 per cent share.

“Meanwhile, GrabFood is present in 178 cities to date since it launched in Indonesia in 2016. GrabFood is a big component of our growth plan in 2019 and we will be the #1 food delivery player in Southeast Asia in 2019,” he said.

Meanwhile, its archrival, Indonesia-based Go-Jek, is also said to have secured $920 million from various investors including Google, Tencent and JD.com as part of its ongoing $2-billion funding round to deepen the startup’s presence in new markets and advance its fintech unit. Go-Jek has been busy with its international expansion into Singapore, Thailand and Vietnam. It also recently made a strategic acquisition by picking a significant stake in Philippines-based e-wallet startup Coins.ph.

On Thursday, Thailand’s retail conglomerate Central Group picked a siginificant non-controlling stake in Grab’s Thai entity for $200 million. The investment is not part of Grab’s ongoing Series H round, for which it is looking to raise $5 billion. So far, it has secured $3 billion from investors including Hyundai, Toyota, Oppenheimer Fund, Microsoft and others.

Edited excerpts of the interview with Grab Indonesia managing director Ridzki Kramadibrata:-

What’s ahead for Grab Indonesia in the coming 12 months? What are some of the growth targets? Also, how far are you from being the super-app in Indonesia?

We are going to be even more consumer-focused and launch many new services on our platform and make sure the services we launch meet the needs of consumers. Just recently, we announced that we will be moving into insurance distribution in partnership with ZhongAn, for example. We will also continue to push our verticals into more cities across Indonesia.

We are on a good track towards becoming a super-app. We have expanded massively in Indonesia since 2017. From 12 cities in early 2017, our services are now available in 222 cities across the country, spanning Sabang and Merauke. In Indonesia, we offer a wide range of Grab services, from GrabFood to GrabExpress and GrabFresh, and we are adding more all the time.

An important part of our strategy to become Indonesia’s leading every day super-app is our open platform approach, whether we’re partnering with global multinationals, local champions or start-ups. Instead of building up services ourselves, we collaborate with the best startups and companies to roll out services that fit exactly what people in Indonesia need. We are dedicating $250 million to Grab Ventures Velocity, our scale-up programme, in Indonesia to help local startups reach our wide customer base and leverage the deep bench of business and technology expertise that Grab can offer them. We just announced a partnership with Warung Pintar, a micro-retail startup company as part of our Indonesian Grab Ventures Velocity programme, for example.

What kind of startups are you looking to back with Grab Ventures Velocity?

In 2017 we launched Grab 4 Indonesia, that we have a commitment of $700 million to support the startups and the ecosystem; to bring research and development in Indonesia; and to increase financial inclusion.

And then with Grab Ventures we made a specific commitment of $250 million just for Indonesia. So we’re looking at startups who can help build the ecosystem and make social impact. We’d like to also help the startups to be join our platform – hence the accelerator programme is called Velocity – to speed up the adoption. We now have more than 100 million users but at the same time, we’re giving more values to our customers as well.

How do you select the startups you’d like to invest in then? Must they possess some synergistic values with Grab?

If you’re looking at us – we’ve always been partnership-minded. Like our acquisition of Kudo, it’s actually also a partnership on its own. It helps us to expand our reach in Indonesia much faster. Look at HappyFresh, when we partnered with them and integrated their services onto our platform. OVO is also another example. And then we have our partnership with HOOQ. So partnership is part of our DNA – so what we’re looking in these ventures, it helps us to spot gems among startups and also the ones that we could partner with and add value to our customers. That’s what we’re looking for.

The size of the fund at $250 million looks quite big given local VCs’ fund sizes are all about $150 million. Do you find it challenging to seek investments or deploy the capital?

It’s an area that we’re just starting but we positively believe that the potential would be more than $250 million. You see, East Ventures – thanks to them who have helped built a startup ecosystem here in Indonesia. And I think we share the same positivity about Indonesia and we see that the government is very supportive of this. The ecosystem is just getting started, and if you see the mobility and the internet penetration in Indonesia, we’re positive that $250 million is not too big.

Grab is said to have invested in OVO, could you comment?

We’re in a long-term strategic partnership with OVO and we both believe it will create value for both of our consumers so we will stick to that narrative. And yes, we see that it has been beneficial for both of us.

So does the strategic partnership involve a financial investment into OVO?

It is a long-term strategic partnership.

How do you plan to navigate through the payment regulatory hurdle in Indonesia?

So it’s a good thing that we’re working with OVO and we will let them to helps us to navigate through the regulatory hurdles while we work on the other segments. That’s the beauty of the partnership – everyone is focused on what they do best, to deliver the service to our customers.

Drivers are basically the backbone of Grab’s ride-hailing business. But not too long ago, Grab Indonesia was faced with the challenge of fake bookings, so how are you tackling that?

I admit that it’s a problem for us in the earlier days but we’re seriously tackling that issue from many fronts. We are using the best technology to tackle fraud, and we put also the data and statistics to pinpoint the problems. We also deal with the issue manually by manual verification – by meeting the drivers face-to-face to verify their identities.

On top of that, we’ve been implementing technologies that no other players in this region have implemented. The drivers’ selfie authentication for example, the drivers cannot take bookings if their faces are not authenticated by our system. It’s not a static verification, it’s a dynamic verification where drivers need to show their actual faces to the app. We also ban our drivers from using fake GPS. And we don’t only deal with issue from a technological perspective, but also from the operational side. Our fraud numbers are less than 1 per cent right now. We’re seriously fighting fraud.

On food delivery – what is the growth for that segment like?

We doubled down on our food delivery business last year and have seen tremendous growth in Indonesia and across Southeast Asia. In 2018, we expanded from one to six major Southeast Asia countries, namely Indonesia, Singapore, Malaysia, the Philippines, Vietnam and Thailand, and we’re now the largest online food delivery player in Southeast Asia by geography. Across the region, the GrabFood transaction volume grew over 10 times from January to December.

In Indonesia, GrabFood gross merchandise value (GMV) almost quadrupled in the first half of 2018 alone. We work with hundreds of thousands of GrabFood merchants in Indonesia, of which 80% are micro, small and medium food enterprises (MSMEs). GrabFood merchants earn up to 88 per cent more in additional income within the first five months of joining GrabFood while driver partners earn 40 per cent more income from delivering food orders, on top of taking rides.

We opened our first central kitchen in Jakarta in September 2018, making food delivery more accessible to local communities while helping merchants expand regionally. What we’ve achieved in one year took years for other players to achieve. We may be late to the market but we are growing faster than any other player. By focusing on the quality of service, we’ll be the number one food delivery player in Southeast Asia in 2019.

What’s the share of ride-hailing business for Grab Indonesia, when compared to the other services that you’re offering e.g. GrabFood and GrabPay.

We don’t share the breakdown of our business by vertical. Ride-hailing has been our core business since Grab first launched in Southeast Asia and currently, we lead the ride-hailing market in Indonesia with 62 per cent of the market. Meanwhile, GrabFood is present in 178 cities to date since it launched in Indonesia in 2016. GrabFood is a big component of our growth plan in 2019 and we will be the #1 food delivery player in Southeast Asia in 2019.

Grab Indonesia is said to have grabbed the biggest market share for ride-hailing in Indonesia, despite it being your rival – Go-Jek’s homeground. So what do you think are the contributing factors to that?

I think customer focus is the key [for us]. The principle within the group is that we need to be hyperlocal. We need to know what each [different] market needs and we work with leaders from the local communities. For example, we get in touch with leaders of the local regions and communities and if they don’t have anyone for that region, we will help them to groom the next leader for their community. This is one of the reasons that we’re able to have presence in 222 cities in Indonesia.

Compared to what’s called a local company in Indonesia – they’re not even close to what we have achieved. And we’re always looking for solutions that could address the problems that people are facing. For instance, imagine you’re ordering one of our GrabBikes during rush hour – there’s so many of them, so how do you quickly identify which one is your driver? So with GrabNow, which is only available in Indonesia, you can hail one of the nearest drivers and pair the booking with our app. And in Indonesia, where there is the odd-even traffic policy, our technology is still the only one that could separate the odd and even bookings for our drivers. And of course we also partner with the tourism players, for example, we’re the official ride-hailing service for Jakarta Soekarno Hatta International Airport. These are the key factors that we become the market leader because we’re so customer-focused.

Also read:

Thailand’s Central Group confirms $200m investment in Grab Thailand

We still need to win over Uber customers, says Grab Indonesia’s Kramadibrata

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.