While Grab’s acquisition of Uber’s Southeast Asia operations has raised anti-competition concerns among regulators in a number of markets like Singapore, Vietnam and the Philippines, Grab Indonesia says the region’s largest market poses “a different competitive landscape” which requires the company to continue to fight for customers.
Unlike other countries in the region whose ride-hailing market had been dominated by Grab and Uber, Indonesia boasts another player with a sizeable portion of the market share – Go-Jek.
In fact, a survey conducted recently by market research company ecommerceIQ suggested that Go-Jek is the most-often used ride-hailing app according to 57 per cent of Indonesian respondents, followed by Grab (33 per cent) and Uber (8 per cent). It must be noted, however, that both Go-Jek and Grab have claimed to be market leaders, through results of different surveys in the past.
Indonesia’s Business Competition Supervisory Commission (KPPU) had earlier dismissed anti-competition concerns, saying it does not class the Grab-Uber transaction as a merger or acquisition under the antimonopoly regulation and therefore, does not require Grab to provide a detailed notification of the deal.
Talking to DEALSTREETASIA, Grab Indonesia Managing Director Ridzki Kramadibrata echoed the commission’s conclusion, adding that the acquisition does not mean Uber customers will automatically be switching to Grab. The company, which describes itself as Southeast Asia’s leading ride-hailing app, says it still has work to do to win over the floating mass of former Uber customers.
“This is an acquisition of Uber’s operations, not their company. So what has been acquired are their operations, such as their drivers, business deals and assets. So when it comes to customers, we still need to fight for that,” he said.
Kramadibrata, however, said he was confident Grab Indonesia, which now operates in more than 125 cities in the country, will be able to lure Uber customers through its strengths such as its regional prowess, payment options and improved safety features.
Going forward, Grab will leverage its acquisition of Uber to strengthen its food delivery and payment businesses in the country. Kramadibrata says the two are the logical expansion areas for Grab Indonesia and will help the company in its mission to empower up to 5 million micro-entrepreneurs in Indonesia by 2020.
In an exclusive interview with this portal, Kramadibrata elaborates on matters related to market competition, regulation and expansion plans.
How has Grab Indonesia changed/evolved since the acquisition of Uber?
Firstly, of course, this strengthens our position as the leading ride-hailing application. In Southeast Asia, we are the strongest, but not only that, in Indonesia, it has cemented our position as a market leader for transport [services], both for four-wheelers and two-wheelers. The consolidation definitely makes it easier for customers to get our service, because our size is now bigger, more seamless, and also we expect efficiency and lower prices. That’s from the transport side.
Other than that, this is also a stepping stone for us to become an online-to-offline player at the regional level. We will tap the micro-entrepreneurs. One of the businesses we acquired is UberEats, and it gives us a wider footprint in Southeast Asia to start delivering food. In Indonesia, we will also be moving towards food delivery.
In terms of online-to-offline, we’re aiming in Southeast Asia to enable around 100 million micro-entrepreneurs by 2020. These include various kinds of entrepreneurs, including drivers, but also food merchants and agents because we have a lot of agents in Indonesia with the help of Kudo. That will definitely be a platform to help us reach out to micro-entrepreneurs.
In Indonesia, we have worked with a number of institutions that has allowed us to enable around 3 million micro-entrepreneurs through these online-to-offline activities. So what it means, it is logical for us to enter payments also, with our vast network across Southeast Asia. Definitely what people need is seamless payment platforms, which we will be ready for.
Uber definitely strengthened our platforms in terms of technology, benefiting the customers, yet also setting the ground for us to enter related areas such as food.
What is the plan for GrabFood in Indonesia?
We have already started in Indonesia. GrabFood is already in 28 cities in Indonesia. We believe the enabler of food business is transport. We launched food delivery a while back actually, but our strategy is really to strengthen our transport first before we really push food. It can’t be launched prematurely. There will be more to come on the food business on the platforms, on the features and so on. We will be more aggressive.
In countries like Vietnam, Philippines and Singapore, there are concerns by the authority regarding competition in the ride-hailing space, following the Uber acquisition. Is that a problem here in Indonesia? How do you manage this?
I think it is confirmed that it’s not an issue here in Indonesia. Definitely, the competitive landscape is different here than it is in other countries. Secondly, the KPPU has contacted us about this, and we have met them, answered their questions and from their side, they have already released a statement saying that it’s not a problem in Indonesia.
Back to the nature of this transaction, this is an acquisition of Uber’s operations, not their company. So what has been acquired are their operations, such as their drivers, business deals and assets. So when it comes to customers, we still need to fight for that.
What is Grab doing to attract those floating mass of customers?
We use our strengths to capture that segment of Uber market. Number one is we are a regional company, a regional platform. Many Uber users travel across the world, but I know in Indonesia, the movement is predominantly Southeast Asia, so we capture that market.
Number two, in terms of technology, we are the most advanced in transport because we are supported by R&D from six countries and top notch engineers. And then from the passenger side, we’re the only option right now that provides payment through credit cards. I know a lot of Uber customers opt to pay through credit cards. We’re the only option for them right now. The other side does not have the capability to offer credit card payment.
On the safety side, which I know is a concern for people on the move particularly for the higher segment, we have strengthened a lot of our safety features, including built-in features. We have a new feature called emergency contact. It’s the newest that have introduced. It allows the passenger to save three emergency numbers and during the ride – knock on wood – if anything happens, they can press that emergency button, then a message will be sent immediately to those emergency contacts, including the whereabouts of the passenger(s).
GrabPay is a great opportunity in Indonesia. What have been the biggest challenges so far?
Let’s speak about the opportunities first. Transport is the biggest use case for payment transactions. So by us being the leader in transport technology, it opens opportunities for people to pay for their transactions through our payment platform.
The challenge is people’s behaviour. The enemy, quote-unquote, is cash. People are so used to using cash even when it comes with a lot of problems. It is expensive to produce and distribute cash. There is also the cost of the potential risk of losing the money. Cash also does not make payments seamless. So this is a challenge for us and we have to change the people’s behaviour. How do we change this? By instilling the benefits. They need to actually feel the benefits.
Secondly, we need to make access easier (for cashless payment) whether it is for top-ups or cash out. Then also give them options to use the cashless payment, not only for transport but also for other uses like to pay for food or other stuff.
Those are the challenges, and we believe we are able to address it. At the moment we’re doing some upgrading of the system. Right now we’re setting up a partnership with OVO, and soon it will be re-launched.
Can you tell us a bit more about the partnership with OVO Pay? We understand that you have been working with them for your payment license.
For 2018, with the Uber acquisition, it sets our base to go beyond transport, in which the logical expansion areas are food delivery and payment. For OVO, we are working with them to set up our payment. There will be more activities and initiatives you will see in the near future on this.
How is the partnership with Kudo and Paytren going? What benefits has Grab gained from the partnership?
Kudo is part of our Grab for Indonesia 2020 commitment, a program which includes increasing financial inclusion, helping startups in Indonesia and enabling micro-entrepreneurs or SMES. We acquired Kudo and that was part of our commitment to boost startups because Kudo is a native Indonesian startup.
We also work with Madang but it’s a different segment. Kudo is for online transactions, Paytren is more community engagement and Madang focuses on enabling women. But what is the goal? It is to help us achieve our mission of Grab for Indonesia 2020.
Grab has entered into microlending and insurance. What is the plan for that here in Indonesia?
Grab has launched Grab Finance in Singapore and it’s a regional strategy. Our large base gives us huge potential to offer financial products and insurance to drivers and passengers. For Indonesia, stay tuned. We’re looking into this in Indonesia, but at this moment, you’ll just have to wait.
Is there a possibility of venturing into other forms of financial services?
Not at the moment, but we never say no to opportunities.
Are there plans for consolidation or acquisition to help with financial services in Indonesia?
We’re always looking for opportunities definitely, especially to help our mission to support startups, reach out to micro entrepreneurs and develop R&D centre in Indonesia. We have R&D centres in Singapore, the US, China, Vietnam, India and also in Indonesia, which is a sizeable one. So of course, merger and acquisitions are things that we are always looking at to help with those missions.
Go-Jek has various on-demand domestic services through Go-Life, as well as various other services. We notice that Grab has stuck to transportation and food delivery. Is there a possibility Grab would go down that road also, or do you intend to focus on your core services?
We’ve become an expert in transport technology, and it’s not easy. It takes a lot of experience to build a stable technology. Imagine every day, we are enabling transport for millions of people in Southeast Asia. Every day. People depend on us every day, not only the passengers but also the drivers. So we put a serious effort into this.
Our focus next is businesses that are related to enabling micro-entrepreneurs and making our service more seamless. Therefore, the logical expansions are food and delivery, and also payments. We believe those are the areas that we want to focus on right now. Because we believe that those are the areas where customers need stable and reliable platforms. We believe that by focusing on those areas we can deliver a much better experience.
The government has said that Grab and Go-Jek must be registered as transport companies. How do you see that?
That’s a new development. By nature, we are not a transportation company. We don’t have a fleet at all. So that request frankly made us think. Maybe the government has reasons for the regulation and we, as a responsible company that honours regulation in the country, will support the regulation. It means we will work with many cooperatives and entities that have the license that was previously required.
We have partners already across Indonesia. So we need to think about what will be the impact on them when we follow the government’s idea. We have conveyed that to the government as well. So I think at the moment the government is also taking inputs. We don’t have any preference, but those are the two concerns coming from us: number one – we’re not a transportation company – we are a technology enabler, and number two – we already have partners because of the previous regulation.
How has the growth been in terms of size, revenue and market share?
I think we are growing at a healthy pace. Over the years we have grown beyond 500 per cent on average. As for market share, we cannot reveal it as yet. But what we can confirm is that in terms of transport application provider we believe we are the leader in Indonesia. We are in more than 125 cities in Indonesia.