Many analysts and pundits would argue that it was a long time coming – Uber’s exit from the Southeast Asian scene almost mirrored what occurred in China with Didi Chuxing in 2016.
It is undeniable that deep pockets will add to the odds of success of any startup.
That being said, it would be selling Grab short to claim that their ousting of Uber from the local ride hailing scene was merely a case of whoever could bleed more money. We take a look at what businesses can learn from Grab’s ousting of its competition as well as why other giants are flocking to a seemingly saturated market.
Grab knew the landscape it was competing in
Every continent is an extremely different animal from the rest, coming with their own set of nuances and cultural norms that define the business landscape a lot more than one would think.
Uber entered Asia on the tailwind of its successes in North America, a mature market in terms of cashless payment adoption. Grab, on the other hand, understood that they were scaling a market where many still didn’t have access to or trusted credit cards – the company accepted cash payments from the get-go. By the time Uber realised the need to follow suit, it could have been a case of too little too late. Grab was also perceived to be safer from the get-go, allowing for the sharing of one’s route with others for security purposes. These details added considerably to the company’s overall credibility among consumers who were choosing sides in terms of loyalty.
Company culture and attitude of founders vital for success
If one were to go by the adage that a business is only as strong as its people, Uber’s management team was and still is for the most part not one to emulate. The business has been known to propagate bad company culture, impacted by scandals while also being involved in various legal battles – attributes that set it apart negatively from other startups in the industry. This has chipped away at the company’s reputation among shareholders as well as consumers. Grab’s founding team, on the other hand, has managed to connect with both drivers and customers on a personal level with founder Anthony Tan insisting that one can do good while creating economic value simultaneously.
The ability to adapt to the times
A look at both apps on either the IOS or Android platforms tell very different stories. Both are functional but the similarities stop there. Grab has realised the necessity to adapt to consumer needs, providing reward structures and more importantly the mobile payments service GrabPay. This has essentially signified that the ride hailing company has plans for so much more. If all things go well, the future will see the platform synonymous with purchasing one’s food, paying for groceries as well as other common cashless transactions. Uber, on the other hand, seemingly stopped at its ride hailing and food delivery business. Southeast Asia was ripe for the picking and it didn’t strike while the iron was hot.
Competition stays strong despite Uber’s exit
It is as if potential competitors were waiting by the sidelines for one of the two behemoths to bow out of the two-horse race. Uber’s exit sparked announcements of both Indonesian giant Go-jek and car-pooling company Ryde joining the Singapore private ride-hailing industry to give Grab a run for its money.
Both consumers as well as potential entrants were also reassured by the Competition and Consumer Commission of Singapore (“CCCS”), ensuring that both company’s are abiding by competition guidelines.
Singapore’s startup ecosystem at regional forefront
One of the apparent reasons why such companies are willing to enter a potentially saturated market with a comparatively paltry 5 Million odd public is due to that fact that Singapore has been long regarded as a funding hub. Grab has set the bar for others in the industry, with the news of the company being the highest venture capital funded business in the first quarter of this year, raising a more than impressive USD 2.5 Billion.
The chief reason behind Singapore being a nucleus for startups of many natures is that companies are fully aware that the city-state is where much of the regional action is at and they stand to gain access to funding by basing themselves here. Another reason is that support from governmental as well as private enterprises in the form of mentorships, accelerators and the likes provide a springboard for them to expand regionally, leveraging Singapore as a base.
Uber evidently attempted to climb an uncharted mountain that had a different terrain from what it was used to. All things considered, it came out of the battle relatively unscathed with an almost 30 percent share in a company on the upward trajectory. The industry will have to wait and see if the new entries have the muscle to compete with a well funded and efficiently managed Grab that has gone from strength-to-strength over the last few years.