Five years on, Grab wants to grab online-to-offline commerce next

Singapore

GRAB - which has in the last five years evolved from a ride-hailing company to a mobile payments platform - plans to disrupt the online-to-offline (O2O) space next. Chief executive Anthony Tan announced the company's ambitions at its fifth anniversary event on Tuesday.

O2O, or O2O commerce, is a business strategy that directs online customers (who are using a website or mobile app) to make a purchase at an offline business (such as a physical store or restaurant). He said: "Yesterday, we disrupted transport. Today, we're starting to disrupt payments. Tomorrow, all the O2O consumer services are waiting to be disrupted."

Mr Tan said that the O2O space is relevant to Grab as it has "tremendous" brand recall, networks, as well as resources which include a "massive" pool of 930,000 drivers and payment infrastructure.

The Business Times understands that in Singapore, Grab will deepen efforts in the O2O space through its exclusive partnership with CapitaLand.

Sealed late last year, the partnership will enable online and offline convergence between CapitaLand's malls, offices and homes; and Grab's ride-hailing services and corporate transport expense management tool.

Grab also unveiled several new services to mark its fifth-year milestone.

The first is GrabNow, which lets users flag down a vehicle on the street and pay for the ride using the Grab app.

This allows them to enjoy fixed fares, track their rides and earn GrabRewards points - benefits similar to booking a ride through the app.

Grab will first roll out the service in Jakarta, via its GrabBike platform. It is working with authorities here to soon implement GrabNow in Singapore.

Mr Tan said: "With GrabNow, we are digitalising street-hailing. This offers the best of both worlds. The beauty is that we (continue to) embrace the driver, making him still feel like he's part of ride-hailing."

The second is an enhanced telematics programme to reduce speeding, which has been launched here and will soon be rolled out to other cities.

It uses machine learning and predictive analytics to track the driving behaviour of drivers and send them weekly reports of their safety scores. Reminders to speeding drivers have led to a 35 per cent fall in speeding incidences across the region, said Grab.

The third is an improved GrabChat feature, which enables the auto-translation of template messages (such as "I'm here") in five languages, including Bahasa Indonesia, Thai and Vietnamese.

This is to cater to regional travellers, and facilitate quick, easy communication between drivers and riders. Eight in 10 riders were found to have cancelled their rides less when they used this in-app messaging feature.

Today, Grab is in 55 cities in seven South-east Asian countries. Its ride volume is said to have more than doubled to 2.5 million rides daily from six months ago, while app downloads have tripled to 45 million devices from June 2016.

The Singapore-based technology company has also raised more than US$1.44 billion in funding, making it one of the region's most valuable startups.

Terence Fan, assistant professor at Singapore Management University, said: "Grab has clearly moved past the survival stage, and is looking towards the next stage of growth. While there is so much worth celebrating for Grab, it should also understand that end-customers' switching cost in the ride-hailing business is fundamentally not very high, so Grab needs to keep on working at its offerings."

The transport specialist added that in Indonesia for example, local rival Go-Jek has seized a sizeable market share in the two-wheels ride-hailing business.

"Go-Jek has gone on to diversify into a mini version of the multi-functional WeChat platform in China. There is clearly much more room for Grab to grow, and there isn't much time to waste."

Stefanie Yuen-Thio, joint managing director of TSMP Law and a keen observer of disruptive technologies, said that the Grab story is no longer about ride-hailing and the lateral expansion of this offering to include bike-hailing etc; Grab has ambitions to expand into fintech through mobile payments and to leverage big data to improve traffic conditions.

"It's inspiring that a company founded five years ago in South-east Asia can take on global giants like Uber, and formulate plans to improve living and economic conditions in Asia. Ultimately though, its business model is going to have to outrun its burn rate, if Grab wants to hitch a ride on the wave of disruptive success."