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Another price war seen in ride-hailing market

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Grab Singapore head Lim Kell-Jay says innovation is the way for it to compete with new ride-hailing or consumer platforms.

Singapore

A PRICE war will break out again in the ride-hailing industry, even as major player Grab has said it would bank on innovation instead of "promo codes" to compete in the field, observers told The Business Times.

Meanwhile, on Monday, Grab launched GrabFood and unveiled its vision to become an "everyday app" for South-east Asian consumers, a development coming just four days after Indonesia's Go-Jek announced its US$500 million investment to expand into four new markets in the next four months - Singapore, Vietnam, Thailand and the Philippines.

Yang Nan, an assistant professor at the National University of Singapore, told BT: "Grab will certainly wish to avoid another price war … but at the moment, I don't see how this can be achieved."

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He said that whether Grab gets its wish would largely depend on user response. "If, by scale, scope, diversification and innovation, Grab can build some user loyalty, it doesn't need to go down the path of price competition. We should remind ourselves that neither Uber or Grab was able to build much user loyalty during their two-horse race."

Grab and Uber had, since 2013, been locked in a long, costly battle for market share, until Grab acquired Uber's South-east Asian operations in March. Uber had reportedly invested US$700 million in the region in the past five years.

After its exit, at least six new players have been reported to be entering the space; Go-Jek is said to be the biggest of the new players, which include India's Jugnoo, Malaysia's DacSee and blockchain application MVL.

Li Jianggan, chief of venture building company mworks and former Asian head of Easy Taxi, when asked whether Grab's refusal to be party to another price war is credible, replied: "It's an interesting proposition, but this will depend on how Go-Jek plays its game. Will Grab refrain from vouchering if its competitor does? We seriously doubt so."

On Monday, Grab Singapore head Lim Kell-Jay told reporters that innovation is the only sustainable way for Grab to compete with new ride-hailing or consumer platforms. "Incentives (such as promo codes) are still going to be there, but we will continue to look at new ways to create value for our riders and drivers."

He added that Grab wants to be the one app through which users can seamlessly live their lives. "As we build out an 'everyday app' that offers transport, food and package delivery and mobile payments, we will be focused on creating a seamless experience and unlocking value for our customers by offering complementary services on one platform."

Today, the Singaporeheadquartered company offers a range of ride-hailing, fintech and marketplace services. It operates in 209 cities across eight countries in South-east Asia; its mobile app has recorded more than 95 million downloads.

Grab on Monday also launched a beta version of its food-delivery service, GrabFood, island-wide in Singapore. Through the GrabFood app, consumers can order food on demand and in advance from "thousands of merchants", and without any minimum-order requirement.

Delivery-partners of GrabFood, meanwhile, can work "whenever they want" without having to pre-book their delivery slots, and cash out all their earnings for the day on the same day, "without any delay".

GrabFood will be available in six South-east Asian countries within this quarter: Singapore, Indonesia, Thailand, Vietnam, Malaysia and the Philippines. In Singapore, Grab will go head-to-head against food-delivery incumbents Deliveroo and foodpanda.

Former player UberEATS shut down on Monday, following Grab's acquisition of Uber's South-east Asian business, which included UberEATS. GrabFood was built on UberEATS.

James Ong, head of GrabFood Singapore, said: "GrabFood is a major milestone in our journey to become the everyday app for consumers." He said GrabFood will offer customer insights to its restaurant partners, and is evaluating the option of creating a dine-in, central kitchen, as have Deliveroo and foodpanda.

Prof Yang is confident that Grab can become an "everyday app" for users in the region: "Grab is in a good position to do that. It has a large user base, high volume of traffic, payment system and data on user behaviour - its most valuable assets."

mworks' Mr Li said, however, that Grab has to work harder to win the hearts and minds of users. "Complaints about higher fares and lower driver earnings are not helping its transport business. As for GrabFood, its offerings are nowhere as good as what UberEATS used to offer."

He added: "With Go-Jek entering the fray, this could get interesting. Grab will be forced to work harder to maintain its lead, which will be almost undefendable in the short term, taking a cue from Didi and Meituan-Dianping's duke-out in China."