Grab has been in talks with Uber to acquire the latter’s Southeast Asian operations in a move that might be beneficial to both ride-hailing companies, according to a report by tech publication KrAsia.
Grab is looking to entrench its market share in a rapidly growing shared transportation sector in SEA, which boasts the fourth-largest internet market and a rapidly growing middle-class population.
On the other hand, Uber has met stiff competition in its forays into the SEA market, with Go-Jek in Indonesia and Grab in other multiple SEA countries. If it cedes its Southeast Asia operations to Grab, Uber may be able to cut its losses and focus on its operations in cities that are profitable for them.
Grab has typically had an edge over Uber in SEA, in spite of the latter’s huge global presence. Last year, Grab claimed that it had a market share of 95 percent in third-party taxi-hailing and 71 percent market share in private vehicle hailing.
The Singapore-based company has typically been nimble and fast to adapt to the local consumer markets. For instance, Grab is more flexible in its payment options, and it accepts both card and cash, whereas Uber has been much slower in accepting cash, alienating a huge proportion of consumers who preferred cash.
In addition, Grab sought to help local drivers assimilate their ride-hailing tech, working with smartphone makers to subsidize prices of smartphones for poorer drivers, and giving them one-on-one tutorials on how to use them at coffee shops here.
In all likelihood, should the acquisition of Uber happen, Uber and Grab will retain their distinct brands, app and business operations, with only backend operations merged.
Users would still be able to use both apps, but with the lesser competition, incentives of discount codes are likely to decrease in scale.
Grab to partner oBike
oBike announced yesterday (22 Jan) that it has signed a memorandum of understanding (MoU) with Grab, which would allow oBike riders to pay for their rides using Grab’s mobile wallet, GrabPay. Users would be able to earn GrabRewards points when doing so as well, in the coming months.
However, a more in-depth partnership is likely to be going on behind the scenes. Last week, Singaporeans spotted photos of Grab Cycle bikes with the oBike logo being loaded into lorries.
Although Grab has yet to comment on a possible integration, there is high probability of it being the case, given that Grab is a huge investor in oBike, and there being successful precedents of Didi Chuxing, the equivalent of Grab in China, partnering with Ofo.
oBike has raised over $50 million from investors and has over 10 million users; however it still pales in comparison to Ofo and Mobike, which have raised close to $2 billion collectively and expanded to 200 cities worldwide each.
A partnership with Grab is likely to increase its financial backing further and ensure its competitiveness in the market.