Uber is ready to take on the ASEAN market but so are its rivals. Will they be able to get market leadership in this rapidly growing industry?
Uber vs. Grab
Despite being the most used taxi app in 108 countries out of 171 countries, it faces significant challenges from rivals, particularly Singapore-based Grab, which holds a competitive edge in localising their operations. Grab is also innovating with its own digital payments platform.
Eddie Thai, a venture partner with investment firm 500 Startups Vietnam, says, “Grab is more familiar with Southeast Asian political and business culture and more active in partnering with existing major stakeholders such as taxi companies. In less-regulated markets, it may be a tougher fight for Grab, since Uber is so deep-pocketed and has a wider global footprint across which it can spread overhead costs.”
Grab dominates in six ASEAN nations: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Indonesia poses a difficult market for Uber as Go-Jek which dominates the motorcycle taxi market has joined forces with Blue Bird, Indonesia’s largest taxi company with a fleet of 23,000 taxis. Go-Jek has recently raised US$550 million to fight off Uber and Grab and has created its digital payments platform, Go-Pay. Meanwhile, Grab is investing US$700 million to strengthen their operations, including a R&D facility.
Uber’s entry into ASEAN countries
Analysts suggest that with the competitive landscape in ASEAN, Uber might acquire rivals to grow, but David Plouffe, Uber’s senior vice president of policy and strategy, said, “I think our view is that we prefer to build and succeed on own, and that’s what our focus is.”
Uber has disclosed it is profitable in Singapore and the Philippines. Uber entered Vietnam in 2014, but many local motorcycle taxi drivers do not want to partner with them as they do not want to relinquish 15% of what they earn. Uber is also now required to pay taxes, which evens the playing field. Myanmar is a promising place to gain a foothold as there is no established taxi association. Cambodia looks to be a crowded market as local transport apps like Exit Taxi Cambodia, Choice Taxi, iTsumo and PassApp Taxi have already established themselves in the domestic market.
Uber looks to expand its revenue streams
To boost its income and leverage on their technology, Uber in Thailand has launched UberEats, a food delivery service that has partnered with 100 restaurants. It also has ventured into other services such as UberPool, its ride-sharing service, and UberMoto, its bike taxi service. This diversification allows them to match their rivals and expand their list of services.
Uber’s expansion into the ASEAN region means they have to scale up quickly and move to the top ASEAN cities with high smartphone penetration, good electronic payment infrastructure, and a significant population. With its US$68 billion valuation and a possible IPO in the near term, it should be able to compete with its established peers in the region.