The entry of Uber in 2011 has changed the game of transportation, not just in the US, but also in the Asian market. The successes of Uber and Lyft have in one way or another prompted the development of similar social sharing transportation platforms on the eastern side of the globe: Didi, Grab and Go-Jek, for example, bring ride sharing to consumers’ front doorsteps.
Globally, Uber’s business model is that of a platform beyond just transportation services, but in Asia markets Uber’s offerings mainly revolve around basic transportation needs. With Uber’s growth crippled in China, and most recently in Italy, one wonders if they would then focus their muscles on other South East Asia markets like Singapore, Malaysia and Indonesia.
JustGrab: Additional Feature that Combines Both Cabs and Private Cars
Grab, a similar ride-hailing platform that originated in Malaysia, has pitched itself against Uber with its “higher local relevance” in the South East Asia region. Instead of being “everyone’s private driver”, Grab aims to get everyone a ride in the shortest time, hitting on the exact pain point of consumers in a city where availability of cabs has long been an unresolved issue.
The recent release of JustGrab on March 29 has further strengthened the “speed” value proposition: it combines the private cars of GrabCar with the Taxi fleet of GrabTaxi into another additional new feature called JustGrab, thereby giving passengers a one-tap access to the closest available ride, shortening the waiting time. However, with the introduction of JustGrab also comes dynamic pricing – commonly known as “surge pricing”, in Uber’s terms.
What Was the Reaction?
As with the introduction of any new initiative that disrupts usual habits, Grab’s dynamic pricing and the new JustGrab feature seems to have ruffled the feathers of some. A review of the online discussion on JustGrab revealed a high percentage of negative sentiment (32%).
We see a cloud of confusion hovering around many users, with close to a third expressing confusion between GrabCar, GrabTaxi and JustGrab. In a market where consumers are used to benefitting from the price war, the new dynamic pricing scheme has also drawn much discussion online with 42% of the grouses resolving around price-hike related issues. What followed suit were numerous price comparison discussions and analysis between the different operators, which once again has brought the focus back to price.
While the new initiative created a momentarily increase in overall ride availability and therefore its value proposition based on speed, we cannot help but wonder if the non-transparent surge pricing would bring back the habits of “disappearing drivers” just before peak hours, or of drivers waiting for the bookings just so in order to increase their yield.
How Do the Drivers Feel?
As a platform that taps social resources, especially one that emphasizes on speed, the widespread availability of drivers is one of the key contributors to the success of the platform.
While consumers are given tons of promotional discount codes to distract their attention from the effects of surge pricing, private car drivers’ displeasure seems to be brewing with the increased competition from cabs. As a social sharing platform that depends on both drivers and riders to function properly, having a strong connection to both groups is paramount to the long-term success.
As expressed by one of the drivers in an online forum, the introduction of JustGrab is seen as “a direct competitor of GrabCar” and “a behavior of betrayal on the fleet of private car drivers”. This seed of distrust is certainly not something to ignore, unless Grab is planning a step back to the days of “GrabTaxi” – as a cab-hailing platform.
Conclusion: Are Discounts Really Sustainable?
Besides assistance with the vocational license applications, fee payment and insurance benefits, there is perhaps a need to forge a deeper relationship with these driver-partners. Go-Jek in Indonesia is one good example that has won the hearts and loyalty of its fleet of drivers. Instead of focusing only on consumers, Go-Jek launched an emotional campaign targeted at the pool of drivers. Positioned as a service that is so Indonesian, created for Indonesians, derived from Indonesian culture, to change the live of Indonesians, the campaign demonstrated a deep understanding of the plight of the locals and how it can improve the livelihood of the riders and their families. While targeted at riders, the campaign has proven to have also won the hearts of Indonesian passengers, becoming the number one online-service booking platform app in Indonesia.
There is much more that ride-sharing companies must do to earn brand loyalty besides engaging in a price war. Continuous price war is just going to get users switching between platforms, until the day comes when surge pricing gets so extreme that consumers are forced to abandon the platforms for other options – which might not be impossible with the pace of technological development that we see today. After all, brand building is about winning hearts, not just pockets.