The author forgot to mention that Uber hasn't just left South-East Asia. It was officially acquired by Grab and got 27.5% stake in Grab in exchange[0]
Before leaving the market, Uber had a really intensive price war with Grab (for a few months I was getting SG$5 discounts for 5 rides a week by each company).
While one might argue that they could have stayed longer and expand their application into a super-app (like Gojek, ICBC or Wechat), it seems they preferred to instead invest in a local company that knows that market better. I think it's still too early to say whether it was a good decision, and definitely too early to say whether it was a mistake.
Which really opens up questions into monopoly rules where a single entity owns significant stakes in all the biggest players in the market and can intervene to stop legitimate competition.
Matt Levine addresses this quite often and has been for years. Hedge funds often own some of all competitors in a market. There might one day be anti trust issues with this.
South East Asia isn’t a country and ASEAN has less political fellow feeling than Europe does in the EU. I sincerely doubt the Thai or Malaysian government much care whether a Singaporean or an American company is the dominant player in their local ride hailing industry.
Indeed, for example, the Indonesian Go-Jek expansion to Vietnam and Philippines are hitting up quite big moat/barrier of the respective governance.
Even with the much-lauded ASEAN, I think Southeast Asia is much less integrated than, say, South America. Or even Africa(n Union). Might be because all the diversity in language, religion, and culture here.
[There's push to make Malay a working language of ASEAN, if the non-Austronesians agree this would make much sense than using English which is only spoken by the elite few of each countries (minus Singlish and perhaps Malaysian... Or Filipinos.)]
The article also omits regional protectionism, local laws, and severe financial penalties that were being levied against Uber.
Uber was basically pioneering a new model of doing business. You can't really patent a new business model. (Though companies try.) One can only try to compete in it.
South-East Asia market is very strange. Uber should have won the market easily.
I live in US and from Thailand. Grab in Thailand is much worse than Uber/Lyft in US in terms of experience. The fundamentals don't work well. I used Grab 5 times in Bangkok and only succeeded once (e.g. the driver accepted but never came, the driver almost arrived but turned away). In the success case, I waited 20+ mins (which is normal for Bangkok's traffic, I guess). In US, the reliability has been 100% for me, and the wait time is like 10 mins max.
I'm from the US but have lived in Thailand for the past year. I use Grab every day, often 2 times or more. 90% of the time, Grab is fantastic – quick, clean, cheap. The other 10% of the time, the drivers either can't use a GPS, have a car that has issues, are drunk, tired, or just choose to drive recklessly. Overall I find the service indispensable, but quality control is an issue.
During a recent couple of months in Vietnam, however, Grab was a mess. Drivers would regularly refuse to both pick me or cancel, and I was left stranded (if I canceled more than a couple of times, I would be blocked from using the service for a few days). I spent more than a couple of evenings sitting on the side of the road, playing a game of chicken with the driver on the other end of the service, seeing how many hours it would take them to cancel.
Grab is a hot mess - my biggest gripe is popup ads. They have the nasty habit to show you one, and block you, at the worse moment, like when you are trying to select your destination.
Some ads have no "escape" button and you have to make a choice between two options in a foreign language. You pick one blindly and there is a 50% chance you will be shopping for fast-food instead of going to your appointment.
All of which to sell you something you don't want and "save" you $0.50.
From time to time I had similar experience to yours, e.g. a driver in Manila cancelled just before arriving, because it appeared that there was a huge traffic jam close to where I was waiting etc.
From my perspective though both Uber and Grab offered similar level of service in SEA. Uber had better mobile application, but prices were very similar and often drivers used to drive for both companies, so there was really little difference between both services.
It is still better than local taxis. I've been scammed by a taxi driver in Philippines and had problems with taxis at the airport in Indonesia. I switched to Grab/Uber and even if the quality was similar, at least I was relaxed and didn't worry about being scammed anymore.
Using Grab - only when you can't explain driver your destination (have ready business cards with addresses). It's faster to stop a taxi on street. Insist on meter and you save at leasts 30% of the fare. Thailand also has motorbike drivers which take you anywhere inside "sois" for 20 bath.
That's just the traffic and drivers. Longer distance trips you're more likely to get a ride, for short distances you should plan ahead and book while you're in your room because it can take upwards to 30 minutes.
I lived in Thailand for 3 months and overall Grab, Grab Food, and Grab Groceries was pretty good.
I'm based in Malaysia, here are some of my observations:
1) Grab treated drivers better than Uber - e.g. the Grab app displays the destination so drivers who don't want to go far out of their way or into congestion can reject fares (whereas Uber used to hide destinations and heavily penalise drivers who reject trips).
2) Prices went up immediately after Uber exited, even now Grab has moved to a floating arbitrary pricing rather than mileage/time x $X. So both companies were providing significant subsidies which were unlikely to be unsustainable. Also Uber had defined hot-spots and if drivers idles in those areas with their app open they would receive an hourly wage (topped up with fares that they get). Grab doesn't do this currently according to drivers I've spoken to, its another form of subsidy to get customers a car faster and snatch market share.
3) Related to (1) above, Grab played the politics better. They got the taxi drivers on-side (Grab was originally MyTeksi and just used to hail a licensed taxi) and also navigated govt legislation better vs Uber strategy of just ignoring/skirting laws and trying to force their way through with market share and popularity. I was in an uber a few years ago and the car was pulled over by airport police, I was told to get out and find another ride - wasn't clear if the driver was getting fined or a warning.
4) The super app is annoying garbage. Now I need 3 laggy clicks to book a car rather than one tap on the app. Everyone wants to be WeChat and is failing with bad software.
5) Malaysia's govt is cracking down with new regulations. E.g. from later this year all Grab drivers will need to register their cars as a public service vehicle. This has implications for insurance but since it is a public record will also cause devaluation of used vehicles that have been driven for Grab (since any potential buyer can look up this record and negotiate a better price - Malaysians don't like heavily used second-hand goods). A few drivers I have spoken to have said they will quit driving for Grab before the legislation comes in since they are only part-time and their estimated loss of car value out-weighs all the money they could earn driving grab a few nights a week. So this will pull supply out of the market.
6) Grab was earlier than uber in allowing cash payments which anecdotally I've heard users and drivers really like. One curious anomaly is that Grab is now also charging cancellation fees. But if you booked a car with cash payment and then cancel, then the next time you book a car the fee will be added onto your fare. And the driver has the responsibility to advise you and collect the fare. A driver was telling me he keeps getting 1 star reviews from riders who get angry at him adding on the late fee (which could have been from days earlier).
I HATE that grab shows drivers where you want to go. You end up never getting a ride. I once tried to book a trip somewhere and I spent an hour trying to find a driver that would take me.
Every single driver would cancel or just sit there and not move, waiting for me to cancel. It's such a crappy experience for passengers.
Yes, exactly - its a concession to drivers that Uber never offered. Its one small factor (plus Uber's open hostility to taxis) that I believe gave Grab an edge in the regulatory negotiations. When taxis and overzealous regulators wanted a target Uber was easier to take aim at vs the local startup heroes (Grab started out in Malaysia and has always seemed to have better executed diplomacy locally.).
FWIW I'd never wait an hour - manually add a tip, increasing the amount until you get a ride. It's like your own personal surge pricing :D
Yes, the Chinese bank.
They have a mobile app where they include a bunch of mini-applications developed by separate companies (essentially they're web views that interact with a small API provided by the main app)
Does it seem likely that the "Super App" model will survive the next decade? Why would we expect 1 vendor to make the best experience for many different products?
I think you are right. I guess my theory was based on some pre-conceived notion that was not entirely accurate. Wikipedia does say:
>The Andaman and Nicobar Islands of India are geographically considered part of Maritime Southeast Asia. Eastern Bangladesh and Northeast India have strong cultural ties with Southeast Asia and sometimes considered both South Asian and Southeast Asian.
Comparing multiples of minimum wage is one of the worst imaginable metrics because minimum wages mean very different things in different countries. The US minimum wage, relative to many less developed nations (which are all that is compared), is extremely high in terms of the purchasing power it provides. For instance the article mentions that in South Africa drivers earn 5.1x the minimum wage. But what does that mean? Well we can figure it out pretty easily!
The recommended minimum wage in South Africa is $173 per month. Of course things are cheaper in South Africa, so that doesn't tell you anything by itself. But we can use Purchasing Power Parity measurements to make it mean something! South Africa's PPP is 0.455 [1]. What that means is that a basket of goods worth $1 in America would cost $0.455 in South Africa. So we now can use about a 2.2x multipler to start ballparking buying power.
So 5.1x the minimum wage works out to 173 * 5.1 * 2.2 = $1,941 in US dollar equivalent purchasing power per month. Now let's assume full time work of a basic 40 hour week to get this into an hourly rate. $1,941 / 160 = $12.13. Lo and behold, their "5.1x the minimum wage" works out to almost an identical market rate for drivers as in the US. They earn about $0.20 less per hour, in adjusted spending power, than they'd earn in the US. Whenever a datum leaves you wondering what it really means, it's often one that's been chosen to present a sensationalized image to what's often a pretty boring reality.
I think the key reason to present min wage vs ridesharing wage is to ask how much pressure is there to raise wages for drivers. The article presents some data that wages for drivers in these countries is high relative to other jobs (or no previous job in many cases). Uber/lyft are in trouble in USA because even though the pay is not much higher than min wage, people keep demanding that uber/lyft pay their drivers higher.
Is anyone aware of recent arguments and discussions on the topic of superapps in western markets? I was curious about this after reading the above article, but a quick google only surfaced articles with not-too-compelling arguments[1].
FB trying to merge many messaging apps seems similar, but for only one service (messaging), and Uber has a credit card, Eats, and transport but they are more of an app constellation than a super app (perhaps a super app from the driver side, but am curious about consumer case in western markets).
One has to understand what the drivers for super apps are first.
The reason they do well in China is that:
1. Most users use android and there is no reliable & trustworthy single popular App Store.
2. So people at scale rely on the apps that came preinstalled. WeChat famously is!
3. Since it’s hard to get people to install new apps, devs through all products into their one app that has distribution
In the west the preconditions are very different, hence there is no force driving this behavior.
I think it's differrent internet culture and demographics, what is a computer or smartphone? To average people it could just be that app, QQ or Wechat, using a smartphone is using Wechat. Computers appear in China relatively late, for young people, they'd rather have a smartohone than a computer.
And lastly, user experience, apps in the west need to mind the laws and media, but in China tech companies basically can do whatever they want, so it's always the race to the bottom coz that's where the winner will be. So you have Wechat filled to brim with hawkers/salesmen/marketers with unfettered false ads, its "self-media" platform feeding people the most eye-catching junk articles. User experience doesn't mean much when the popualation is so big they can just lock as many people on their apps as quick as possible, then the picky ones are forced to deal with it as it's a "superapp" - everybody is using it and they are not going to change.
So there you have it, the superapp experience: your boss and coworkers messaging you at night and weekends; the local police where you rent your room asking you to register ID and verify face on their Wechat applet; your acquaintances and parents sharing the latest self-media top story about stoping drinking coffee immediately coz Americans found it's carcinogenic.
Most of the author's arguments are compelling, but I am very skeptical if any app in the west will ever reach super app status.
Regulators are already considering actions against FANG, although, if compared to Tencent, neither Google's or Facebook's positions in the market seem that threatening at all ...
Building a "real" super app might actually be dangerous for any company int the west.
It's strange how prevalent these things are in Asia and yet non-existent in the West. Whatsapp is only just now jumping on the payments bandwagon. Were it not for how crappy Chinese banking is and the difficulty onboarding they easily could have been outmanoeuvred here. I guess the popularity of QR payments in the East also helps too.
Wechat pay is quite popular even outside of China, seen some tiny mom and pop stores in rural Thailand/Malaysia accepting it. I've spoken to Chinese tourists who say they barely bother carrying cash to most cities in SEA.
> Wechat pay is quite popular even outside of China
You have to be a Chinese tourist to use it. It isn't used by locals or tourists from other countries.
Other countries solved the cashless problem long ago with credit cards, which just never caught on (mainly because of horrible banks, ICBC AmEx places the burden of proof on card holders for fraud).
I've only been to an ATM twice since leaving China in late 2016. As a foreigner, WeChat never worked very well for me (they want a copy of my Chinese ID card????), so I had to carry lots of cash. Heck, before around 2012, I was even paying the rent with cash (pay once every 3 months, need 20k+ RMB...ATM has withdraw limit of 3K RMB per transaction...ugh).
Yep, them too. They could have dominated the region were it opened to international payments, but seems like typical stubborn government getting in the way, doubt tencent or alibaba are holding it back. Even for foreigners with work permits in China it's apparently incredibly hard to link foreign accounts with these payments systems.
Works great for the Chinese, not so much anyone else. They really dropped the ball on that. I see local alternatives springing up all around the place. Grab probably will win out in South East Asia.
I'm quite used to contactless payments in Australia but work over there a lot and going back to card + pin is painful. I'd happily use the QR code payments given the chance but legacy banking is struggling to adapt.
QR is a poor substitute for contactless. America has screwed up their chips, however, making even contactless pay too slow, I can't imagine QR codes would improve anything unless the money was onloaded somehow (like how it works at Starbucks).
American EMV has some dumb decisions baked in, but as far as speed goes it's not the chips, it's the existing in-store backend processors. A lot of them are over slow and unreliable connections (GPRS is super-common, as are phone lines shared by many points of sale). As processors are forced to upgrade, Americans are seeing faster chip transactions.
Companies that prioritize this--Walgreens comes to mind as an obvious example--have chip auth under ten seconds. It isn't optimal, but it's improving.
Even stores with faster connections like grocery stores in bigger cities it is "wait a few seconds" (less than ten, they have it down to 3-5 seconds at this point) and then collect the receipt after it slowly prints out.
Whereas in Australia, it is just "tap and go." Starbucks works similarly with their QR code buying (but the money is onloaded to a digital gift card; but then I never use it anymore since mobile ordering is so damned convenient).
Could Snapchat be something close? I don't know all the features, but it had games, a social geo map, commercial published content, and personal social content. Although the only third party integration is for filter and ad creatives, it "feels" like it might go there someday.
Neither of those apps are profitable yet. Even if there was a huge opportunity there, Uber didn't have the cultural understanding necessary to execute well, and didn't have the funds to fight a global war of attrition with every other ride-hailing company.
Uber being a money sink is the biggest VC joke ever. I can't understand how they are losing that much money while having no car expenses, providing an app, customer support and some certification service for the drivers.
Their developer and RnD departments has to be way too bloated and the ambitions way too high.
The style of the art on that page is similar to HBO's Silicon Valley opening[1]. Until I scrolled down I thought the page might be some sort of satire.
Did a bit of a double-take when I saw the large "18+" image: apparently this is a reference to having "18+ products", but that's not what "18+" means in much of Asia.
Wow I know I'm not the only one but this is the first time a web page has literally pegged my CPU. It even created audio artifacts in the music I was listening to at the time.
Shameless corporate plug: I am a Grab engineer, we are hiring like crazy right now. We hire engineers in USA (Bellevue WA and Seattle), China (Beijing), Singapore, Vietnam (HCM City), Indonesia (Jakarta), India (Bangalore) and I probably forgot some.
Living in SEA, I really enjoyed having the option of both Uber and Grab as it was easy to compare prices, and sometimes get a taxi for cheaper.
Now I use Grab as a price gauge and usually haggle a taxi for lower if he doesn't want to use a meter. Can usually always get a taxi cheaper, GrabBike is the only thing that beats it.
Before leaving the market, Uber had a really intensive price war with Grab (for a few months I was getting SG$5 discounts for 5 rides a week by each company).
While one might argue that they could have stayed longer and expand their application into a super-app (like Gojek, ICBC or Wechat), it seems they preferred to instead invest in a local company that knows that market better. I think it's still too early to say whether it was a good decision, and definitely too early to say whether it was a mistake.
[0] https://thenextweb.com/asia/2018/03/26/ubers-southeast-asia-...