Grab Journeys: A small peak into its Business Model
$Grab Holdings(GRAB)$is facing a lawsuit for not disclosing that there were not enough drivers during the COVID-19 pandemic. That was one of the major issues which the company faced during the period and continues to face it today.
Today, I had an interesting chat with my driver that gave me insights which could affect Grab earnings in the aspect of transport and passenger mobility.
Choice of Apps
My Grab driver told me that he had been driving for 7 years. Interestingly, he is a taxi driver, who operates using the Grab app. I asked why he didn't use the Comfort app ($COMFORTDELGRO CORPORATION LTD(C52.SI)$)and he said that it didn't have that many calls. When asked why he didn't choose Gojek, he said that he was happy with how Grab operated even though it ceased giving out incentives early this year. He told me that his style was to just accept "any call" and was more "Chin Chai" (Chinese dialect for easy-going). He would then stop at his allocated time and was not prone to rush.
I then recalled that a Gojek driver had once told me that Gojek had more incentives and was more for the "fast and furious" driver (those who like to chiong or dialect for rush) but Grab served the more easy going drivers who wanted to move at their own pace. My observation here was that Grab was reducing the incentives to improve it's profitability. This would not bode well in attracting drivers but my driver reminded me that actually, it would depend on the driver's needs. Grab actually provides higher fares but took larger corresponding commissions from drivers.
Driver Supply
We also got down to chatting about the current driver Supply. He highlighted that right now, there were less drivers because most had returned their cars. The main reasons were because some were just "waiting to see" if the conditions were better. They had previously been scared off because of their experience during the pandemic where they actually lost money because there were no passengers. Another big reason was because most had found either better paying or more stable jobs or were comfortable now in their current jobs. When asked if he thought whether they would return, he shrugged and replied that he didn't know.
Coincidentally, he also addressed a gripe many of us have, which painted a bad image of Grab and its business model: High Surcharge.
He said that this was due to the lack of drivers. Once more drivers joins the fray, the surcharges would reduced. Well, that's a big if. But if they do, especially now when measures have eased, it will definitely be a boon to Grab. It also hinges on how Grab wants to balance incentives and profitability.
Conclusion
During these bad times, Grab is certainly important in helping people earn money. Be it the customer who no longer wants to own a car, or the delivery guy who is rushing to deliver food. There is a window of opportunity to win the hearts and minds of both consumers and workers. I hope Grab can find that balance.
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