Sunday, 13 August 2017

Grab's success spells downhill for Cabby.


A year ago, Mr Anothny Tan, founder and CEO of Grab, while celebrating his investor and global partner @Didi Chuxing‘s successes in China, told his staff, among other things that:

“Didi’s success reinforces what I believed all along. That a team that lives and breathes the markets it operates in makes a difference. Because our users are also people whom we care about – our families, our neighbours, our friends. And not just some digits presented on a business dashboard at the other side of the world in a different time-zone.

We must listen and put ourselves in the shoes of our users and partners. And ultimately deliver the best passengers transport solution in this region has ever had.”  (Link)

These are Wise Words from a young man

Anthony Tan, a Harvard Business School graduate, is brilliant and enterprising. He probably has the family gene as a grandson of Tan Chong Motor’s boss. While still a student at Harvard, he drew up a business plan for an Uber-like service that won his university school awards and backing from angel investors.

Anthony Tan knew from the beginning that he sells no physical product, only an idea and application that connects the user and the provider through internet technology. His role is only a middle man and the initial period was tough with many sceptics. He also knew that ultimately, the success of his enterprise depends solely on the user (commuter) and provider (driver) willingness to participate in his scheme.

Unlike many ivory tower bosses, Anthony has an intimate feel of the earth he farms. He knows exactly what he needs to do to get his business off to a great start.

Firstly, he gets his managers to drinks coffee with taxi drivers at street stalls to hear their motivation and talks to commuters to understand their frustrations in hailing for taxis.

Then he gets his battalion of foot soldiers to recruit taxi drivers at food stalls, coffee shops, taxi stands, airport terminals and shopping malls through face-to-face sweet sales talks and enticements like free non-alcoholic drinks and easy-to-win gifts. An overwhelming majority of taxi drivers joined him instead of his rivals EasyTaxi, Hallo and Uber. He did the same with commuters. 

After three years of hard and smart work, Grab expanded into many South East Asian countries and raised a few billions of dollars of investment funds from famous venture capital like Temasek Holdings.

Grab wisely invested in a new R&D facility in Singapore CBD that houses 200 engineers and data scientists. They also set up new software engineering offices in tech hub Seattle USA to attract talents and hired the best minds like Mr. Wei Zhu ex-Facebook creator. Inevitably and quickly, Grab developed exceedingly successful new application tools and features like JustGrab, GrabPay, GrabHitch, GrabNow and ventured into money spinner GrabCar.  

Today, Grab success is beyond words and recognition. 

What has Grab's progress and all its new developments got to do with a taxi driver like me?

Yes, it does and a lot!.

Initially, I love Grab simply because she gave me call-booking jobs that were never available before and improved my income considerably. More importantly, she dethroned the monopolistic COMFORT as the "big-brother" in the taxi industry. 

Within a short period of a year or two, Grab became the most popular taxi booking application in Singapore, kicking Hailo, EasyTaxi and other out of the market. Once Grab dominates the taxi industry, she makes the common mistakes that most corporation does. Among others, I think Grab had lost its "human dimension" in its management. They had forgotten Mr. Anothny Tan's  our users are also people whom we care about – our families, our neighbours, our friends. And not just some digits presented on a business dashboard on the other side of the world in a different time-zone. 

I reckon as a young courting couple, Grab wooed me with loving attention and generous gifts. Once married, Grab sets new rules and regulations in the name of peace, harmony and progress to regulate our partnership, turning me into a powerless housewife dependent on her husband allowance for survival.


For example

As a partner, I have no say at what price I get paid for the service I provide. I cannot reject too low price jobs that would make me lose money. If my rejection rate is above 85%, my account gets terminated without hesitation nor explantion.

Sad to say, many GrabTaxi drivers are doing more jobs through JustGrab and driving more hours but for less money. Is this right?. If you put yourself in the driver's shoe, you either choose a more reasonable price job to do or switch off the Grab application. But to turn off Grab application is suicidal as almost 80% of taxi rides are now through call bookings.

These days, street hailing jobs are very much harder to find. Hence, a mind-boggling majority of the 26,000 taxi drivers have no choice but to stick with GrabTaxi like an oppressed housewife with kids.

Grab is aware of the prevailing taxis drivers' dilemma and the management staff is taking full advantage of it through its dealing with taxi drivers. I think Grab is contemplating to reduce or remove taxi drivers in their booming platform GrabTaxi and focus on GrabCAR. You'll notice that all advertising money is spent on GrabCar, none for GrabTaxi.

Why?

Presently, there are more than 42,800 private-hire cars on Singapore roads, a figure which has overtaken the current taxi population of 26,000. With such massive numbers of Private Hire Car drivers in their fold and getting 20% commission from their ride-fare, any manager would surely want to push more jobs to these drivers than to GrabTaxi drivers whom they get only 10% cut.

Suppose a customer books a Standard Taxi ride via GradTaxi, Grab gets merely a fixed 50 cents administrative charge from the driver. If a GrabCar had done this job instead of a GradTaxi, Grab would earn at least $1.00, which is double and could be higher depending on the ride fare based on 20% commission. Simply said, Grab can make much more money from GrabCar than GrabTaxi. For this reason alone, Grab is tempted to remove the "Standard Taxi" option from their booking platform and GraxTaxi eventually.

In around June 2013, Grab claimed to be doing one booking every eight seconds or 10,000 a day. Today, it has gone up to 200,000 a day with rivals like Hailo and EasyTaxi out of the market.

Assuming that on an average Grab collects $5 a day from a Grabtaxi driver, based on 10% commission from 10,000 taxi drivers using JustGrab, Grab would profit $50,000/day. Multiply $50,000 x 30 days a month, its $1.5 million. If GrabTaxi drivers are removed from JustGrab and all these jobs go to GrabCar via Private Hire Car that has a 20% commission, Grab profit would double to $3 million a month.

Like all corporate business, maximizing profit is the greatest ultimate motivator.

Who cares about过河拆桥.
A Chinese idiom that says "To destroy the bridge after crossing the river. It means to abandon one's benefactor upon achieving one's goal.

Now, Grab does not fancy taxi drivers!. They are like COMFORT, getting rid of taxi drivers at the slightest mistake they made or a customer feedback or trivial complaint.

Grab is unfeeling like a robot and lets machines manage their relations and dealings with drivers. When a GrabTaxi driver rejects most jobs offered to him and his acceptance rating drops miserably low or when a customer triggers a feedback or complaint on their website, the driver's account is instantly de-activated (suspended) without warning nor explanation. The GrabTaxi driver could be fetching a passenger when his/her account suddenly gets deactivated, resulting in driver unable to collect the fare and passenger unable to make a further booking.

Recently, I had the exact upsetting experience when a customer feedback to Grab that my taxi number plate was different from that shown in my booking application. My GrabTaxi account was suspended instantly without notice or warning.

On calling and speaking to an Indian national on the phone, I was told to submit an appeal through their website, with nobody knowing the reason for my suspension. How could I submit an appeal and defend myself if I'm oblivious of the charge for my suspension?. Meanwhile, Grab withheld my earning of about $500 indefinitely without regard to my financial needs and hardship.

After 4 days and upon knowing the reason for my suspension, I re-appealed and explained that I was driving SMRT's TaxiShare that allows a driver to book and drive their taxis AS and WHEN we like. without a rental contract.

Under this flexible rental scheme, booking of taxis is on a first come, first serve basis and subject to taxi availability. I could be driving the same model of Toyota Pirus for four days with four different taxi number plate. I usually call my customer when my number plate is different from that shown on the booking application before I pick them up. Most of my customers appreciate my advance notice and my service rating is close to perfection at 4.87 out of a maximum of 5.

I wonder why a customer would be unhappy when the only change is the taxi number plate while the taxi driver, taxi model and taxi fare remain unchanged.

Nevertheless, Grab should not have suspended my account indiscriminately without first checking with me. Worst, they demanded that I drop by their office at Midview for investigation by their disciplinary officer, who refused to tell me the reason for the investigation and my suspension.

Honestly, I'm deeply distressed by the unprofessional work attitude of Grab ground staffs and is prepared to leave GrabTaxi even if proven that I've not committed any offence against my customer.

Three weeks had passed with my hard-earned earnings still withheld, while I wait for Grab's decision. Even Dr. Tan Cheng Bock's appeal case in the apex Appeal Court took less than three weeks to come to a verdit. I hope the senior management in Grab will investigate this case of unreasonable delay in suspension decision making. I wonder who holds the powerful function and authority to decide on suspension and termination? Is it in the hand of senior management staff or junior Tom, Dick and Harry?.

How could Mr. Anothny Tan allows such a harsh, inefficient and robotic management style to prevails in his company when he is a strong advocate of the human touch. What happens to his values and vision of friendly tenet in his company?

Unsurprisingly, when the only rival Uber has abandoned taxi driver to focus on the money spinning private hire car business, Grab now completely dominates the taxi booking platform. They are no different from COMFORT whose authoritarian style of management is well known among taxi drivers. If Grab is not careful, she would end up like COMFORT with massive drivers defecting to a new rival platform or simply dumping the use of her app.

I think in the next decade or so, very few people will hail taxis from the streets or queue at taxi stands when online booking of private hire cars are relatively cheaper, easier and faster than standard taxis. If taxi uncles want to survive in this cut throat trade, they must jump ship from "taxi-uncle" to be GrabCar or Uber-X driver. It will mean the downhill slide of the traditional cabby vocation and eventual demise of taxis providers like COMFORT and the rest of the players.

I hope a brave investor will come to give Grab a wake-up call like the way Grab shook-up COMFORT and the local taxi industry three years ago.

There is certainly room for another Grab-like service here.








11 comments:

Anonymous said...

Now cabby balls kena Grab.
Grab started as a trojan horse in the Taxi booking service to kill the Taxi business. Most cabby don't see it thinking of sleeping with the devil can get more out of the business. All cabby needs to united and fight it to prolong the Taxi industry or get kill faster. There is no win_win in conflicts of interest in business. As for why the smaller Taxi company partner with Grab and made no noise about it's driver situation is obvious. Grab must have given them side kick from the driver's commission without knowing Grab is terminating them slowly but surely.

James Lim said...

Hi Anon,

Thanks for your comments.

I agreed totally with all your comments.

In Singapore, it's impossible to get anything to unite to fight for injustice or a common good cause. Just look at the number of disunited oppositions political parties and you get my drift. I guess, if you can't win them, join them.


Francis Pang said...

Hi James,

To minimise the fixed cost of leasing a taxi full time, SMRT Taxi share maybe a good option for driving taxi part time. Only thing is that you have to top up the at least 1/4 fuel every time you return the taxi.

Only Private hire cars plying the streets may be a thing in the future but for now there are still demand for street jobs on weekends and peak periods on weekdays. Guess we need to play on both courts of the game in order to get better income driving taxi.

regards
Francis

James Lim said...

Hi, Francis Pang,

SMRT, like other corporate business, is greedy and impatient. After a good start with the flexible Taxihare at reasonably low rental rates, they now increased their rental rate averaging about 15 percents. I think fuel top up is not compulsory at 1/4 fuel. The only thing we must ensure is that the @Fuel Empty Tank symbol is not lighted when we end our shift.

When every future commuter is tech savvy with cell phone, the traditional taxi drivers must either jump ship as Private Hire Car drivers or be security guards.

Papa Lapapa said...

s a very stupid thing to be an Uber or Grab driver. You paid for the car rental and fuel to fulfil their booking and still let Uber/Grab to take away 20% of the fare. By right, Uber/Grab should mark up 20% from the fare,ie. riders should pay fare+20%!

Anonymous said...

@ James Lim:
Ride sharing companies like Uber & Grab are just opportunistic so-called ‘technology’ sharing economy companies which is free riding on their contracted drivers’ efforts & car-owners to get richer. They have no real technology assets other than their web-site & their smart app resources. In truth, there are no real ‘technological’ barriers to entry other than their first-mover advantage. In fact, it is very easy to replicate their business model by any technopreneur with sufficient financing from venture capitalists. Uber & Grab are being funded by easy money through several rounds of equity & debt raising exercises. Their ultimate goal is an IPO exit strategy but the US IPO atmosphere is currently very toxic. Recent US IPOs have gone ‘underwater’ re: Snap, Blue Apron, etc. Market observers are already calling Uber an unicorn IPO. But their likelihood for an IPO is very dim under present market conditions. Their company’s high valuations are being questioned while their cash burn rate is exceedingly high. There are already market doubts whether ride-sharing operations can continue to raise cash from investors as timelines for an IPO gets push further out into the time horizon. What many people don’t realized is that ride-sharing companies subsidize passengers using their apps by using their cash raised from investors to gain market share & to kill off the taxi companies.
My prediction – Ride-share companies will implode after the stockmarket crashes & the prospects for an IPO looks grim for a while. Investors will not fund them any more if there’s no clear exit strategy. A lot of the ride-share players will get badly burnt re: on the hook for car hire-purchase liabilities, excess cars that can’t earn a living, excess drivers without any mean of job assignments, etc. The whole industry is unsustainable.

Francis Pang said...

Hi James,

Thanks for the comments. True that he future will be much tougher for traditional drivers. It would even be worse when "auto-pilot" cars and buses starts plying our roads in the not too distant future.

There are so much greedy & opportunistic companies out there, believing that greed is good but they forgot the "Law of gravity",
What goes up, always have to come down. Time will tell if it is really sustainable..

Nasri said...

Some customer are just plainly stupid. Just because of the plate number and thet want to complain. *Face Palm*
Pay $1 but expect $2 service.

James Lim said...

Hi Nasei,

The person who complained about my case of different taxi number plate could be a Grab staff who disguises as a paying passenger. He's worse than stupid, Blockhead and moron.

Anonymous said...

I’m sorry about your plight.

With such good English you should write a book about your life as a Grab driver!

Hope it ends well for you.

Anonymous said...

Grab taxi is just a copy cat like Alibaba, they stole the Concept and develop similar app.

You are just a complaint king. When no private taxis, aren’t Comfort and SMRT raising rental every year to squeeze you dry too? Now they are suffering and they drop rental too. If there is no competition, they will be like PAP.

Your whole article is trying to claim you suffered because Grab is monopoly and squeezing like shit.
You can’t say Grab is monopolistic as they compete with so many companies. If you are not happy with Grab, you can quit and go Uber or go back Comfort.

You wrote a good flow but your logic and argument seriously flawed!