Singapore-headquartered technology firm Grab Holdings Limited has set the bar high for corporate response to the COVID-19 pandemic. Its swift move to diversify its services cushioned the impact of the unprecedented health crisis on its ride-hailing business.
The transportation sector was one of the worst hit by the pandemic. As mobility ground to a halt amid lockdowns and other restrictions in 2020, Grab quickly accelerated its shift from ride-hailing services to deliveries to meet increased demand for food and groceries.
"Our drivers couldn't take passengers, so we had to find a way to keep them surviving. We also had consumers who couldn't get out and needed access to food and grocery. So we were able to create a nice cohesive ecosystem," Peter Oey, Grab’s Chief Financial Officer said in an interview.
The company is no stranger to fast iterations and quick pivots. Its first service, a mobile taxi booking app introduced in Malaysia in 2012, was quickly expanded to motorcycles, large passenger vehicles, and other local modes of transport in quick succession, not just in Malaysia, but also in Vietnam, Indonesia, the Philippines, Singapore, and Thailand, where it expanded operations.
Present in over 500 cities across the eight Southeast Asian markets, Grab now operates more than just a transportation service. Through one app, Grab enables millions of people to order food, send packages, pay for online purchases, and access insurance and lending services.
This super app strategy creates a flywheel effect that increases engagement, Oey said. Growing market share, building resilience
Oey, who has been Grab CFO since April 2020, believes that growing market share and building resilience are intertwined.
"We were able to survive and thrive during COVID-19 because we have market share and diversification across Southeast Asia,” Oey said.
Grab's delivery business is estimated to account for 54%, or $8.8 billion, of the region's food delivery gross merchandise value, a 16% growth from a year earlier, according to a report by Momentum Works. This is despite Southeast Asia's total food delivery spending growing only a modest 5% to reach $16.3B in 2022.
Grab delivers food, groceries, packages, and documents. At the height of the pandemic lockdown, the company even introduced a feature that allows users in the Philippines to ask Grab riders to buy items for them. The Grab super app also facilitates payments, insurance, quick top-ups, bills payment, hotel bookings, and the purchase of gift cards.
Diversifying the product range means diversifying the market risk and in turn creates resiliency, Oey explained.
"We've always been diversified. We've never taken the view that one or two countries can make up the majority [of our business]," Oey added. "No country today in Southeast Asia accounts for more than a third of our gross merchandise value."
In 2022, total revenue grew 112% to $1.43 billion from $675 million a year earlier, narrowing the company's loss by 51% to $1.74 billion from $3.56 billion in 2021. As economies recover, the company expects to see 54 % to 60% revenue growth, or $2.20 billion to $2.30 billion, at the end of 2023, according to its earnings results.
Bold moves, big strides
The world wasn't entirely out of the pandemic when Grab announced in December 2021 its merger with Altimeter Growth Corp., which paved its listing on the NASDAQ.
The move raised $4.5 billion in what was dubbed the largest-ever U.S. public market debut by a Southeast Asian firm. Grab will use the proceeds to expand its super app ecosystem, according to a news release.
"We're all about solving Southeast Asia's [challenges]. How do we empower [people]? How do we move Southeast Asia forward? How do we digitize Southeast Asia?”Peter Oey
In December 2020, a consortium formed by Grab and telecommunications giant Singtel was awarded a license to set up a digital bank in Singapore, where it is estimated that 40% of residents are underbanked. In August 2022, GXS Bank, the Grab-Singtel 60-40 joint venture, opened as the first digital bank in Singapore.
In Grab's view, Southeast Asia is still underpenetrated, so it has room to grow its market share. After deliveries, the company's next foray is into financial services.
The joint venture and a consortium of Malaysian investors also received a full digital banking license in Malaysia in April 2022. The plan is to offer financial services to micro, small, and medium-sized businesses and other economically underserved demographics such as gig economy workers.
"One of the most exciting parts of this journey is launching the digital banks," said Oey, adding that the move is part of the company's efforts to digitize Southeast Asia.
Social impact and resilience
Beyond the bottom line, Oey said Grab wants to make a positive social impact in Southeast Asia.
During the lockdowns, Grab drivers were switched to delivery jobs to ensure their livelihoods were not disrupted. In just two months as lockdowns began in 2020, a total of 149,000 transport driver-partners were moved to deliveries, while 78,000 new merchant- partners were onboarded to Grab, according to a company report.
For the rest of the year in 2020, the company allotted over $40 million to relief initiatives across the region and $5 million in subsidies on car rental provided to driver-partners for income relief. Meanwhile, small restaurants on Grab reported a 21% increase in online revenue during COVID-19.
When reports emerged of nurses in Singapore facing discrimination as they travelled on public transport in their uniforms, Grab immediately set up GrabCare to give healthcare workers a safe way to travel to and from hospitals. The service has been expanded to Indonesia, and more than 43,000 GrabCare rides have been completed in both countries, the company said.
"In 2021, we almost generated $9 billion of earnings for our drivers and merchant-partners," Oey disclosed. "We were helping our merchants and drivers during this critical moment, but our business was also growing at the same time."
And there's more to look forward to post-pandemic. Oey noted that half of the population in Southeast Asia is under 30, and the region is digitizing quickly. "So, you've got to keep your eye focused on sustainable growth," he said.
One of the projects Grab has been working on for years is mapping Southeast Asia, which it believes is important for efficient operations in its e-commerce, transportation, and logistics businesses. Today, Grab provides hyperlocal location-based technology and map data to third parties as an enterprise service.
“As we head towards profitability, we are also making an impact for the economy in Southeast Asia,” Oey said. "Our strategy is making sure that we can continue to innovate."
* Editor's notes: This article is part of the Cxociety Coffee Table Book project (The Project) which chronicles the journey and experiences of senior business, operations, finance and technology leaders in Asia in recent years. The Project illustrates the tenacity, ingenuity and resiliency of the human spirit in the face of seemingly endless challenges.
With nearly 50 stories chronicled in The Project, it is a must-read compendium of learnings and experiences from seasoned professionals in the region.