Grab Unveils Grocery Delivery Service

Ride-hailing company Grab has just unveiled a grocery delivery service on Tuesday in hopes that the firm’s vast network of 7.1 million drivers, agents, and merchants will aid drive the company’s growth as it expand beyond its core ride-hailing business across the Southeast Asian region.

The strategy is to offer “everyday” offerings via a new open platform.  This effort highlights Grab’s goal to secure its dominant market share at a time when competitor Go-Jek is starting a $500 million expansion into various markets that include Thailand and Singapore.

Go-Jek is the largest ride-hailing player in Indonesia backed by private equity firms KKR and Warbug Pincus.  It has already expanded into digital payments, food deliver, and on-demand cleaning and massage services.

Grab, on the other hand, is currently transforming itself into a customer technology group.  It already offers loans, electric money transfers, payments, and food delivery.  With the kicking off of GrabFresh, the company will now provide on-demand grocery delivery.

“We believe that as we offer more localized services, there will be more users and higher engagement across the user base,” said Anthony Tan, who is Grab’s 36-year old co-founder and group chief executive officer, in an interview prior to the launch.

“When that happens, it attracts more partners and it’s a virtuous upwards cycle.  Great for business,” said Tan, who hit the jackpot when Uber hand over its regional operations to Grab this year in exchange of a stake.

As for GrabFresh, the company said that it was partnering with a Southeast Asian grocery delivery provider HappyFresh.  This is part of its new open platform strategy in which partners can access parts of its technology such as logistics and payments.

“Whether it’s food, whether it’s groceries, we need to make sure that all these are well funded, both technologically and financially,” added Tan.

A grocery delivery service could compel the Singapore-headquartered Grab to compete against Amazon.com and RedMart, owned by Alibaba-backed Lazada, which is already offering online grocery shopping in the city-state.

The company will test GrabFresh in Jakarta starting this month.  Then it will roll out in Thailand and Malaysia by the end of this year.  Eventually, the project will then be kicked off in other countries.

Grab, which has 5,000 people, has firms like Japan’s Softbank Group and Chinese ride-hailing firm Didi Chuxing included in its list of investors.

During the previous month, Toyota Motor Corp agreed to pump in $1 billion in Grab.  According to a source familiar with the deal, the funding valued the company somewhere above $10 billion.

Grab facilitates more than 6 million rides every day across eight countries and over 200 cities.  This was higher than 2.5 million rides just one year ago, putting it among the biggest ride-hailing platforms in the world.  It expects to reach revenues of $1 billion by the end of this year.

On the other hand, Tan said that the company’s goal was “not to be blindly shooting for a target.  The way to think about is, how do we create a sustainable business.”

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