Ride-sharing companies are booming in the Asian market, especially in South-east Asia.
In recent years, the region has witnessed a robust growth of smartphones and widespread internet access, thereby increasing the influx of various ride-sharing companies.
These companies are offering private car, licensed taxis, motorcycle, and carpooling services across the operational countries in the region.
However, the market is facing fierce discounting on rides offered by companies to capture the market share in the region, making it a key battleground.
Furthermore, with the entry of the US based ride-sharing firm, Uber, many existing companies in the region are facing the heat.
Giving direct competition to its regional rival, Grab, Uber is currently operating in same number of countries where the former is functional – Malaysia, Singapore, the Philippines, Vietnam, Indonesia and Thailand.
In addition, a major event that added to the competition in the region was the exit of Uber from China by selling its business to Didi Chuxing, a local competitor, after which the company started to focus on the burgeoning South-East Asian market to retain its global position.
The intensifying competition in the region has caught the attention of large investment and technology firms across the globe.
To emphasize, in July 2017, Singapore-based Grab, received a new round of funding of $2bn from Didi Chuxing and SoftBank.
The company stated to invest the fund in expanding its ride-sharing services across other markets, mobile payments, and machine learning capabilities to facilitate services like predictive demand and driver and user targeting.
Similarly, Grab’s global alliance partner, Lyft raised a total of $600m in last round of funding in May 2017, bringing its total funding to $2.6bn till date.
Such aggressive pouring of investments in the market has opened up opportunities for local ride-sharing start-ups to enter into the market like Go-Jek in Indonesia and Hello Cabs in Myanmar.
Moreover, Go-Jek received $550m of funding last year and is gearing up to provide tough competition to large players such as Grab and Uber in the extremely competitive space.
In addition, the investors are eyeing potential prospects with their investments in these companies as they expect that the users of ride-sharing firms will also make use of online applications for package-delivery and mobile financial services.
For instance, many ride-sharing companies came up with their online payment services such as GrabPay (Grab) and Go-Pay (Go-Jek) in an aim to replicate WeChat’s success by developing a fintech push in the region and offer their customers with seamless benefits.
Despite the ride-sharing market growth, there are many barriers that need to be crossed including strict regulations, fragmented market, and the lack of proper banking system available to a large part of the population.
Moreover, the growing competition will lead to consolidation activities in the industry in the next one year, with large and established ride-sharing providers acquiring the new and small players.
Traditional players like Uber and Lyft possess expertise in the market and a huge financial backing that gives them benefit them an edge in the already fragmented Southeast Asian ride-sharing market in the years ahead.