The COVID-19 pandemic is taking a heavy toll on ride-hailing services, like Uber and Lyft. Grab, Southeast Asia’s largest ride-hailing company, has also been impacted, but the company has adapted by quickly transitioning many of its ride-hailing drivers to its on-demand delivery verticals and expanding services needed by customers during social distancing measures.
The company told TechCrunch that its ride-hailing drivers saw their incomes decrease by about a double-digit percentage in April 2020, compared to October 2019, in line with a double-digit drop in gross merchandise volume for Grab’s ride-hailing business in some markets. Between March and April, more than 149,000 Grab ride-hailing drivers switched to performing on-demand deliveries. In some markets, the transition was done very quickly. For example, in Malaysia, 18,000 drivers moved to delivery in a single day. The platform also saw an influx of new driver requests, many from people who had been laid off or furloughed, as well as merchants who needed a new way to make income.
Russell Cohen, Grab’s regional head of operations, told Extra Crunch that to redeploy driver capacity to delivery verticals, the company worked with governments in its eight markets to understand how different COVID-19 responses, including stay-at-home orders, affected on-demand logistics. Anticipating shifts in consumer behavior, it also started adding new services that will continue after the pandemic.
Quickly moving driver capacity from ride-hailing to on-demand delivery
Grab currently has about nine million “micro-entrepreneurs,” or what it calls the drivers, delivery, merchants and agents on its platform. Cohen says the company began to see an effect on ride-hailing and transportation patterns in January and February as flights out of China, and air travel in general, began to decrease. Then COVID-19 started to have a material impact on its ride-hailing business in March, with a sharp drop after countries began implementing stay-at-home orders.
Grab prepared for the increase in delivery by talking with governments in each of its eight Southeast Asian markets (Singapore, Indonesia, Malaysia, Vietnam, the Philippines, Thailand, Cambodia and Myanmar) about different regulations for vehicles, transportation and delivery.
For example, Singaporean regulations prevented ride-hailing drivers from also doing deliveries. Last September, however, it launched a pilot program with Grab that allowed some private-hire vehicle and taxi driver partners to perform on-demand deliveries during off-peak commute hours in a bid to improve the country’s logistics network without increasing road traffic. That program, called GrabExpress Car, was expanded in March as social-distancing measures began going into effect.
“The various vehicle formats, that is very localized,” said Cohen. “For example, in Singapore we had permission from the Land Transport Authority to permit four-wheel, or car, drivers to do food deliveries. Previously that had not been something they encouraged, but obviously they recognized that those drivers did not have meaningful volume in their day-to-day transport jobs and food delivery could help make up some of that lost income.”
In the Philippines, Indonesia, Malaysia, Thailand and Vietnam, the company also “worked very closely with the governments in major provinces to permit food delivery to continue even whilst transport was severely restricted or, in some cases, turned off entirely,” he added. In Manila, where movement restrictions are in effect, Grab adapted its technology to ensure drivers aren’t sent on jobs that take them out of the areas they need to stay in.
Part of Grab’s collaboration with governments means assisting when tasked with contact tracing and tracking potential virus clusters, which are crucial to many Southeast Asian countries’ COVID-19 containment measures. The company introduced a body temperature and coronavirus symptom checklist widget in the Grab Driver app that drivers fill in on a daily basis. Grab also adapted in-app feedback forms for both drivers and passengers, not only as a safety precaution, but also to help health authorities with contact tracing if necessary.
Adapting to new supply and demand
Support for drivers who transitioned to on-demand deliveries or onboarded after the coronavirus crisis began was conducted in the Grab Driver app or online to comply with social distancing, and contactless deliveries to designated drop-off spots was also implemented.
Merchants on Grab Mart, the company’s on-demand service for packaged groceries, personal care and other staples, create inventories for customers to select from, which means drivers do not have to deal with the hassle of realizing an item is out of stock and choosing a substitution, an issue that American services like Instacart, Shipt and FreshDirect have had to deal with. This helped GrabMart quickly onboard more merchants as social distancing orders went into effect.
In order to meet the increase in customer orders, Grab also began scaling up programs it had started before the pandemic began, including Pasar, an extension of GrabMart launched in Indonesia and Malaysia to deliver fresh produce, meat and fish from wet markets.
Cohen said Grab was already talking to vendors for Pasar before COVID-19 because of the importance of wet markets in many Southeast Asian countries. Once it became clear more governments would implement stay-at-home measures, Grab began expediting Pasar’s expansion. This included conducting merchant training online or by phone. Because many wet market sellers were accepting cashless payments for the first time, the company also added them to GrabPay, its digital payments service.
While wet markets have been the target of negative attention outside of Asia, in many Asian cities they serve the same purpose as farmers’ markets, giving shoppers more affordable and fresher alternatives to supermarkets.
“Customers are culturally familiar with the format and they often know merchants personally. They trust the supply chain and source of product, and pricing is affordable for them,” said Cohen. “The modern grocery concept may not exist in some cities we operate in in Southeast Asia, or price points may not be affordable, so a digital version of wet markets was a very logical next step.”
Pasar is built on technology that was originally created for GrabKitchen, a cloud-kitchen service that launched in January. Run with merchant partners, GrabKitchen enables customers to combine into a single delivery items from different places — for example, entrees from one restaurant and beverages and desserts from other vendors.
Because wet markets are usually a collection of stalls, each of which specializes in a type of good, like seafood or produce, Grab was able to use GrabKitchen’s tech to create a “Mix and Match” feature for Pasar. Customers order items from the same wet market and drivers are given a sequence of stalls to pick up packages. Because Pasar delivers highly perishable goods, new safety and handling guidelines were created for the service. Merchants are provided with a small mobile device for managing inventory and orders, and a starter pack that includes plastic cling film, bags, meat trays and ice packs.
“We’ll be scaling that across the region because it’s a hyperlocal solution for Southeast Asia that we think we’re well-positioned to serve,” said Cohen. He added that “it’s been a really interesting experience and proven to us that if we can bring a lot of traditional retail formats in Southeast Asia that have been around for a long time into a digital economy, it’s really meaningful for them and our customers.” The concept was also adapted to bring Ramadan bazaars online.
In addition to expanding its on-demand delivery services, Grab also introduced a new service in February called GrabCare to provide rides for healthcare workers in Singapore to and from hospitals. Cohen said GrabCare started as a grassroots project by the company’s employees. About 2,000 drivers signed up for the service in the first 12 hours after it opened for registration, with the number of drivers increasing to 12,000 over three months.
It also launched GrabResponse, a non-emergency transportation service in partnership with government authorities, including Singapore’s Ministry of Health, to provide rides for people who are under self-isolation orders or have suspected COVID-19. GrabResponse drivers are provided with safety equipment and training and their vehicles cannot be used for other services, including on-demand deliveries, while they are working for the service.
Preparing for the “new normal”
Cohen said Grab has spent almost $40 million on driver and merchant support during the pandemic. In most countries, the company provides drivers with healthcare benefits, depending on the local health insurance situation in each market. During the crisis, the company extended coverage to coronavirus testing and cases, and began distributing masks and hand sanitizer. It also mandates that both drivers and passengers wear masks, and is currently subsidizing the installation of plastic shields between driver and passenger seats in Vietnam, Indonesia, Thailand and the Philippines.
The global pandemic is changing how people interact with the world around them, including how they work, learn, communicate and shop. Cohen says that Grab expects the pandemic to reshape consumer habits, bringing more new customers to online shopping. In anticipation of that, the company is expanding its delivery verticals, including adding new categories to GrabMart, like health and beauty, clothing and fresh groceries. While GrabMart is the company’s primary focus, it is also experimenting in some markets with a personal shopping and concierge service called GrabAssistant, which is more similar to Postmates and TaskRabbit.
“Obviously the world has changed in the propensity of people ordering online, and there’s been a huge influx of new customers to e-commerce. What we’re seeing as our unique place in the ecosystem is to really push what we call instant e-commerce,” he said.
Another piece of the company’s preparation for the “new normal” is Grab Financial Group, which offers digital payments, business loans and other online financial services. Grab Financial Group was already an important part of its business diversification efforts before the pandemic and during the crisis the company has used it to enable new merchants to accept cashless payments.
“As we help a lot of these smaller merchants or offline businesses digitize, whether it’s accepting orders for the first time, accepting digital or cashless payments, or looking at their statements online and engaging with customer service through the app, it’s meaningful for us as we build our platform, but it’s also meaningful for them as they find new customers,” said Cohen.
While there is still no certainty about how long the pandemic will last or how it will end, many experts are forecasting recurrent waves of cases that may require intermittent lockdowns. This means platforms like Grab, and its drivers, may have to prepare to quickly pivot between ride-hailing and on-demand delivery again.
“It’s something we’re thinking a lot about in scenario modeling,” Cohen said. “First, ensuring that drivers can continue to switch freely between verticals is something that is already built into the business operations, app and technology. Maintaining that and encouraging drivers to work across verticals where there is demand for them to fulfill, is obviously something that will continue.”