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Grab to enhance GrabMart in Cambodia, thanks to post-IPO funds

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Cambodians stand to benefit from app enhancements on the back of Grab’s post IPO expansion plans. Hong Menea

Grab to enhance GrabMart in Cambodia, thanks to post-IPO funds

Coming from its recent listing,cash-rich Grab is ready to expand, with multiple enhancements in the first half of 2022, including a safety feature in mobility service

Possibly one of the first few items in its shopping cart since its Nasdaq listing, Grab Holdings Ltd’s acquisition of Kuala Lumpur-based Jaya Grocer, a 40-store premium grocery chain in Malaysia, signals the strengthening of its GrabMart service.

The ride-hailing app, headquartered in Singapore, with humble beginnings as a taxi app in Malaysia, expects to conclude the deal by the first quarter of next year, filings with the US Securities and Exchange Commission showed.

The deal, which could be worth up to 1.8 billion ringgit ($420 million) according to The Edge Malaysia’s sources, comes as GrabMart’s gross merchandise value (GMV) surged 380 per cent year-on-year, according to its third fiscal quarter ended September 30, 2021.

The growth trajectory has pushed steadily upwards since the first quarter of 2020.

Against this backdrop, the consumer technology firm, known for its “super app”, is bringing into its fold five major retail chains, comprising Indonesia’s PT Indomarco Prismatama or Indomaret, Thailand’s Big C Supercenter PLC, Malaysia’s Lotuss Stores (Malaysia) Sdn Bhd (formerly Tesco), S&R Membership Shopping in Philippines, and MM Mega Market (Vietnam) Co Ltd.

These businesses will become GrabMart partners as the app scales up grocery delivery across Southeast Asia, Grab said.

The latest development brings new prospects for smaller nations within Grab’s regional footprint, like Cambodia, where the provider has had a prominent presence in the mobility sector since 2017.

“We hope to serve as many daily use cases as possible,” said Corentin Rouxel, head of expansion region (Cambodia and Myanmar), who was recently appointed to the post, while serving as the country head for Myanmar.

In doing so, Grab is pouring in investment to enhance the service level of GrabMart, though it did not specify the amount.

“We will make it more convenient for our merchant-partners to monitor and prepare orders, and we will introduce cashless payments for consumers,” Rouxel told The Post.

Its listing via US-based special purpose acquisition company, Altimeter Growth Corp, which saw Grab’s valuation swell to $40 billion, made it the largest initial public offering on Nasdaq by a Southeast Asian firm.

It boasts over three billion rides since it began in 2011, with a strong foothold in the region’s ride-hailing business, but now aims to grab a larger portion of the deliveries market, as reflected by the firm’s latest financial quarterly brief.

According to Anthony Tan, group CEO and co-founder, who spoke in an investors webcast last month, the reopening of economies is providing “tailwinds” to the business, enabling it to double down on investments to “capture a greater share of the opportunities”.

“ … and open up new addressable markets for Grab, such as groceries,” he announced.

Small market

From the outset, Grab has been reporting losses. In the third quarter ended September 30, 2021, its net loss expanded to $988 million from $621 million a year ago because of an “increase in non-cash items”, while revenue dipped nine per cent year-on-year to $157 million.

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Source: Financial results, third quarter 2021 (Grab, November 2021)

In the period, the monthly transacting users, an indicator that shows the number of users who paid for any of Grab’s products, fell by eight per cent year-on-year to 22.1 million users.

Although renewed movement restrictions and lockdowns across the region impacted its mobility segment, Grab’s overall GMV climbed 32 per cent to a record $4 billion, from the corresponding period last year.

Admittedly, Cambodia is a relatively small market for Grab, with some 16 million population, but competition can be stiff in the mobility sector, given that the number of city dwellers is no where near its neighbours.

It competes in a landscape that is populated by two or more players, namely Singapore-registered ride-hailing app MVL Tada Cambodia Co Ltd and homegrown PassApp Technologies Co Ltd.

PassApp dominated the market for a period of time despite the presence of other local providers, before it was forced to relinquish a fraction of its market to Grab and Tada, a notion based on observation as exact figures are not available.

While the fare is competitive, the players try to stay afloat by resolving pain points and offering loyalty rewards to maintain repeat customers, particularly during the pandemic when travel movements were restricted, compounded by a month-long curfew.

Seizing the opportunity, MVL Tada expanded its third-party courier business in Phnom Penh, which Limkosal Ty, head of delivery business, contended that it featured a “few big players”. Grab is one of them.

But “no one” had been able to solve the problem of delivery and logistics “as a whole”.

“The entire industry keeps evolving every day, and nobody knows the so-called ‘right’ remedy for our market demand yet,” said Limkosal, a Cambodian who joined the company in 2020.

Known by its app name TADA, the blockchain-based service allows its tuk-tuk riders to pocket the full passenger fare, thanks to its zero-commission policy.

Looking at its courier services, Limkosal noted that retail businesses are better off using third-party services to cover their delivery or logistical needs.

This is because managing one’s own product delivery to customers is a “whole new game of operations”.

“A lot of hassle goes into ensuring a product is delivered to the customer. Plus, to operate the delivery side of business is very costly,” he said in March on the viability of the courier business, at the height of Covid-19 pandemic in Cambodia.

Since then, the company has diversified its revenue stream to include electric vehicle manufacturing in Cambodia, following its Series A and B fundraising activity.

Food delivery app?

For Grab, with around $4.5 billion gross proceeds it raised from the listing as well as cash in hand of $5.2 billion as of September 30, 2021, it is time to grow.

Asked what the plans are for Cambodia, its eighth market, Rouxel was quick to relay Grab’s optimism vis-à-vis its development potential here.

“It is a vibrant country, and boasts strong short- and long-term growth prospects across multiple sectors of the economy, including the ones Grab operates in,” he enthused.

This progress would be driven by macro-economic growth and its own continued efforts to enhance services and bring them to more users.

In the first half of 2022, it plans to roll out “multiple enhancements” to its mobility and deliveries services, which would serve more users, increase safety and convenience for its users.

“Among these enhancements, I am excited to share about our upcoming safety feature [where] passengers and driver-partners on our mobility services will be requested to verify their identity.

“This will further protect their account against fraud, and will make the platform safer for all our mobility services users, passengers and driver-partners alike,” Rouxel said.

Interestingly, not all the services on the super app are offered to Cambodians, such as its food delivery service found in mature markets, travel, finance and insurance.

Similarly, there does not seem to be any plans as yet to implement a third-party payment gateway, which is popular in Malaysia and Singapore.

That said, Rouxel reiterated that Grab’s priority is to enable cashless payments across more of its services.

“Today, cashless payment via debit or credit card is already available for our mobility and GrabExpress services. We are also planning to enable it for GrabMart in the future,” he said.

In the meantime, enhancements have been made after listening to users’ needs, including fixed fares, and flexible work arrangements for “driver-partners” to choose when they work and for how long as formal jobs are difficult to find.

It also launched GrabExpress, a courier service to ship items purchased online or send items to others, and GrabMart for the convenience of shopping for essentials from home.

“It’s this culture of striving to address consumers’ and partners’ needs that makes Grab successful. And the result is a win-win-win situation,” he said.

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