Splyt gives non-transportation platforms the ability to offer transport options to their users.
By 2017, Splyt was focused on “mobility roaming,” enabling customers of local online transportation services to seamlessly access similar services from different providers while overseas. Their application programming interface allowed third-party operators to fulfill ride requests from users of apps that weren’t present in their markets in either geographic or sector terms.
Thanks to Splyt’s technology, Alipay and Ctrip users visiting from outside Southeast Asia can access Grab’s services via those two mobile apps without the need to download the Grab app. This also means they can avail of Grab’s transport services through a familiar interface in their own language, collect rewards points through their existing loyalty memberships, and pay in their home currency without conversion-related losses.
Incoming and outgoing
A Grab spokesperson said that the strategic alliance with Splyt has two phases.
The first is intended to enable visitors from outside of Southeast Asia to use Grab’s transport services while they’re in the region.
The phase will also include further integration by the end of 2019 with Booking.com, part of the Booking group of hotel reservation sites that invested US$200 million in Grab late last year.
That deal has already seen hotel booking capability introduced within the Grab app via Booking.com sister site Agoda.
Splyt will, conversely, enable Booking users to hail rides from Grab.
Further Splyt-enabled integrations with “demand partners” other than Alipay, Booking, and Ctrip are expected, the spokesperson said.
The second phase of the Splyt deal is aimed at helping Southeast Asians easily access on-demand transport when traveling outside of the region.
“We want to be useful to them when they travel abroad,” the spokesperson said. “They’ll get GrabRewards when they travel overseas, [and] they’ll be able to pay with GrabPay.”
Farther down the line, it’s hoped that Grab users overseas will be able to open the app and see restaurant recommendations and other tips for their current location, the spokesperson added.
Learnings from Lyft
Grab has attempted to team up with ride-hailing apps in other markets before.
In June 2016, it began trialing an integration with Lyft, which allowed Grab’s users to book rides with its US counterpart in over 200 cities in the country. Lyft users were likewise able to hail Grab vehicles while visiting Southeast Asia. However, the crossover was mothballed after the pilot stage. Maintaining one-on-one integrations may have proven too difficult, particularly as the Grab app rapidly evolved with new features and services.
In contrast, Splyt’s platform, based on a single API connecting multiple partners, makes integration a lot simpler.
Grab’s deepening relationship with Lyft’s local archival Uber – which sold its Southeast Asian business to Grab in early 2018, getting an ownership stake of around 30% – is also likely to have put that integration to bed.
As it happens, Lyft is also a Splyt partner. Given Grab’s closeness to Uber, it seems unlikely that Grab would want its users to be able to hail Lyft rides while visiting North America. This illustrates that, even with increasing consolidation in the worldwide ride-hailing industry, there may be other Splyt partners that Grab would prefer not to integrate with.
A Grab spokesperson said that Grab will have control over which of Splyt’s partners it wishes to work with, and added that more operators are expected to join Splyt’s platform in the coming months.
The question of revenue
While Grab has painted the Splyt investment and partnership as a positive for its users, it isn’t clear how the company will benefit in terms of revenue.
While integrations with the likes of Alipay and Booking.com will theoretically secure more fares for Grab’s driver network, ride-hailing from travelers alone isn’t likely to turn Grab profitable anytime soon.
Splyt, however, seeks to generate revenue from the currency exchanges performed on its platform, such as when an Alipay user visiting Thailand pays for a Grab ride in renminbi.
“It is certainly an interesting add-on to Grab’s existing offering, but obviously it’s unclear as to the economics of the venture,” says Angus Mackintosh, an analyst with CrossASEAN Research at Smartkarma. “I am not sure what tourists make up for in terms of revenues, but I don’t imagine it is a huge portion.”
Grab’s counterargument may well be that it’s seeking to create that ride-hailing market for tourists from the ground up. But even when tourists from outside the region do seek to use local ride-hailing services, there are other barriers to consider.
“In Bali, for example, local interests make it hard for Grab or even Gojek to operate transport services, only allowing drop-offs in certain areas,” he says, referring to the common phenomenon of local taxi cartels muscling out private-hire drivers.
“I also think the economics of any cooperation would be skewed to the local provider, with a small commission to Grab,” he says. “My view is that tourists would often be happy to download a local app and use it directly. And they always have the option to pay in cash.”
Although it isn’t obvious how the partnership can generate additional revenue for Grab on a large scale, it can create value for the company in other ways.
For one thing, Grab can further grow its brand at home by offering added convenience to its already-established user base.
Second, the partnership allows Grab to secure at least some business from markets outside of Southeast Asia without the massive costs of physically going overseas to set up operations.
“In the end, I think [this is] a service for existing customers, rather than a big new revenue stream,” says Mackintosh. “Setting up outside Southeast Asia would be a much greater undertaking with much higher risks and a long period of cash burn.”