05-03-2022, 10:29 PM
Here's something to chew on.
For IG, the consumers consume a digital product, a pure digital product, in this case a photo/video(content), is very profitable since the creation of content is essentially free. And the reach is global. Monetizing this is far easier as compared to say, bike share. Bike share even with a monopoly is unlikely to be profitable.
Then we have GRAB, let's take ride hailing and food delivery segment. The initial idea is a great one. And the social impact is also excellent. 10/10 for its social impact. The gig economy have provided jobs for many people who otherwise could not work elsewhere. It also helped many food outlets during the severe covid period where dine in were not allowed. Moving around also became much easier, But that's where it ends, as a business currently it is 0/10.
1. Users are consuming a local physical product/service. Food and a ride provided third parties. They are not consuming a digital product, hence how GRAB can effectively monetize is questionable.
2. Grab will only face more legislation for its delivery riders and ride hailing drivers. Insurance, mandatory contribution to retirement etc etc hence cost will only increase and no amount of local network effect can offset this increase.
3. For Food delivery, there is limited room to maneuver, getting 30% from eateries is not easy, do consider the high cost of running a food business in SG. From a eatery's point of view, they would rather have a direct consumer do take out/eat in than GRAB take 30%. Also GRAB's menu prices are already marked up from eat in/take away prices to cater for this.
This model will NEVER work on gorceries and as margins are nowhere as high to begin with. So day to day gorcery delivery using this model will be completely flawed. (think redmart)
4. For the food riders, takings are already starting to take a hit as they get less money for each delivery made. Also factor in the waiting time needed for the food to be cooked, especially the popular ones.
5. Also consider the quality costs. For IG, very little, so long as the servers are up and running.
Then we look at GRAB. There is a lot of human interaction in the process and when that happens, there will be plenty of incidents, mistakes and complaints. And another human will be needed to resolve(another cost).
Ie For food delivery, what if delivery takes too long and food become cold? What if the order is wrong? What if the order is not picked up or not delivered?
To sum up, there is no way to value Grab. This is not to say it is worth nothing, but impossible to value right now. Anything that is not possible to value, will be, by deafult, not investable. Of course, there are smarter people out there who has far greater insights and they maybe able to value GRAB.
For IG, the consumers consume a digital product, a pure digital product, in this case a photo/video(content), is very profitable since the creation of content is essentially free. And the reach is global. Monetizing this is far easier as compared to say, bike share. Bike share even with a monopoly is unlikely to be profitable.
Then we have GRAB, let's take ride hailing and food delivery segment. The initial idea is a great one. And the social impact is also excellent. 10/10 for its social impact. The gig economy have provided jobs for many people who otherwise could not work elsewhere. It also helped many food outlets during the severe covid period where dine in were not allowed. Moving around also became much easier, But that's where it ends, as a business currently it is 0/10.
1. Users are consuming a local physical product/service. Food and a ride provided third parties. They are not consuming a digital product, hence how GRAB can effectively monetize is questionable.
2. Grab will only face more legislation for its delivery riders and ride hailing drivers. Insurance, mandatory contribution to retirement etc etc hence cost will only increase and no amount of local network effect can offset this increase.
3. For Food delivery, there is limited room to maneuver, getting 30% from eateries is not easy, do consider the high cost of running a food business in SG. From a eatery's point of view, they would rather have a direct consumer do take out/eat in than GRAB take 30%. Also GRAB's menu prices are already marked up from eat in/take away prices to cater for this.
This model will NEVER work on gorceries and as margins are nowhere as high to begin with. So day to day gorcery delivery using this model will be completely flawed. (think redmart)
4. For the food riders, takings are already starting to take a hit as they get less money for each delivery made. Also factor in the waiting time needed for the food to be cooked, especially the popular ones.
5. Also consider the quality costs. For IG, very little, so long as the servers are up and running.
Then we look at GRAB. There is a lot of human interaction in the process and when that happens, there will be plenty of incidents, mistakes and complaints. And another human will be needed to resolve(another cost).
Ie For food delivery, what if delivery takes too long and food become cold? What if the order is wrong? What if the order is not picked up or not delivered?
To sum up, there is no way to value Grab. This is not to say it is worth nothing, but impossible to value right now. Anything that is not possible to value, will be, by deafult, not investable. Of course, there are smarter people out there who has far greater insights and they maybe able to value GRAB.