My Trip to Vietnam ‘17 (part 1)
By: Anh Phung
Tags: Vietnam, Hanoi, Emerging Markets, Southeast Asia, Startup

Now, all of this is just my observation and macro-level data that explains my hope and excitement for Vietnam. But let’s have a look at the highlights of my trip:

Case Study — Grab Taxi Driver

HANOI — VP Bank & Up Co-Working Space (Part 1)

HCMC — 500 Startups & Vietcetera office (Part 2 - to come)

Case Study — Grab Taxi Driver

Everyone knows the “sharing-economy” companies popping up around the world, especially the likes of Uber. For every “sharing-economy” startup beginning their journey, many use the word “Uber of…”. Based in the West, I’ve only heard of Grab and Uber entering the Vietnamese market. I didn’t really realise how integrated Grab & Uber have become in the two largest cities in Vietnam, Hanoi and Saigon. On the streets of Hanoi, there were Grab drivers everywhere in green. Even at home, my grandmother or auntie told me to use Grab anywhere I go. So, to understand a little about the Grab and Uber story in Vietnam, I took a Grab Taxi and had a conversation with the driver.

When Grab entered Vietnam, they had a “typical” sales approach. The Grab driver, I spoke to already worked for a traditional taxi company. One day, whilst looking for a customer, he was approached by a Grab sales representative on the street who informed him about the Grab service and the potential to earn more income. At first, the taxi drivers or car owners were very skeptical and scared that it could be a scam. However, after a while, his friends, who were happy with Grab, recommended him to jump in too. The driver was happy with the service and as a result he told his other friends. This was the power of “word-of-mouth” marketing in action.

However, to get their first initial customers before going viral, Grab took the best care of their initial customers. When the driver signed up, he was invited to the Grab office for a training / onboarding session lasting ~1 hour. Grab used these sessions to educate the drivers about Grab and the phone application. Additionally, Grab gave the drivers a lot of useful merchandise that the drivers could use. E.g. Grab pillow to support the driver’s neck. And if I remember correctly, drivers with kids even received free packs of milk when they joined. In his own word, the taxi driver said “Grab took really good care of us when we joined”.

“So how did Grab help you concretely?”, I asked.

Extra income Ability to fill up spare capacity Ease of finding customers

In the past, to find customers taxi drivers had to wait at a spot until a customer calls them. And unless you are a taxi company with means, you are ushered away from “reserved” taxi spots. Or else, you drive slowly on the street to find waving customers. With Grab, customers are brought to them and they have the power to choose.

“May I ask how financially this has helped you?”

On an average month, he made ~30m VNDrevenue. His expenses were ~7m VNDfor Grab fees and ~14m VND for Petrol + maintenance fees. So he could take home ~9m VND profits.

And on a good month, the driver could take up to 20m VND profit. This is not bad. This would buy you a London — Hanoi return flight ticket.

Nevertheless, the taxi driver has acknowledged that the “honeymoon” period is coming to an end: drivers face difficulties. The ride-sharing market in Hanoi has become saturated due to so many drivers joining the platform, creating intensified competition. Furthermore, there is a shift in balance from customers having more power as they have the power to choose their driver or the ability to review drivers.