On-demand Business Model –How does Grab make money?

It's normal to have an opinion of an Uber-like on-demand services. But asking yourself how they make money is another story. Most on-demand startups have failed. But some on-demand companies like Grab are doing well, and there is a chance that it can become the biggest taxi company in Asia. So let's look into the Grab business model and how it makes money.

On-demand is a business model that allows customers to request products or services from a business via a mobile application or website. This on-demand business model gives customers the comfort of "now," businesses are eager to cater to these on-demand requests. To make the best out of this business model, it is essential to understand how it works and makes money. 

It is also essential to learn how the business model evolves. This blog will give more details on the on-demand business 'grab.' This article will help you understand the basics of the Grab platform and give you in-depth knowledge of Grab. At last, you will learn about how Grab is making money. 

What is Grab?

Grab is an Uber-like on-demand service that offers a variety of services, including food delivery, taxi ride, shopping, payment option, etc. grab is a Singapore-based company that is a southeast Asia leading on-demand platform. Grab is active in eight countries, including Malaysia, the Philippines, Myanmar, etc.

Grab has different products that can be accessed with a single app. A single app, also known as a super app, is an app that offers several products or services to its users. The following are some products of Grab-

• GrabFood- GrabFood is a food delivery product of Grab that delivers restaurant food to its users' houses.
• GrabMart- GrabMart is an e-commerce store of Grab that allows its users to order groceries. Additionally, it also delivers groceries to the user's house.
• GrabRide- GrabRides is a taxi ordering product of Grab that allows its users to book a taxi or other vehicle for a ride.
•  GrabPay- GrabPay is an e-wallet product of Grab that allows its user to make payments.
• GrabInsure- GrabInsure is an insurance product of Grab that allows its users to buy insurance for travel and rides.
• GrabFinance- GrabFinance is Grab's financing product that provides loans to its drivers and pays later services to its users.

The list of the products you have read above has some essential products of Grab. Apart from these, Grab has numerous products, like GrabExpress, GrabInvest, etc. in addition, Grab is testing more products to launch them on its app. 

Grab works together with an independent contractor for its mobility and delivery products. Grab can be downloaded and used on any android and IOS mobile. So, now I believe that you have gained enough knowledge on the features and specifications of Grab. It's high time to dive into the history of Grab.

History of Grab

Anthony Tan and Tan Hooi Ling launched their own On-demand Business Model, known as Grab taxi, in 2012. After four years, they rebranded GrabTaxi into Grab and started their journey to make Grab a super app. As a result, grab expanded its ride-hailing services in eight countries in seven years. In 2018, Grab achieved the milestone of acquiring its main competitor ‘Uber, ’ southeast Asia ride-hailing services.

Grab has become a super app offering multiple products like food delivery, hotel booking services, on-demand video streaming, etc. The average daily ride of this app is 6 million, with more than 2.8 million drivers. So, here comes the end of the history of Grab; you will learn about how Grab makes money in the next section.

How does Grab make money?

Grab earns a commission on the per-service used by its users. Grab takes 16 to 25 percent commission from the driver on completing every ride. Additionally, they do not offer any kind of discount to its users. Apart from Grab rides, Grab also takes a commission from other services. Let us understand the commission factor of some primary products of Grab-

GrabFood 

Grab collaborates with a delivery person who picks up food from the restaurant and delivers it to customers' houses. The bill is determined by the distance between the house and the restaurant. Customers pay delivery charges for the delivery of food. Grab generates money by taking a share of revenue of 25 to 30 percent from the restaurant.

GrabMart

Grab collaborates with the store to deliver groceries and beverages to its users' houses. Grab generates money from GrabMart by collecting a cut from the stores.

GrabExpress

GrabExpress is a service like a courier service that delivers letters, documents, and more from the users’ homes to another address provided by the user. Packages of this service are insured and can be traced in real-time during delivery. Of course, grab will deduct some percentage from the total fare to earn money. But the deduction of this service is quite comparable to GrabRide.

GrabPay

GrabPay generates a large number of profits for Grab. GrabPay is an e-wallet service that allows its users to pay for the purchase in or out of the Grab app. 

Further, Grab has collaborated with merchants who pay a slight 1 percent on each transaction. Additionally, they have collaborated with MasterCard to create their debit and credit card. Some amount will be charged as interchange fees when people use their debit or credit card. The fees will be split and go to grab and MasterCard as they are the card's issuers.

Grab also offers to pay later services that allow its users to purchase in installments. However, the service is free, but if a user does not pay an installment on time, they have to give a penalty fee of about 4 percent.

Conclusion 

So here we are at the end of this blog. In this blog, we have explained the business model of Grab, a taxi-booking app in Southeast Asia. It is well-entrenched in the business model of on-demand companies that offer a diverse range of services. 

Suppose you plan to launch your on-demand platform like Grab. then you must contact iScript UberforX. iScript uberforX is an IOS and Android mobile app development platform that lets you build a Grab-like platform.