WHY DID UBER FAIL IN VIET NAM ? CHAPTER 1 INTRODUCTION CHAPTER 2 COMPANY BACKGROUND 2 1 Bussiness Model 2 2 Market CHAPTER 3 SWOT ANALYSIS CHAPTER 4 WHY DO THEY FAIL IN VIETNAM? 4 1 Customer target 4[.]
WHY DID UBER FAIL IN VIET NAM ? CHAPTER : INTRODUCTION CHAPTER : COMPANY BACKGROUND 2.1 Bussiness Model 2.2 Market CHAPTER : SWOT ANALYSIS CHAPTER : WHY DO THEY FAIL IN VIETNAM? 4.1 Customer target 4.2 Promotion 4.3 Marketing 4.4 Uber vs Grab CHAPTER : METHODOLOGY CHAPTER : CONCLUSION CHAPTER : REFERENCES CHAPTER : INTRODUCTION Uber started as a simple idea: What if people could request a ride from their phone? More than billion trips later, they’re working to make transportation safer and more accessible, helping people order food quickly and affordably, reducing congestion in cities by getting more people into fewer cars, and creating opportunities for people to work on their own terms Uber Technologies Inc (doing business as Uber) is a peer-to-peer ridesharing, taxi cab, food delivery, and transportation network company headquartered in San Francisco, California, with operations in 633 cities worldwide Its platforms can be accessed via its websites and mobile apps Uber has been prominent in the sharing economy, so much so that the changes in industries as a result of it have been referred to as Uberisation Uber has also been the subject of protests and legal actions and the subject of a criminal investigation for its use of Greyball The name "Uber" is a reference to the common (and somewhat colloquial) word "uber", meaning "topmost" or "super", and having its origins in the German word über, meaning "above" The luxury transportation startup arrived in Bangkok in February, Beijing in April, and Jakarta in June Now it has reached Ho Chi Minh City in July,2014 Uber’s on track to roll out monthly in every major city across Asia If in many countries, Uber simply earn more income, in Vietnam, Uber quickly became a major occupation Many professional drivers take part, called Uber Taxi Many people have left their old job to become a professional driver for Uber Number of cars and drivers, owners of cars increased rapidly Drivers not hesitate to borrow hundreds of millions to invest in cars Even, there are people who buy more than a dozen vehicles, hiring Uber riders CHAPTER : EXTERNAL ANALYSIS I Industry characteristic and trend The industry that Uber operates in is the sharing economy It means that this economy is based on sharing physical or intellectual resources In this case, Uber hires drivers to respond to customer and drive them to a location It’s often deemed cheaper than taxis and easier to schedule an appointment Uber has grown exponentially since its initial launch But countries have banned or restricted its services due to Uber having an unfair competition against regular taxis Other companies in this industry face debate, but Uber’s fast development has led them to be the focus point.People are studying whether this type of economy brings new career opportunities or takes them away from existing positions (Uber vs traditional taxi driving) Or bringing in new opportunities but for lower pay Customers of Uber enjoy its easy to access platform Choosing an appointment and pick-up time is easy using the app on smartphones It requires no communication rather than a few presses of a button The cheaper price is enticing to many, which has led to the explosion of Uber’s growth all over the world, also in Vietnam As consumers enjoyed their rides, they posted about their experience on social media sites Word of mouth spread awareness quickly But with the popularity increase, prices in major cities rose too Good for Uber, but not welcome by riders Still, because of the ease of use, customers choose Uber frequently The more accessibility Uber provides, the more people will use its services rather than taxis or even public transportation II Competitors Uber is expanding around the world rapidly, but its growth in Asia might soon hit a wall A group of investors in Asia and the US are funneling cash into Uber’s biggest competitors in the region Among the recipients are Ola, a Bangalore-based startup popular in India; Didi Kuaidi, a Beijing-based company whose service is popular in China; and GrabTaxi, a Kuala Lumpur company that has offices throughout Southeast Asia They have also funded with traditional taxi such as Mai Linh and motorbike taxi, a service of transporting people in the form of motorcycles in Vietnam Even worse for Uber, these companies are starting to show signs of cooperation, a movement that could slow Uber’s progress abroad—and perhaps indicate that some or all of them could merge into a single company that’s bigger than Uber itself Here are the analysis of Uber's competitors in Vietnam: Who is Mai Linh Taxi ? Mai Linh is a Taxi service call directly through the operator, not by phone and with the motto "Customers are all, safe, convenient at all times." On July 1993, Ho Huy has founded the Taxi service named Mai Linh The orientation of the company focuses to increase the major business, the transportation service in Vietnam With the growth of the economy, the demand of transportation services increases very fast The increasing number of city habitants, investors, tourists, Up to now, the demand of transportation services is increasing and not sufficiently covered Many transportation companies are aware of this demand and try to expand their business Therefore, a lot of difficulties arise, and companies are facing problems in its expansion For example, the low quality infrastructure, badly constructed roads and bridges Taxi service is a readily service Customers may take cabs wherever and whenever they need For that Taxi company may use other good supporting services such as training center for driver, spare parts delivery, develop instruments and tools for management It is obvious that the quality of the service will go down when the company not focus on the quality of its development As of October 2017, Mai Linh Group has launched a car phone application, aiming to keep up with Grab and Uber, called Mai Linh Taxi including two wheels service The advantages of Mai Linh taxi includes : • Founded by Vietnamese • Compared to Grab and Uber, Mai Linh was born before • Not only Taxi, Mai Linh also have Mai Linh E-Bus and Mai Linh Express • Vietnamese people identify Mai Linh more easily than Grab and Uber at 4-wheel service • Get sponsored by the government Mai Linh has so many disadvantages that the above advantages are not enough to cover the disadvantages below, causing a "king" was removed and now have to fall down as "soldiers" Too many bad scams about the service Sleeping on victory Do not keep up with the market Underestimate the opponent Do not respect the customer Capture the market but not keep market share Cars must be dialed through the switchboard (currently can be booked via Mai Linh Taxi app) Who is Grab ? Brands that remember their purpose and use their mission as a guiding light when making tough decisions will ultimately win, says Grab's marketing lead A report by media intelligence company Meltwater called ‘The Sharing Economy: Exploring the Future of Transport in Southeast Asia’, found that Grab holds the majority market share in SEA, as compared to Uber and Indonesia’s Go-Jek, with 2.4 million drivers and 81 million consumer download of its mobile application Like Uber, Grab is a service "Get Bike - Taxi via Smart Phone" was founded by two Malaysians, Anthony Tan and Hooi Ling Tan with the thought "life of people can improve a lot if the traffic system active and effective way " With that in mind, these two have launched a Grab Taxi (now Grab) application and this idea was placed in the middle of the 2001 Harvard Business Plan Competition! Today in Vietnam, millions of people have known Grab and believe in Grab ' They also has several advantages such as : • The jacket color is easy to identify • Focusing on the mid-range segment (two-wheeler) • Good business strategy • Strong capital • Do not be afraid to pay for advertising • Compared to other Taxi services in Vietnam Grab does not own a car Disadvantages : • In the absence of drivers, the Grab will increase sharply (guests will not satisfied, but the drivers are happy) • More than 60% of drivers are discouraged Grab (according to feedback) • Unprofessional in resolving the conflict between the driver and the traditional motorbike taxi • Quality and professionalism are not equal to Uber • Cash must be deposited into the account to operate Who is motorbike taxi ? Vietnamese motorbike taxi ( which is called "xe om") is a transport service for the transport of people and goods (usually passenger, mainly luggage attached) in the form of motorbike (motorcycle) to receive remuneration as agreed or by the length of the road Motorbike taxi is one of the most popular forms of transportation in Vietnam and is a suitable occupation for the poor or unskilled Motorbike drivers not have to be trained, they only need to have driving skills (driver's license) and can practice in the area Motorbike taxi drivers are often crowded at bus stations, hospitals, schools, etc Motorbike taxi drivers are relatively hard and sometimes in danger of being robbed In recent times, xe om is no longer as popular as before because motorbike taxi customers are less than motorbike taxi drivers In order to earn passengers, they have to fast, risk and sometimes even fight because others robbed their customers Not simply welcoming, inviting and transporting, motorbike taxi drivers have to compete and wrestle with their colleagues III Customer buying pattern About years ago, technology applications began to be used by Vietnamese people because of the rapid development of the Internet and smartphone boom This is the appropriate time to not only Uber but also other technology taxi companies want to start in Vietnam Because of the Vietnamese buying behavior - interested in a cheapest price of the services so in this case, Grab has done better than Uber in catching customer demands In Southeast Asia, the majority of the population has a habit of using cash So Grab has allowed customers to choose cash or bank accounts Unlike Uber when entering the Vietnam market only requires payment by bank accounts that make it difficult for users, Uber has accidentally ignored the customers not have the habit of using credit account As a result, Grab has expanded its market rapidly due to the adaptation and understanding of Vietnamese habits IV The promotion war: Uber vs Grab vs traditional taxi The war strategy utilised by Grab and Uber is one of predatory pricing This means that companies set the costs of a service (i.e rides) at a price lower than the marginal cost to the seller These refer to the costs incurred by the seller when adding one more unit of service Through this, the companies are able to keep the costs of rides for passengers down, while upping the ante for low cost rides All with the singular goal of eliminating the competition Once that has been achieved, the victor gets ahold of the entire market demand, thereby exerting an almost-monopolistic control (save for taxi companies) a) Uber Uber, owing to its presence worldwide has been successful in operating in loss-making markets The losses incurred in these countries are supported by the gains they make in other markets where they have a stronger, more lucrative hold Secondly, event though Uber has constantly been reporting losses and a burning through of their war chest (especially in China against Didi), the company continues to raise money as if it is broke As such they have a massive war chest with which to compete, thus allowing them to cover any losses they might be making in countries where their market penetration rate is low Although Uber owns a huge investment, they can not seize the customer psychology In detail, not like Grab, Uber didn't run much promotion, they insist on encouraging drivers than customers Specifically, at the peak time from to am and after 16 pm, Uber will support the driver 170,000 VND / trip Similarly, during the 9-16 hour time frame, the driver also receives a certain amount of support from Uber after each trip In addition, every weekend Uber will summarize the activities and assess the driver rating, if people good work will be rewarded from 1-2 million more In the other hand, Vietnam also Southeast Asia Countries are developing nations, so any ride-sharing business want to attend have to position their brand in accordance with the target customer That is more evident when compared with Uber, they are positioned as a luxury brand and pioneer With his "personal car" positioning, Uber entered the Vietnamese market by using the Refferal code Some of the names of KOLs include Vietnamese famous actress, singer, blogger, etc Every field that is related to the "luxury" is the appearance of Uber Therefore, Uber has demonstrated the professionalism although it is not suitable with those developing countries b) Grab Grab on the other hand has a presence limited to the Southeast Asian region This restricts them with respect to their market penetration rate, and in turn, their total revenue Logically speaking, Grab has inadvertently set itself up as the player more disadvantaged to fight a prolonged war However, it’s clear that this is not the case as public opinion of the Malaysian startup remains strong This is because the regional and local players often outperform foreign players as they understand their customers more closely They are more sensitive to fluctuating market trends and smaller nuances, and are in a better position to alter their business model according to market needs This places Grab at a place where they have better customer service optimisation than Uber Given the market penetration strategy, Grab chose a quick penetration strategy - a short-term entry strategy, which brought the product to market from the very beginning at a low price but still invest heavily for promotional activities It can be said that this is the most suitable international market penetration strategy for Grab Because Vietnam market is very price sensitive, motorcycle taxi / taxi service is not different between traditional xe om and ride-sharing technology Customers will choose the provider that offers them a price preference The threat of major competitors entering the Vietnamese market has also put pressure on Grab to set a target to penetrate the Vietnamese market quickly Firstly, they spend their money to run promotions at very favorable prices and discount codes every day The price is too cheap to go, go for short walks or long walks, gradually they get used to Grab Drivers have more orders, although customers only pay a small amount, but afterthat the amount of the discount will be returned to the driver after the trip When the amount of buyers and sellers are large enough and too familiar with using Grab, Grab has changed the habits of Vietnam market As written, Grab has allowed customers to choose cash or bank accounts because most of customer tend to pay bill by cash Unlike Uber, Grab is a popular brand, so instead of creating marketing campaigns that make people admire, Grab focuses on reminding people of Grab when booking a ride/car Grab uniforms are green, the color of the brand is covered by the brand identifier to the driver's uniform, which makes it easy for consumers to recognize Grab Green gives people a sense of closeness and friendliness Every field that is related to the "luxury" is the appearance of Uber Instead, Grab offers discount codes instead of call-to-action, motivating customers to place a car that is less than marketing campaigns to position the brand In the use of KOLs, Grab also chose the brand ambassador to bring familiar images, close to the popular market IV Government policies Referring to the determination of the Uber Dutch Residence in Vietnam, the Ministry of Finance states that "Uber B.V Ltd, the Netherlands, has income generated in Vietnam through its permanent establishment in Vietnam Therefore, the company is obliged to pay the contractor tax as prescribed " As confirmed by the Ministry of Planning and Investment, Uber B.V is a company incorporated under the laws of the Netherlands and is represented in Uber Vietnam by Uber Vietnam In fact, Uber Vietnam Ltd has declared the contractor tax on behalf of Uber B.V Netherlands Ltd Damian Kassabgi, Director of Public Policy, Uber Asia-Pacific said, "Uber is committed to tax compliance in each of our countries Uber's tax in Vietnam, which has never existed before and we are committed to doing the right thing " For individuals signing contracts with Uber B.V Netherlands Co Ltd for transport business, the tax obligation is as follows: The percentage for calculating the VAT on the turnover is 3%; The percentage for calculating personal income tax (PIT) on turnover is 1.5% IV Market More than 15,000 people have registered to be an Uber driver in Vietnam, making the country the second fastest growing market after China, said Dang Viet Dung, general manager of Uber Vietnam "At the end of 2014, there were only 300 drivers in the Uber network, but now the figure is as much as 15,000, of which 50 percent drive quite often,” said Dung Waiting times have also fallen from five minutes on average to three minutes in Ho Chi Minh City and 3.5 minutes in Hanoi, just slower than San Francisco at 2.5 minutes, Dung added From March 2, Uber Vietnam dropped their fares by 15 percent, in line with the price slide of oil products in Vietnam In 2016, Uber expects to apply a 100 percent cash payment system in Vietnam rather than the current 70 percent In general, the ride-sharing market in Vietnam market is highly competitive Customers have many options not just Uber But in some ways, Uber did provide a better services not only for riders but also customers For drivers, there are lots of benefits for them to work with Uber · Make More Money On an average, the drivers on Uber earn approximately more than any other platform · No Set Schedule No to long working culture, no permission seeking for holidays, no work load, no arrogant boss, simply own a vehicle and be your own boss · Professional Culture Where Uber goes, professionalism follows Uber partners with the largest ride-sharing platform in the world of digital business Unlike the friendly culture of Grab, Uber is more concentrated on the making of the environment more aligned, narrowing towards work ethics · Real-time Fares The fact is the charm to earn more with flexibility motivates the drivers to work more qualitatively Uber introduced a model wherein the drivers can track exactly how much they can make after every trip · Just Too Many Customers Because of the highly transportation needs, the drivers not have to worry at all about the driver’s acquisition, Uber does it for them All they have to is simply drive and earn · A Better Experience The drivers have the satisfaction of working with Uber and so altogether, it is a good experience for them CHAPTER : SWOT ANALYSIS One of the most acclaimed startups, which showed the power of the internet and has a really inorganic growth is Uber Uber is an app and is known as the company which has the largest fleet of automobiles and yet, it does not own a single car by itself Uber is a ride sharing app and it replaces peope having to step out of their homes to hail a cab Now the cab comes to your doorstep This, and the fact that Uber has a fantastic and low pricing policy for its users, makes Uber a favorite app for the frequent or even random travellers Many office going crowd are now regularly picking an Uber cab instead of driving to the office themselves Strengths in the SWOT Analysis of Uber : Brand Equity: Uber is a recognised Brand Globally with presence in over 50 countries With increasing internet penetration and coming of age technology, Uber is expected to grow rapidly in the coming years It is currently valued at over $68 Billion Due to the high valuation of brand, Uber attracts investors too Low Fixed Investment: Uber, being an aggregator does not require high fixed investment and so it becomes easier for Uber to add more cities to its network It has expanded rapidly because there is no fixed investment or infrastructure required Emphasis on Customer Satisfaction: Uber has always prioritised customer satisfaction Uber has understood that it is serving in a totally customer transportation market where competition is increasing, especially in a developing country like Vietnam To keep an edge over the rivals, it needs to provide better customer satisfaction and enhanced user experience A recent survey comparing the customer satisfaction of Uber and traditional taxi in Ho Chi Minh City has clearly shown that Uber is far ahead About 65 % chose Uber over traditional cab when it comes to user experience Dynamic Pricing strategy: Uber has adopted the dynamic pricing strategy which works on the demand supply principle of economics Higher the demand, higher the price This becomes really beneficial for the company and the drivers In peak hours as well as in rush hour time, drivers earn a good amount of money Weaknesses in the SWOT analysis of Uber Highly Dependent on Manpower: Drivers are the face of the company and thus the company’s image depends on the behaviour of drivers towards the customer This is a highly uncontrollable situation even though strict guidelines are provided to the drivers Caters only to knowledged-technology individuals: Digital Literacy in developing nations is low and hence technology based applications such as Uber only cater to those who are technologically updated Low barriers to entry: Uber is in an industry where the barriers to entry are very low so it will face competition in multiple fronts Already in Vietnam, Grab, Mai Linh taxi and others are giving tough competition to Uber Oppotunities in the SWOT analysis of Uber Dissatisfaction with unorganized market: Customers are unsatisfied with the unorganised ride-sharing market which presents an opportunity for Uber to take advantage of This is one of the main reasons for the success of Uber Local drivers like 'xe om' are known to be rude and not comply Alternate transport: Uber has launched ‘Uber chopper’ in various countries and can look for other transport medium catering local needs In India, Uber can launch Bus aggregator system Poor government transport: In markets like Vietnam where there is over population and people are tired of using public transport, Uber provides a kind of privacy and relief where the user gets his own space to travel and does not have to drive in traffic Special transport: Uber can provide special transport services such as paid ambulances or urgent and emergency vehicles for dedicated transport operations Logistics: A smart idea for Uber can be to launch movers and packers support whereby people can search movers and packers in the nearby area via Uber Local logistics can also be integrated Threats in the SWOT analysis of Uber Government regulations are unclear: The primary point of disagreement between drivers and government regulators is about their legal status and whether they should be treated as conventional taxi companies or as IT companies Customer retention and brand switching: As competition rises, it becomes all the more difficult to retain customers and drivers for Uber Any monetary advantage can sway the customers and drivers from Uber Low margins: Uber helps the drivers to get a high number of daily rides but it does not have a high-profit margin for the drivers and thus they can easily be swayed away CHAPTER : WHY DO THEY FAIL IN VIETNAM ? Based on the analyses, we can conclude that there are several reasons why Uber failed in Vietnam Competition is fierce with low entry barrier: multiple taxi companies, grabs, etc this make it very difficult for them to compete The regulation from Vietnamese government is unclear with taxes depute => this does not support the growth from Uber Benefits for the driver is low compare to other company => this affect the loyalty of the driver Since the business model rely heavily on the driver, this is a fatal flaw The unsatisfied driver affect the quality of services 4 The company cannot keep up with the promotion war from Grab, their biggest competitor Grab dominated the Asia market before Uber, this gave them an first mover advantage CHAPTER : DATA AND METHOD I Research Question Is it because of poor service so Uber had failed in Vietnamese market ? II Survey 1.Qualitative Research The main source of data for this study is qualitative research method which is the survey that collect information from students and labor force participation in Ho Chi Minh City It is administered by me using some standard questions by using handouts of about 100 students and 100 adults include detailed information on respondents' demographic characteristics, education, salaried worker, average wage and labormarket status I am going to analyze their tastes, travel habits and all simple questions relating to ride-sharing service The qualitative method is the best available data to analyze customer's demands in Vietnamese market This study will approximately be enforced in one months Customers target would be all ages citizens that own middleincome wages from all Distric of HCMC Qualitative research is a scientific method of observation to gather non-numerical data. This type of research "refers to the meanings, concepts definitions, characteristics, metaphors, symbols, and description of things" and not to their "counts or measures." Qualitative research approaches are employed across many academic disciplines, focusing particularly on the human elements of the social and natural sciences in less academic contexts, areas of application include qualitative market research, business, service demonstrations by non-profits and journalism Analytical In Analytical Research, the researcher has to use facts or information already available, and analyze them to make acritical evaluation of the material It involves the in-depth study andevaluation of available information in an attempt to explain complex phenomenon Analytical Research is primarily concerned with testing hypothesis and specifying and interpreting relationships, by analyzing the facts or information already available In my study, by using analytical research could analyze the promotion campaign as well as their customer-service strategies to Vietnamese customers through years existing At first time in Vietnam, Uber is more prominent than Grab because of effective marketing strategy In the first year there were more than 10,000 Uber drivers, a number that a traditional taxi company had to pay for a few decades to get that number of employees Uber's marketing strategy has targeted social networking and consumer groups Through the sharing of positive comments on their fanpage website and the user-friendly policy of inviting others to use Uber, this application rapidly help Uber increases the number of customers In the other hand, Uber did not spend money on promotional campaigns that focus on how to grow Markets like India requires traditional advertising methods, such as leaflets, prints In Vietnam, Uber focuses on the media, creating interaction and interest in the user experience Uber uses data to better understand the users, what products they like, when they use the service, where they live in the city, and then navigate to the marketing methods that they would use In particular, Uber invited many Vietnamese famous influencers such as Chipu singer, MyLinh singer, etc to promote and increase spreads Uber celebrity campaigns not only aim to increase brand recognition, but also bring exciting experiences and emotions to audiences through creative, fun and meaning media messages In November 2017, Uber launched the "Unlock" campaign in Ho Chi Minh - Called "go together to go faster" Uber's campaign appealed people for carpooling has been launched across seven cities in Asia, including Ho Chi Minh City, from raising awareness of the importance of space for the city to all people Besides, Uber offered many other promotions such as : UberNOW - Uber's new users will be rewarded by bus trips to redeem Uber and Uber's partners Hunting promotion code by location, time frame, Cooperate with banks in the form of discount or cashback: Vietcombank American Express, Standard Chartered, UberDELIVER - logistic service, save with many promotional codes Overall, although Uber's marketing strategy is quite good and effective, Uber has not focused on promotion campaigns that are suitable for Vietnamese customers Uber's struggling to find a position in the Vietnamese market and rigid rules such as the issue of sharing benefits with the driver, not cooperating with traditional taxis, have unknowingly caused Uber to tie his legs and let Grab passed CHAPTER : REFERENCE https://www.onbusinesspartnerprogram.com/events/6048/uber-in-mclarne-valeinformation-session/ https://en.wikipedia.org/wiki/Uber_(company) https://pestleanalysis.com/pestle-analysis-uber https://vulcanpost.com/600621/grab-vs-uber-price-war https://www.trootech.com/digging-deep-into-the-uber-driver-app-features/ https://www.marketing91.com/swot-analysis-uber https://en.wikipedia.org/wiki/Qualitative_research https://vi.scribd.com/doc/33329016/Analytical-Research ... determination of the Uber Dutch Residence in Vietnam, the Ministry of Finance states that "Uber B.V Ltd, the Netherlands, has income generated in Vietnam through its permanent establishment in Vietnam... represented in Uber Vietnam by Uber Vietnam In fact, Uber Vietnam Ltd has declared the contractor tax on behalf of Uber B.V Netherlands Ltd Damian Kassabgi, Director of Public Policy, Uber Asia-Pacific... oil products in Vietnam In 2016, Uber expects to apply a 100 percent cash payment system in Vietnam rather than the current 70 percent In general, the ride-sharing market in Vietnam market is