SINGAPORE — For at least two weeks in a row, some Grab users have been receiving promotional offers for rides despite the ride-hailing company saying just a month earlier that the perks would not make a comeback.

Grab maintains, though, that its latest promotions are part of its continuing efforts to engage users and offer long-term value, and that it has “never stopped” in this endeavour.

In the last fortnight, commuters have been getting notices that they could shave S$4 off each booking for two rides or S$3 off each ride for three rides, for example.

Mr Ali Ahmad Yaakub, 28, first received the S$4 promotions on Jan 9. The data analyst was expecting Grab to “hold out a bit longer” since it said recently that it will not return to giving ad-hoc discounts on fares.

In an interview with TODAY last month, Grab’s Singapore head Lim Kell Jay said: “We have moved on from the days of using promotions for a particular service. We want to introduce more value to our customers for a longer term and not just for ad-hoc single-ride promotions.”

While Mr Ali did not expect to receive the ride promotions, he was not surprised that the company “finally cracked” since it is facing intensifying competition.

Last year, Grab — which is based in Singapore — swallowed up the regional business of its American rival Uber, drawing brickbats from passengers after it withdrew promotions in the wake of the takeover. Both firms had dished out perks to commuters in a battle for market share.

Responding to TODAY’s queries on Monday (Jan 21), a Grab spokesperson said that the firm has been exploring different ways to engage its users in the past months.

For example, it rolled out ride discounts to users in the top two tiers (Platinum and Gold) of its GrabRewards loyalty programme.

To qualify, these users must first pay for their rides with cash credits stored in GrabPay, the firm’s electronic-payment service, and earn “stamps” in Grab’s mobile application.

The more stamps they accumulate, the higher the discounts.

In another move, S$4 rewards have been offered to a “small, selected group of customers” to encourage them to use Grab’s services, its spokesperson said.

Even with the discounts, some passengers said that Grab rides are still pricier than those provided by its rival Gojek, an Indonesian ride-hailing app that began operations here in November last year. 

Mr Zac Chua, 27, the boss of a snack company, said that he was “pleasantly surprised” to receive S$3 ride discounts from Grab last week and he was “always happy” to receive promotions. “I wish it was more though, because after deducting S$3, it is still more expensive than Gojek.”

Business development executive Jeremy Koh, 27, agreed, saying that he did not use the S$3 promotions because Grab rides are generally “so expensive”.

When contacted, Gojek, which has dangled promotions since its launch, declined to comment on its competitor’s moves, but its spokesperson said that details of upcoming promotions will be announced at a later date.

It has an ongoing one aimed at new users, who receive S$5 off a ride for two rides.  

PROMOS LIKELY TO FEND OFF COMPETITION

On Grab’s recent promotions, transport economist Walter Theseira of the Singapore University of Social Sciences said that Gojek’s entry must have had some impact on Grab’s market that is causing some concern, be it in terms of ride bookings or driver retention.

Grab did not see a need to respond significantly in the past year to the entry of smaller players such as Tada, he added, because those firms have difficulty attracting enough drivers and commuters to impact Grab’s market share.

“Gojek is different, and even though Gojek’s entry has been measured thus far, Grab is well aware that Gojek has the financial ability to sustain a high amount of competitive pressure — with promotions and wage subsidies — if desired,” Associate Professor Theseira said.

Grab has said that it is looking to dole out benefits to users over the longer term through its GrabRewards programme and GrabClub, a monthly subscription scheme offering ride and food delivery discounts for a fee.

Assoc Prof Theseira noted that Grab is, understandably, still reluctant to offer untargeted ride-hailing promotions which may not be very good at building longer-term customer loyalty, but it might change its mind if it faces more pressure from Gojek.

Assistant Professor Terence Fan, a transport specialist with the Singapore Management University, said that Grab likely wants to signal its willingness to revert to price cuts as a means to fend off Gojek, which has used promotions to woo riders and rolled out its service to the entire Singapore market earlier this month.

Assoc Prof Theseira’s view is that promotions are unsustainable for any market player unless they have bottomless wallets.

Many promotions, he said, are priced such that rides are sold below the real costs of operation.

“For promotions to be sustainable, customers need to have enough loyalty that they take enough no-promotion rides which actually generate surplus for Grab,” he said.

“It’s not clear that you can depend on customers to do that in a high-promotion environment, because the customers are quite price-sensitive and they shop around using different apps to hunt for promotion codes.”