The market is on track to hit US$4 billion by 2025, becoming the fourth in the region, after Indonesia, Singapore and Thailand.

Source: e-Conomy SEA 2019 report

Revenue from the Vietnam’s ride hailing market has reached US$1.1 billion in 2019, an increase of over five-fold against that of 2015, according to a research report by Google, Temasek and Bain. 

The size of Vietnam’s ride hailing market ranked fourth among six largest ASEAN economies under study in the report titled "e-Conomy SEA 2019", including Indonesia, Malaysia, Singapore, Thailand and Vietnam. 

The market is on track to hit US$4 billion by 2025, becoming the fourth in the region, after Indonesia, Singapore and Thailand.

Ride hailing, along with e-commerce, online travel and online media, forms an internet economy. Comparing to other sectors in Vietnam’s internet economy, ride hailing has the smallest revenue in 2019, as e-commerce revenue stood at US$4.6 billion, online media at US$2.8 billion and online travel at US$4.1 billion. 

However, the report suggested the sector is growing at a rapid rate with huge potential for development. 

Four years ago, ride hailing players focused primarily on providing alternative transportation services through an app. But the sector has since transformed. In 2019, ride hailing companies in Southeast Asia are not just providing transport services but also a whole range of offers, including food delivery and financial services.

“Grab and Go-Jek are also leaders in online food delivery, which has rapidly become a key driver of their growth and profitability,” stated the report. 

In Vietnam, Grab and Go-Viet, a local unit of Go-Jek, are competing fiercely in food delivery. The sector has fast become a “battleground” for ride-hailing companies in Vietnam. Other local ride-hailing players, such as Vato and Be, are also stepping up effort to join the sector, in spite of the presence of specialized food delivery companies such as Now or Beamin. 

According to the report, food delivery has created a fundamental shift in consumer behavior since 2018. From a niche service that was used only occasionally by a small group of users, it has become common for busy professionals and families  to order food online for everyday meals and special occasions. By sparing consumers the inconveniences of humid weather and traffic jams, food delivery has become particularly popular in metro areas.

In financial services, despite Vietnamese still prefer cash and access these services through direct channels,  the outlook remains bright. The report revealed 50% of Vietnamese did research online prior to purchasing financial services offline. 

As a result, Grab are providing promo and incentives for customers using e-wallet Moca for its services, while Be partnered with VPBank, FastGo with e-wallet Vimo and Go-Viet is recruiting staffs for their own upcoming e-wallet. 

However, to get a foothold in Vietnam’s US$1.1-billion market, each ride-hailing firm is having its own strategy. For Grab, in addition to shifting its focus to online delivery, the firm is selling promo all-in-one packages for customers, while gifting cash for customers in case their drivers cancel  their trip. 

Meanwhile, Be and Fastgo’s policies are keeping stable transport fares at peak hours. Fastgo looks for cooperation with Vingroup in bringing in 1,500 VinFast Fadil cars for their services. Go-Viet has its own advantage in offering the lowest transport fares among others.  

The report concluded ride hailing companies have also stepped up efforts to boost their supply capabilities — by recruiting, training and developing drivers, delivery men and restaurant partners — to meet the rising demand for such services.

More importantly, they are at a stage where they need to start demonstrating their abilities in steering their businesses towards profitability. Many have invested heavily into building loyalty and reward programs to deepen customer engagement and retention amid rising competition.

“Borrowing from the playbook of airlines, hotel chains and credit card companies, they have started to offer point accumulation schemes, tiered memberships, exclusive promotions and a variety of redemption options. These are seen as more sustainable and effective ways to drive continued growth as compared with short-lived promotions,” stated the report.