ComfortDelGro’s super-app gambit: Can it succeed?

The Singapore-based land transport company wants to be a super app, but it faces a chicken-and-egg situation.

Years before Grab became the de facto mode of private four-wheeled transport for many commuters in Singapore, it was ComfortDelGro’s signature blue-tone Comfort and yellow Citycab taxis that were synonymous with taxi rides.

Still a household name today, ComfortDelGro Group runs the largest taxi fleet in the city-state and has 40,000 vehicles across the UK, Australia, Malaysia, Vietnam, and China.

CDG, Chope, comfort, comfortdelgro, Grab, Klook, Lazada, ride-hailing, Singapore, super-app, superapp, transport, zig

While the Singapore-headquartered group is perhaps best known for its taxi services, it is a land transport company that also operates bus, rail, car rental, inspection services as well as driving centers. But Zig, a new mobile app centered around “lifestyle and mobility” that launched in March could be an indication of CDG’s changing ambitions.

The term “super app” comes to mind.

Zig is primarily a journey planner – much like Google Maps – that offers route suggestions that help a user get from point A to B. Users can make a booking for a CDG taxi or opt for public transportation.

The new app also features a small but growing range of lifestyle services that include restaurant bookings through partner Chope and activities including bike tours, outdoor adventures, and staycations offered through Klook. Soon, Zig will also introduce a “click-to-collect” takeaway order service at selected restaurants and a loyalty program.

ComfortDelGro isn’t the first company attempting to supplement their core offerings with other lifestyle services. Since 2018, telco Circles Life has been operating Discover, an events app featuring staycation deals, music and art festivals, and movies. It aims to deepen engagement with existing and new customers, but user response has been muted so far.

While companies like Grab have shown that mobility and lifestyle services can complement each other, CDG may face an uphill task standing out from the pack. No less than 10 “everything” apps in Singapore offer an ever-growing array of services from ride bookings and payments to shopping and food delivery.

See more: The front-runners of Southeast Asia’s super-app race

A measured bet

To be clear, Zig appears to be a nascent effort rather than a large-scale pivot.

Zig runs in parallel with CDG’s eponymous taxi-booking app. But as company chairman Lim Jit Poh recently pointed out, the goal is to eventually “marshal all our business activities onto one platform for the convenience of the users and to extend beyond land transport.”

CDG, Chope, comfort, comfortdelgro, Grab, Klook, Lazada, ride-hailing, Singapore, super-app, superapp, transport, zig

Screenshots of the Zig app. Zig recommends lifestyle activities to users depending on their preferences and hobbies

The millions of dollars that have reportedly gone into Zig’s development, which was drawn from CDG’s US$100 million corporate venture fund, is just a fraction of the group’s full year revenue of S$3.81 billion (US$2.87 billion) in 2018.

CDG declined to give further specifics on the total invested in Zig so far.

Rather than completely reinventing the wheel, the company is allocating a small budget for Zig and operating it through a wholly owned subsidiary, CDG Zig. This purportedly allows CDG to reap benefits like attracting a new clientele and increasing overall ridership among its taxis while limiting the downside of potential failure.

On the flipside, though, there’s a chicken-and-egg dilemma: Given how competitive the super- app race is in Southeast Asia, CDG may need to make a larger commitment for Zig to succeed. This could come in the form of a larger budget or embedding Zig into CDG’s core taxi app.

That said, the company may also be hoping that Zig will play a central role in its new ambitions. “My guess is that they’re trying it out to see what happens and, if the Zig app is successful, whether they can eventually migrate seamlessly all their existing customers from the current app to the Zig app,” Shekhar Jaiswal of RHB Group Research tells Tech in Asia. The industry analyst has a buy rating on CDG.

The company declined to disclose the traction on Zig since its launch, but it says that downloads far have been “encouraging” so far.

According to mobile app intelligence platform App Annie, Zig is not yet among the top 1,000 mobile apps by active users in Singapore. In April, Zig was the 58th most downloaded app in Singapore across iOS and Google Play combined.

Zig, which targets experience-seeking younger users who are interested in new dining places and activities, is just one of CDG’s recent attempts to shore up its user base in Singapore.

In April, Tech in Asia was the first to report about CDG’s stealth launch of its taxi-booking service on the Lazada app – the first partnership of its kind between an ecommerce platform and a transport operator in Singapore.

The tie-up adds ride-hailing to Lazada’s range of shopping and entertainment options in Singapore. In return, CDG can tap into Lazada’s existing user base to expand its reach in the city-state, particularly among younger shoppers.

RHB’s Jaiswal notes that while the Lazada partnership isn’t expected to have a material impact on CDG earnings, it could drive up the usage of its taxi fleet by helping CDG acquire a new customer base that it can’t get via its booking app alone. Zig will hopefully achieve the same results.

CDG’s moves are coming at an opportune time, particularly as newly implemented regulations for private-hire cars are leveling the playing field between taxi companies and ride-hailing operators, Jaiswal observes.

The company also appears to be facing less competitive pressure. “In the last year and a half, Grab has actually reduced incentives for drivers and discounts to customers. They have started charging platform fees to ensure that they can cover the cost of operating the business,” he explains.

Grab’s increased focus on food delivery and other verticals outside of ride-sharing as it pursues a public listing also makes it “a very good time for ComfortDelGro to double down on this business and aggressively try to revitalize it,” the RHB analyst adds.

Taxi services are CDG second largest revenue source, accounting for 12.5% of total revenues in 2020. That number was higher at 17% in 2019, before Covid-19 struck.

With 9,577 vehicles as of February 2021, CDG’s taxi fleet is also at an optimal size. In Singapore, the company has “clearly identified [itself as] the market leader when it comes to taxis – that part hasn’t changed,” Jaiswal says.

Still, it took a pandemic for CDG to take a leap of faith with Zig, which was created just six months before it was rolled out.

Tammy Tan, group chief branding and communications officer of CDG Corporation, tells Tech in Asia that the launch of Zig was a “timely” one in the face of rising digitalization brought about by Covid-19.

As the pandemic boosted digital adoption among consumers, it pushed CDG to experiment with new services as well. In April 2020, the transport operator rolled out a delivery service for food, groceries, and even medicines calledComfortDelivery.

The service later ceased as demand for taxi rides rebounded.

CDG, Chope, comfort, comfortdelgro, Grab, Klook, Lazada, ride-hailing, Singapore, super-app, superapp, transport, zig

Super-app ambitions?

As more lifestyle apps come to market, these will noticeably begin to converge in terms of services. The question is, can Singapore accommodate yet another super app?

“For users, it’s unclear why they’d want [more than one] app that has the same super-app functions. China is of course a bit of an exception with Tencent and Alipay, but even then, each does have some unique aspects,” Ryan Rodenbaugh, author of tech newsletter East Meets West, tells Tech in Asia.

Crucially, CDG also doesn’t have a native digital wallet or payments function yet, so its users pay through cash, debit, or credit cards linked to the app. Embedding payments is arguably necessary to unlock a trove of information about users, such as their financial profile and spending behavior, which can then be further monetized through financial services.

For Zig to succeed, a more integrated approach could be the way forward. After all, by operating Zig as a separate app, CDG could slow down the progress of its lifestyle foray.

Instead, if CDG were to progressively bring in lifestyle features to its popular taxi app, the new functionality could benefit from latent traffic from existing users as well as more eyeballs from the Lazada integration and gain instant feedback or even significant usage.

While users might find it odd at first to see non-transportation features on a taxi app, it won’t be jarring if they’re added gradually. This approach is also possibly less risky: Rather than spending millions to build an entire app from scratch, CDG can introduce one feature at a time at lower costs. And if something doesn’t pan out, it can be reworked or killed.

There’s precedence for this: GrabTaxi’s evolution into Grab has been successful. Players like Sea Group’s Shopee and Indonesian platform Traveloka have also been building more non-core features into their apps.

If CDG can leverage its biggest asset – i.e., its vast transportation network – and nail down a promising business model for its lifestyle gambit, then it can certainly push its brand out of the comfort zone and turn it into something more.

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