Industry Perspective An outlook on Asia's sharing economy - UOB
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Technology, Media &
Telecommunications
Industry Perspective
An outlook on Asia’s
sharing economy
Industry Perspective
Technology, Media & Telecommunications 2
(This page is left blank intentionally)
Industry Perspective
Technology, Media & Telecommunications 3
Executive summary
Convenience is a key driver of the sharing economy due to:
Smartphone Number Lack of Cost
usage of apps time savings
Ride-hailing Retail/e-commerce
• After establishing a large • Companies are looking
customer base, ride-hailing into the online-to-offline
companies are branching out to (O2O) model and
additional categories to increase business-to-business
customer lifetime value (CLV). (B2B) space to drive
revenue growth.
• Ride-hailing companies aim • Chinese players have
to become super apps, with Four key been investing in
services centred on a pillars Southeast Asia’s (SEA)
consumer’s daily activities.
of the e-commerce players
to expand their footprint
sharing in the region.
economy
Hospitality and
Real Estate Content
• Convenience is the main factor • Cost-effectiveness of
that has contributed to the content streaming
success of travel-related apps. services is a huge
• Online travel agencies (OTAs) driver of the market.
are expanding their verticals to • Streaming service
look for new sources of revenue. companies such as
• Traditional developers are also Spotify are starting to
starting to invest in co-working look into the B2B space
spaces. to grow their revenue.
For more information on UOB’s value chain solutions for the digital business sub-sector, please
reach out to us here.
June 2019
Industry Perspective
Technology, Media & Telecommunications 4
Content
03 Executive summary
Overview of the
05 sharing economy
Sector:
08 Ride-hailing
Technology,
Media and
Telecommunications 12 Hospitality
An outlook
on Asia’s
sharing 16 Real estate: co-working
spaces
economy
19 Content
22 Retail / e-commerce
25 Risks
27 Case studiesIndustry Perspective
Technology, Media & Telecommunications 5
Overview of the
sharing economyIndustry Perspective
Technology, Media & Telecommunications 6
Overview of the sharing economy
1 Pure sharing economy
Refers to assets/services shared
Pure Sharing
Economy
Hybrid Sharing
Economy
among individuals through various
distribution channels via the
internet, e.g.
• Airbnb • Shopee
Commercial
• Carousell to buy/sell unused
second-hand goods. • Kaodim • Traveloka
• Airbnb to lease or rent • Style Theory
space/apartments.
• Carousell
2 Hybrid sharing economy
Non-Commercial
Includes platforms that facilitate
the buying and selling of goods
and services on top of shared • Lendor
assets/services, e.g.
• ZeroWasteSG
• Shopee enables the buying and
selling of products between
merchants and consumers.
• Traveloka aggregates the travel
services of various providers.
Four key drivers of the sharing economy
Increased time spent Change in consumer
on smartphones behaviour
Southeast Asian Increased demand for
consumers spend procuring goods/
approximately four services in the quickest
to six hours on their way possible.
smartphones daily.
Convenience is the
Increased number main driver for the Cost savings
of apps rise of the sharing Consumers can
Growing number of access services and
economy
apps that connect goods at a lower cost.
consumers with the
products/services.
Source: UOB analysisIndustry Perspective
Technology, Media & Telecommunications 7
The concept of the sharing economy can
be illustrated through four key areas:
• Ride-hailing apps fulfil transportation • Online platform for buying and
needs by matching rider demand selling of goods /services.
with driver supply.
• Riders can share access to vehicles.
• Content apps for music and video • Hospitality: For booking of
content. Examples include Netflix, accommodation/tickets when travelling.
Spotify and Youtube.
• Real Estate: Utilising co-working
spaces to maximise empty spaces while
enabling more flexibility.
While the sharing economy is a global phenomenon, a critical success factor lies in their localisation
strategy. A Google and Temasek report predicted that Southeast Asia’s internet economy will grow to
US$240 billion by 2025 driven mostly by the growth in online travel, e-commerce and online media.
Source: UOB analysis, Google and TemasekIndustry Perspective
Technology, Media & Telecommunications 8
Ride-hailingIndustry Perspective
Technology, Media & Telecommunications 9
Huge potential for growth in the ride-hailing
market with growing number of users and
daily transactions
Growth in ride-
3 hailing market
Increased
2 demand for ride- Ride-hailing market in
Key reasons for hailing services SEA is expected to
1
growth surge to US$20 billion
(bn) in Gross
Number of ride-hailing users*
Merchandise Value
is expected to double by
(GMV) by 2025.
2022.
Poor transport US$5bn
and road
infrastructure
~60m 2017 US$20bn
2022 2025
~30m
2018
Low car
Inefficiencies
ownership
in the public
transport system
Key strategy of ride-hailing players
• Establish a large base before expanding into other verticals.
• Continue to expand by growing in breadth and depth.
• Breadth: Covering different types of services
• Depth: Ensuring consumer stickiness and driving higher usage
from its existing base
As smartphone penetration increases in emerging markets, we expect the ride-sharing penetration in
these markets to also grow and reach 10-15% by 2023. We have seen how Mainland China has reached
a higher ride-sharing penetration rate due to its higher smartphone penetration.
2018 Mainland China Indonesia Thailand Vietnam Philippines
Smartphone
66.6% 45.9% 62% 37.7% 44.9%
penetration
Ride-sharing
15%-19% 4%-7% 4%-7% 3%-5% 3%-5%
penetration
* Note: Includes markets such as Hong Kong (China), Indonesia, Malaysia, Singapore, Thailand
Source: UOB analysis, Data from various sources, Google and TemasekIndustry Perspective
Technology, Media & Telecommunications 10
Key strategies of ride-hailing companies:
Offering additional categories to boost
a larger CLV and average order value
(AOV)
AOV / GMV
Stage #4 –
Targeted
product
offerings
Stage #3 –
Collection of
customer data Critical mass of
Stage #2 – users and
Increased significant data
number of will enable
services As the number of
services expand, targeted product
Stage #1 – ride-hailing offering
Achieving players are able to
critical mass Existing users
start transacting gather more data
for other services on consumers
Transactions offered by ride-
through the ride- hailing players
hailing app
Timeline
Source: UOB analysisIndustry Perspective
Technology, Media & Telecommunications 11
A look at Go-Jek: A ride-hailing company’s
journey towards becoming an
all-encompassing super app
All these services are fulfilled through Go-Pay, Go-Jek’s digital
GO PAY wallet, serving users of varying demographics.
Scenario 1
GO FOOD GO GLAM GO MASSAGE GO LAUNDRY
11am 3pm 6pm 8pm
• Stay-at home
mother with 2 Orders Gets a facial done Takes a break with a Laundry gets
children food for her in the comfort of massage while her collected from
• Does not children her home children are napping home
have the time
to head out
Scenario 2
GO CAR GO SEND GO TIX GO CLEAN
8am 12pm 3pm 8pm
• Working
professional Orders a Sends something Movie tickets Able to get his
• Does not have Go-Car to get to his mother get sent to house cleaned
the time to do to work during lunch his office even when he is
housework not at home
• Does not have
the time to shop
Go-Jek has gained close to 50% of Indonesia’s ride-hailing market
and has expanded in various verticals.
Source: UOB analysis, Go-JekIndustry Perspective
Technology, Media & Telecommunications 12
HospitalityIndustry Perspective
Technology, Media & Telecommunications 13
The convenience of accessing a vast
number of hospitality services has led to
the popularity of travel apps
Past Present
Consumers travel to
the tour agency 1
3X
growth expected
Consumers discuss
with the agency on
their proposed plans
2 Consumers
for the SEA online travel
market from 2017 to 2025
have immediate (US$26.6bn to US$76.6bn)
access to a
wide and
customisable
range of travel
options via an
online platform
Tour agency calls the airline
to confirm the flights 3
60-70% travellers
Use mobile apps to
make travel plans
Consumers make
payment at the agency 4
Source: UOB analysis, Google and TemasekIndustry Perspective
Technology, Media & Telecommunications 14
A look at Airbnb: An asset-light company
with a large revenue gained through the
sharing economy
Homeowners Airbnb Travellers
Who is
Airbnb? Homeowners Airbnb is an app that Travellers have a
rent out their connects homeowners cheaper option
unutilised space. and travellers. other than hotels.
• Asset-light business model and revenue for six key markets* was
US$1.5bn in 2017. This made up close to 60% of the global revenue of US$2.6bn,
showing importance and vast potential for growth in these countries.
Business • Airbnb operates a simple pay-per-booking model, charging a 3% fee to the
model host and 6%-12% to the guest on the value of the booking.
• Airbnb was reported to be raising cash at US$30bn valuation, exceeding that
of every major hotel chain. In comparison, the market cap of Hilton Worldwide
Holdings was around US$21bn.
• Airbnb’s new initiative ‘Backyard’ aims to design a prototype of new ways of
building and sharing homes.
Strategies
moving • This is likely Airbnb’s strategy to diversify its revenue stream as it faces
forward more regulatory hurdles. It has also launched the “Experiences” business line
for travellers to book classes, outings and tours with the local
providers.
*Includes Mainland China, Hong Kong, India, Malaysia, Singapore, Thailand
Source: UOB analysis, various media sources, Google and TemasekIndustry Perspective
Technology, Media & Telecommunications 15
A look at Traveloka: Entering the market
at the right time was the main factor to
Traveloka’s success
Timing PayLater
Launched at the right place and time Flexible payment options
Traveloka launched in 2012 and 2013-2014 was Consumers are able to purchase products first
the period when the smartphone boom happened and pay later. The limit for this is close to
in Indonesia. This was also the period when US$3,500. Payments can be made one to two
consumers were starting to purchase more things months later with low instalment fees without any
online. annual fee and downpayment needed.
Best Price Guarantee Convenience
Price advantage All-in-one travel platform
Traveloka offers to match or to beat lower prices Users are able to purchase all travel-related
found on other websites. booking services on one platform, including
tickets to tourist attractions and activities.
Traveloka
as at January 2019 making it
has been million one of the most popular travel
downloaded
more than 40 times booking
Asia.
apps in Southeast
App helps consumers search, compare and purchase flights, train tickets, hotel and tour
packages.
Source: UOB analysis, TravelokaIndustry Perspective
Technology, Media & Telecommunications 16
Real estate:
Co-working spacesIndustry Perspective
Technology, Media & Telecommunications 17
Co-working spaces: Provides flexibility and
convenience
Appeal of co-working spaces
Flexible. Startups prefer flexibility in managing their
Cost effective. This is beneficial for small start-
resources. They now do not need to commit to long
ups/teams that do not want to commit to a large
term office leases at the onset of their operations
and permanent space yet.
and have flexibility to manage it on a need-to basis.
Convenient. Startups especially do not need to Encourages creativity and networking. Co-
deal with managing an office space and can working offers the opportunity for collaboration
manage their limited resources more efficiently. among companies within the same space.
Demand from these type of companies
Multinational corporates (MNCs)
Grab Facebook Flexible lease terms enable MNCs
to manage their workspace
Startups
requirements arising from changes
As the number of startups grows, Microsoft in headcount and project-based
the demand for co-working spaces
work.
has also increased given the
flexibility of scaling their operations. IBM
Co-working space companies that have expanded in the region
Number of co-working space companies is growing
Co-working space
enables individuals to
Go Work Common Ground
work independently or
collaboratively in a Spaces Ucommune
shared office space.
Just Co
Source: UOB analysis, various media sourcesIndustry Perspective
Technology, Media & Telecommunications 18
ContentIndustry Perspective
Technology, Media & Telecommunications 19
Cost-effectiveness of content streaming
services is a huge driver of the market
>2X
Revenue Growth
>200%
Increase in Time Spent
between 2015 and 2021 on video streaming hours
for the Asia Pacific video from 2015 to 2017
streaming industry
Timeline Early
1990s Present
2000s
Streaming services:
US$9.99 per month
CD: US$15 for 15 songs MP3: US$1.29 per song
with access to 30
Evolution of million songs
medium
of content Video streaming
delivery services: US$10.98 per
DVD: US$15 for one DVD: US$1.50 per day
month with access to
movie (rental)
>5000 TV shows /
movies
Content was limited to Content was limited
Variety of Millions of songs and
one CD (15 songs) or to the show /song
content thousands of shows
one DVD (one movie) subscribed or purchased
US$1 per song but one
For the same five songs, US$10 per month for an
Cost per has to purchase CD at
one has to pay almost infinite number
song/show US$15 to listen to five
5xUS$1.29= US$6.45 of songs or shows
songs
Source: UOB analysis, various media and online sourcesIndustry Perspective
Technology, Media & Telecommunications 20
A look at Spotify: Localisation a key factor
for its success
At a glance
• Global music streaming service offering basic features for free
• Paid subscriptions offer additional services such as improved
streaming quality
Spotify •
•
Started as a business-to-consumer model
Revenue earned from subscriptions and advertisements
• Currently in these Asian markets - Hong Kong, Indonesia, Japan,
Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam
Strategies
Local partnerships Tailored payment structures
• With telco operators to offer • Different payment options: In light of the low credit card
bundled mobile plans with penetration rate, users can pay for Spotify with phone
paid subscriptions credits, bank transfers or cash at convenience stores
• With local musicians by • Lower monthly fees: Average monthly fees less than
promoting playlists with US$5 compared to US$9.99 in US and US$14 in Britain
local hits, prioritising
licensing for Korean pop • Tailored subscription plans: Family subscription plan
music etc for six users works out to be as low as US$1 per person
What’s next for Spotify?
Spotify is focusing on B2B strategies to gain more breadth and depth in the industry
• Offering B2B subscriptions that enable consumers to stream music in public spaces with a
monthly subscription of around US$35
Partnerships include
• Retail stores (Starbucks)
• Soundtrack Your Brand – Provides customised playlists to fit client’s brand. Global
clients include Aesop, Joe & The Juice, McDonald’s, TAG Heuer, Uniqlo and W Hotels.
• Building on partnerships with telcos to tap large databases to gain subscribers
Source: UOB analysis, SCMP and ForbesIndustry Perspective
Technology, Media & Telecommunications 21
Retail/ e-commerceIndustry Perspective
Technology, Media & Telecommunications 22
E-commerce companies driving growth
with O2O and B2B strategies
Reasons for growth
• Rising middle class in Southeast Asia
• Mobile-first society
Key growth numbers
• Less than 5% of Southeast Asia’s sales are done online, reflecting the growth potential of the market.
• Southeast Asia’s e-commerce Gross Merchandise Value (GMV) of first-hand goods was close to
US$11bn in 2017, up from US$5.5bn in 2015.
E-commerce players are starting to look for new strategies to expand their verticals as
the share of e-commerce is still quite small compared with overall retail numbers.
O2O (Online to Offline) Greater focus on B2B. With Chinese players expanding
Traditional retailers are moving B2C still in the low single-digit their footprint in SEA.
online, while e-commerce percentages, companies will
players are also setting up start focusing more on B2B. Alibaba.com invested in
offline stores to complete the Examples: • Lazada
customer experience journey.
• tokopedia
Examples: Zilingo
Launched for consumers in US
Love, Bonito Tencent and/or JD.com
and Europe to buy at wholesale
Pomelo prices. invested in
• Go-Jek
Shopee • Pomelo
• Shopee
Wholesale feature for merchants • Tiki
to set lower unit prices for larger • Traveloka
orders.
Source: Google-Temasek, Newswires and various sourcesIndustry Perspective
Technology, Media & Telecommunications 23
A look at Carousell: Seeking new ways
to drive monetisation
• Start: Consumer-to-consumer marketplace for buying/selling of low-value second-hand goods
• Current: Buying/selling of used products and new larger-ticket items
• Goal: To be the world’s largest online classified listing platform
• Operates in Australia, Hong Kong, Indonesia, Malaysia, Singapore, Taiwan
• Generates revenue by moving into other verticals and monetising some services
Monetisation and Artificial Intelligence (AI)
now a key focus of Carousell
Premium listings Introduction Launched Artificial
for sellers of paid listing CarouPay Intelligence
For S$2.98, users services for Users can make Building AI
can boost their other verticals payment through solutions to boost
listings to the top Cap on the number payment apps, credit sell-through rates
of their category of free listings for or debit cards. and to increase
for three days. Cars and Property Carousell charges a quality of listings.
categories. Charges nominal fee of 4.98%
users for listings in + S$0.50 (US$0.37)
the Jobs, Services- for all successful
related and Learning transactions.
and Enrichment
categories.
Source: UOB analysis, data from Carousell’s websiteIndustry Perspective Technology, Media & Telecommunications 24 Risks
Industry Perspective
Technology, Media & Telecommunications 25
Despite the huge potential of the sharing
economy, there are risks arising from this
new business model
Lack of fiscal discipline
With too much money from investors,
companies could over-expand and face
operational difficulties as a result.
“Loss-making companies”
Many of these companies are still making losses
and burning cash. It could take time before they
become profitable.
Collateral drawbacks
The lack of protection and stability for companies
in this new economy could mean that employees in
this industry would face a clear disadvantage.
Regulatory impact
Despite being a relatively nascent industry, many of these
companies are subject to regulations. For example, in
Japan, more than 40,000 Airbnb rentals were removed
after Japan implemented a new home-sharing law.
Source: UOB analysis and various media sourcesIndustry Perspective Technology, Media & Telecommunications 26 Case studies
Industry Perspective
Technology, Media & Telecommunications 27
Case study on Go-Jek
Go-Jek is a successful example of a company that first started out as a ride-hailing service provider but soon
scaled and expanded its services through its various verticals. We have provided some suggested metrics
below on how we can assess companies.
Proposed metrics on
how to assess companies Go-Jek
Does the team have
The CEO has built a strong management team
a track record in a
comprising experienced professionals in areas such as
similar business/
products, technology, payments and government
industry? What is
Team relations.
their background?
What is the overall GMV for ride-hailing services in Southeast Asia is
market trend? In the expected to grow four times from US$5bn in 2017 to
country? In the region? US$20bn in 2025.
Secured market leadership in home
Is the company
market (Indonesia) before planning its expansion
expanding too rapidly?
into Philippines, Singapore, Thailand and Vietnam.
Market Regulations are constantly evolving given that this is
Are there regulations still a relatively new industry. For example, Indonesia is
that are affecting preparing to launch regulations to fix the rates drivers
business expansion and riders for ride-hailing services receive and to
plans of the company? impose limits on promotional price cuts. This may limit
its expansion plans.
What are the direct and
Grab remains its main competitor after Uber exited the
indirect competition in
Southeast Asia market.
the market?
Used its consumer base to expand into many other
services / verticals that are supported by its
What is the defensibility
Competition payments ecosystem, making it a super app.
of the business?
The wide range of services ensures that it has
a high number of monthly-transacting users.
Average number Processes more than 100mn transactions for its 20-
Unit Economics of transactions 25mn monthly users.
(and evolvement
over time)
Source: UOB analysis, Google and Temasek, ChannelNewsAsiaIndustry Perspective
Technology, Media & Telecommunications 28
Case study on Ofo
Ofo is a bike-sharing company that expanded too fast at the start and faced the problem of being a single product
business with low frequency. It also did not have the ability to scale to other verticals. In addition, Ofo faced
several regulatory hurdles in some countries. In the most recent case, its licence to operate a bike-sharing service
in Singapore was suspended in February 2019 after it failed to meet the Land Transport Authority’s (LTA)
regulatory requirements.
Proposed metrics on
how to assess companies Ofo
Does the team have Management team includes professionals who have
a track record in a experience working in the ride-hailing industry.
similar business/ Investors include Alibaba Group, Didi Chuxing, DST
industry? What is Global, Coatue Management and Matrix Partners
Team their background? China.
Growth of the market has slowed down with Chinese
cities barring rental companies from putting new bikes
What is the overall
on the streets, leading to industry consolidation. The
market trend? In the
number of bike-sharing users was forecast to grow at
country? In the region?
only 14.6 percent in 2018, a steep decline from 600
percent growth in 2017.
Is the company Went international before winning in China, its
Market expanding too rapidly? home market.
Are there regulations Faced hurdles ranging from traffic regulations to
that are affecting vandalism and rising costs. New regulations such as
business expansion updated locking requirements and the need to meet
plans of the company? various financial obligations led to its exit in some cities.
Competitors include Mobike and HelloTransTech
(formerly HelloBike).
What are the direct and
indirect competition in
Unprofitable business model: Charged between
the market?
US$0.07 and $0.14 for 30 mins. Average cost of bikes:
US$45.
Competition It was a single product business with low frequency and
it did not have the ability to scale to other verticals.
What is the defensibility
of the business?
Users’ contribution to programme funding was too small
to make facility setting and maintenance profitable.
Average number Average daily transactions ranged between 10-32M.
of transactions Close to 63M monthly active users in 2017.
What is the burn rate?
Unit Economics
(covers at least 6-12 Burn rate: At least US$25M per month/US$300M
(and evolvement
months) per year
over time)
Source: UOB analysis, Various Media SourcesIndustry Perspective
Technology, Media & Telecommunications 29
Contacts
Technology, Media and Telecommunications Team
Hooi Mun Hon Tay Xiaohan
Centre of Excellence Business Insights and Analytics
Hooi.MunHon@UOBgroup.com Tay.Xiaohan@UOBgroup.com
UOB’s Industry Insights brings you the latest trends across industries
in Asia. Scan the QR code to learn more about potential
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