Myanmar-based Oway Group, which operates an online travel booking site and later added ride hailing services, expects ride hailing to be a big revenue contributor in 5 years as it increases its physical reach to other cities in Myanmar.
As competitors with deeper pockets such as Grab focused on Yangon, Oway decided to focus on cities outside of Yangon. The company is present in five cities in Myanmar – Yangon, Mandalay, Bagan, Pwin O Lwin and Mawlamyine.
To fuel its next stage of growth, the company is looking to raise more capital with a Series E round. It expects to complete the fundraising in the first half of next year. According to data from Crunchbase, Oway has to date raised a total of USD 24.7 million from investors including Northstar Group,(an early ivestor in Indonesian ride-hailing unicorn Gojek) the International Finance Corporation (IFC) and Openspace Ventures (also an early backer of Gojek).
Oway’s CEO, Alok Kumar spoke to KrASIA over the phone recently to share his vision of the company.
KrASIA (Kr): Can you share with us the short history of Oway and how the ride hailing and travel business complement each other?
Alok Kumar (AK): Oway started as an online travel company in 2012 and moved into the ride hailing business sometime in 2014/2015. We also have a corporate fleet business, servicing almost all the large corporations in Myanmar.
Our ambition is to become an integrated mobility company in Myanmar. We want our consumers to participate and transact with us in travel and transport–related transactions. So, when you step out of your home, if you want a taxi or public transport system to get to your workplace or school, we want to be part of the transaction. And if you want to step outside of Myanmar, we want to be part of that transaction as well.
Travel and ride hailing complement each other because we are able to bundle these two services given the unique propositions that it provides consumers. For example, we ran a promotion with one of the airlines in Myanmar. Customers who booked a ticket on our website are able to get a complimentary airport transfer.
Another example is that we ran a small pilot program earlier this year for our own office employees. We told our employees that if they take a certain number of rides from Oway, they will get a free flight ticket to Mandalay. The pilot program helped us to drive stickiness to the Oway platform.
Since we have an ecosystem of online travel and ride hailing, Oway is able to offer the service at a much discounted price as compared to anyone else. Both of these services are able to complement each other and drive a higher synergy, moving forward.
Kr: Oway has some big name investors including the early investor of Gojek, the Northstar Group. Do you have any plans to create a super app like Gojek?
AK: We currently have two separate apps – one for ride hailing and another one for travel. Our ambition is to embed both of them together and create one super app, and that work is already in the pipeline right now. However, we still have a long journey to cover before the super app is ready.
We are looking at converting all our services into one app maybe early next year.
Kr: What are the dynamics of ride hailing in Myanmar?
AK: Ride hailing businesses around the world are mainly driven by two fundamentals – discounting and ancillary services. The MNCs [like Grab and Gojek] have zoomed in on payments and food delivery. As far as Oway is concerned, we are very focused on the ride hailing business.
When our competitors came to Myanmar, they outspent us both in terms of building the category, providing discounts to consumers, and rewards to drivers.
Yangon, with a population of about 7 million, is not a major market for us because the market is completely dominated by the large players, focusing on discount pricing. Our market share in Yangon is currently in the single digit. Oway currently operates in five cities – Yangon, Mandalay, Bagan, Pwin O Lwin and Mawlamyine.
In Myanmar’s second largest city, Mandalay, where we pioneered the use of Mini-Oway, a three-wheel bike, we have a dominant market share of about 65-70%. To us, the markets that we actually wanted to go after are cities outside of Yangon
Kr: Digital literacy is quite low outside of Yangon. How do you educate a population that is not digital-savvy to use your services?
AK: We recently launched our service in Mawlamyine, the fourth largest city of Myanmar. We needed to ensure that people understand that a new possibility of public transport is available in the city, which is tuk-tuk from Oway. We drove around the city with 50 Mini-Oways and announced that our services are now available in Mawlamyine on an app via loud speakers.
We are slowly educating the people of our services and have identified hotspots in the city of Mawlamyine. We also have promoters around the city, explaining to the people and helping them go onto the app to book the ride hailing service. We are fighting against big behavioral shifts where we are asking people to start using an application which is far more convenient, economical and safer to use for their public transport.
Kr: Can you share the approximate revenue contribution coming from the ride hailing, travel, and corporate fleet businesses, respectively?
AK: Currently, a large portion of our revenues come from the travel business, followed by fleet services and ride hailing. The reason for this is that the ride-hailing business is significantly smaller for us at the moment because we don’t have a very dominant share in Yangon. Though the opportunity is immense in cities outside of Yangon, the uptake is relatively small.
If you ask me five years from now, the equation will completely change. I think that ride hailing and travel would be a dominant revenue contributor, while over a period of time, our fleet business will be phased out.
I am very optimistic [about ride hailing] because we will increase our physical reach to many more cities in the next four to five years. The uptake of digital services will increase dramatically in the next three to four years especially in cities outside of Yangon.
Kr: Are you looking to raise more capital and when do you expect to complete the fundraising?
AK: We are well supported at this point in time as far as cash flow is concerned. We see huge opportunities going forward in the next two to three years from now with respect to the uptake of digital services in Myanmar. And to fuel that growth, we are looking for someone who believes in our growth story.
We are looking at raising a Series E round to fuel the next phase of growth for Oway and expect to complete the fundraising maybe by the first half of next year.
Kr: Do you have any plans to expand outside of Myanmar?
AK: Right now, as we speak, the opportunity that we see in Myanmar is large enough for us to remain focused here. But with the next round of funding coming in, we are not ruling out an option to look at our neighbours within the region. So, there are one or two markets where we see that there’s synergies between what we have been doing here in Myanmar and the opportunities that exist in those markets. So, it’s on our cards, but we don’t have very clear, firm plans as to when and where we would actually go.