Go-Jek and Grab go head to head in ASEAN’s largest market

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Local Indonesian ride-hailing app GoJek challenges the regional competitor Grab’s existing market share in Indonesia.

By Joelyn Chan

Uber and Grab are two dominant ride-hailing platforms in Southeast Asia’s private transport industry. 47% of Indonesian consumers surveyed used Grab’s services most often. Even so, their dominance in Indonesia, the largest economy in ASEAN, did not deter Go-Jek from starting up. In fact, the global popularity of Uber and Grab helped accelerate Go-Jek’s growth by boosting public’s receptivity.

Sources: TechinAsia, Go-Jek, Grab

Go-Jek has evolved since its entry in 2010

Founded in Jakarta in 2010, Go-Jek started off with the aim of legalising the informal taxi services provided by local motorcyclists. Its initial small fleet of 20 drivers has now ballooned to more than 200,000 motorcycles, cars and truck drivers. Adding on to Go-Jek, the firm launched Go-Life, its lifestyle services offering and Go-Pay, its mobile wallet.

Go-Jek had five acquisitions in the recent twelve months. It acquired mobile platform Pianta, boutique software engineering firm C42 Engineering, Indonesian e-payment startup MVCommerce, mobile app developer Leftshift, and local online ticketing platform Loket. The acquisition spree started off with solidifying the core mobile technology of Go-Jek, followed by diversification or expansion strategies to dabble in other areas like event management.

Conversely, Grab only moved towards providing motorcycle services in 2016. Also, it had lagged behind Go-Pay by a few months before it finalised its acquisition of Indonesian payments startup – Kudo. According to Grab’s latest corporate profile, there are  500,000 Kudo agents facilitating offline-to-online payment transactions in 500 cities and towns in Indonesia.

Grab is becoming old news in Indonesia

Southeast Asia’s ride-sharing market is predicted to grow from US$2.5 billion in 2015 to US$13 billion by 2025, according to a report co-authored by Google. Indonesia’s share of that segment is forecasted to jump from an estimated US$800,000 million to US$5.6 billion over that same period. This highly lucrative industry had sent both startups and regional players scrambling for a larger share of the pie.

Grab’s latest developments revolved around enhancements in GrabNow, GrabReward and Driver-Partner programme while Go-Jek hit the news with the constant rollout of new offerings under Go-Jek, Go-Life and Go-Pay. Go-Jek has certainly enjoyed home-ground advantages, evident from Go-Life, which secured good partnerships with local businesses. There is no similar offering by Grab and Go-Life enjoys an unrivalled cut of 15% for every sales transaction. Most of the 3,000 members of Jakarta’s Association of Hotels and Restaurants says Go-Jek has increased their sales by 15-20%.

It is worth noting that Go-Jek is founded by an Indonesian to solve the pain points in Indonesia. Whereas, Malaysia-born Grab is a foreign entrant into the local market and it eyes the region’s untapped revenue streams.

Go-Jek spells disaster for Grab, who has Indonesia contributing as its largest market.

Up to now, Grab had a total of 63 million downloads in Southeast Asia while Go-Jek had accumulated only 20.2 million in comparison. In June 2017, Grab said, “As of today, Grab is the number one ride-hailing choice for consumers in Indonesia and in Southeast Asia, with up to 2.5 million daily rides and 70 percent market share in private vehicles (cars and motorbikes). Over 930,000 driver partners enable Grab to solve various transportation problems in the region while also improving the quality of their lives and their technology literacy.”

Whereas, Makarim – Go-Jek CEO and founder claimed, “Go-Jek commands 50 percent of Indonesia’s ride-hailing market and 95 percent of the online food delivery market.” Grab’s lack of country-specific data makes it hard for in-depth assessments.

Strong investors back both Grab and Go-Jek

To fast track their pace of development, Grab and Go-Jek invested in startups specialising in respective fields. Post-funding injections, both Go-Jek and Grab’s valuation stands around US$3 billion.

Last year, Go-Jek successfully raised more than US$500 million from KKR & Co and Warburg Pincus LLC. Both companies are private equity firms from the US. This year, China-based e-commerce companies – JD.com and Tencent, pledged around US$1.2 billion and rose to become Go-Jek’s greatest investors.  With such strong backing from China’s giants, Go – Jek hoped to speed up the growth of its very own digital payment service (Go-Pay) and achieve higher customer engagement and retention rates.

Grab recently fared better and raised US$2.5 billion from its new and existing investors. China’s Didi Chuxing and Masayoshi Son-led Softbank have previously provided US$750 million funding, but that did not stop them from generously injecting another US$2 billion. This funding boost will bring Grab’s total disclosed funding to US$3.9 billion. Grab pledged to invest US$700 million into a “four-year plan” in Indonesia, which includes expenditure on fintech-focused startups.

Go-Jek’s growth plan bears an uncanny resemblance to Alipay, China’s technology giant. There could be a chance that this Indonesia unicorn managed to expand successfully, imitate China’s achievements and become a success story itself. For the consumers, it does not really matter if Go-Jek or Grab wins the monopoly in Southeast Asia as price competitions do benefit the consumers. Should Go-Jek outsmart Grab, Indonesians may have a sense of national pride. In the end, the biggest winner is still the Chinese investor who managed to tap into the Indonesian market through both Go-Jek and Grab.