Google announced it had invested into Go-Jek. Go-Jek has found a useful ally for the next stage of the Grab-Go-Jek war.
By Oliver Ward
Google has picked a horse in the Go-Jek-Grab race. At the end of January, the online behemoth announced it had invested in Go-Jek. Google refused to disclose the size of the investment, but analysts believe it may be as much as US$100 million.
The Indonesian ride-hail market is a pivotal market for the region
There is a lot at stake. The ride-hailing market in Southeast Asia is expanding at a phenomenal rate. Indonesia is the largest economy in Southeast Asia. It represents the bulk of this growth. A victory in Indonesia would have significant implications for the wider region.
Source: Nikkei
Securing Google as a backer is a major win for Go-Jek. Grab may have secured slightly more funding in the most recent round, but Google is a high-quality backer for Go-Jek.
Sources: CNBC, Tech in Asia, Crunchbase, (I), (II)
How will Google affect the war?
Grab has a far larger fleet size. In 2017, Grab had 1.3 million drivers while Go-Jek had 654,000. Grab also operates in a few more cities than Go-Jek.
But Google will give Go-Jek an edge. However, it will not be in its ride-hailing sector. Google could help drive Go-Jek’s Go-Pay initiative. When Blibli.com invested in Go-Jek, there were plans to add Go-Pay as a payment option on the e-commerce site. With Google on board, Go-Pay may be able to refine its e-payment service. It should be able to roll it out across more e-commerce platforms. This will further diversify revenues.
Where next for the battle?
For Go-Jek, expanding its e-payment sector is a priority. Grab secured an e-money license in December 2017. It is trying to expand the use of its own e-payment service, GrabPay.
Currently, GrabPay processes around 3.5 million transactions a day. Go-Pay processes around 100 million a month. There is little to separate the two but Go-Jek is hoping to change that.
In the closing weeks of 2017, Go-Jek bought three Fintech companies. It wanted to expand its grip on the e-payments market. Through Kartuku, Go-Pay will access to the top 100 enterprise retailers in Indonesia. Another acquisition, Midtrans, had a commercial relationship with 3,000 online merchants. Go-Pay gained access to these merchants after the acquisition. It was able to expand the use of Go-Pay across Indonesia’s e-commerce market. With the acquisitions, Go-Pay now processes around US$5 billion of payments annually.
The next stage of the race will take place outside Indonesia. Grab recently acquired a license to launch its Grab Pay services in Malaysia. It also appointed a new Managing Director for Singapore, Malaysia, and the Philippines. Go-Jek is also planning an expansion to the Philippines this year.
Go-Jek founder and CEO, Nadiem Makarim said, “we are now taking Go-Jek to the next stage.” The next stage is dominating the e-payments market.
Grab will not go down without a fight. Google’s entry into the race may prove to be a watershed moment. It all depends on how much guidance and support it offers Go-Jek. If Google helps Go-Jek expand its e-payment services, Google will be a powerful ally to have in this war.
