Uber’s withdrawal from Singapore opened up the ride-hailing market. Indonesian challenger Go-Jek may be the first to make significant inroads.
Go-Jek is coming to Singapore in the next few months. The company also plans to move into Thailand, the Philippines and Vietnam. Company insiders predict a presence throughout Southeast Asia in the future.
For now, the company’s focus is on entering Singapore, a very different market to Indonesia. There, they must take on Grab. Following Uber’s departure, Grab enjoys a dominant position, but there are other competitors.
Go-Jek has big plans, but also plenty of competitors
Last year, Go-Jek CEO Nadiem Makarim talked about operating in four more ASEAN nations. Go-Jek is well established in Indonesia, where it has more than 3 million users in 25 cities. It received funding from Google, Tencent and Temasek Holdings. Analysts are “certain” that a Singapore launch is imminent.
Go-Jek is not the only company pushing to launch or expand their services in Singapore. Local carpooling app Ryde unveiled RydeX, offering lower commissions than Uber or Grab. Jugnoo, an Indian start-up, has now started providing services. They allow drivers to choose from a range of bids for their ride.
The marketplace could become crowded and competitive. Mass Vehicle Ledger (MVL) and DacSee are also poised to move in. Both are breaking new ground with their use of blockchain currency. MVL also has plans to launch in Vietnam. All will compete with Go-Jek for a share of the ride-hailing market. Having already launched, RydeX and Jugnoo have the early advantage.
Uber’s departure may be timely for Go-Jek
Uber’s departure leaves a gap in the region’s ride-hailing market. For the moment, that suits Grab as it has limited competition. However, the regulators raised concerns about the lack of options for consumers. They have still not approved the merger.
Uncertainty over the deal between Grab and Uber could be a boost for Go-Jek. The longer the regulators take to come to a decision, the more money Grab will lose. For example, Grab has already paid to keep Uber operations live for longer than expected. Uber’s departure came at a good time for Go-Jek. If the merger proceeds, Grab will benefit. In the short-term, it is on the back foot.
Grab may welcome the arrival of Go-Jek and other new services. Grab could argue that as a result, it does not have a monopoly. The more options consumers have, the better for Grab as it fights to make the Uber deal work.
However, in practice, Go-Jek’s arrival is unlikely to influence the regulators. They do not yet have the volume of drivers to make enough impact on Grab’s market share.
Go-Jek has already made moves to establish themselves in Singapore
Go-Jek wants to partner with taxi firm ComfortDelGro, which had previously worked with Uber. ComfortDelGro needs to maintain its presence in the market. Go-Jek needs to grow its presence and build trust. The deal makes sense from both sides because neither can topple Grab on their own.
Establishing trust is vital, but Go-Jek may already have an advantage. Some feel the company is more a product of Southeast Asia than Grab. Go-Jek could pitch themselves as the better local choice.
Furthermore, Go-Jek offers an array of other services. These may prove attractive to customers. Go-Jek earns more from food delivery, house cleaning and massage services than ride-hailing. It has also recently launched Go-Pay, a mobile payment system.
Go-Jek faces several challenges
Aside from heading into an unfamiliar country, Go-Jek faces many challenges. Go-Jek must adhere to Singapore’s Land Transport Authority (LTA) regulations. The LTA would not allow Go-Jek to launch its successful motorcycle ride-hailing service. Can Go-Jek prove to Singaporeans that it can operate cars as well?
The LTA has already reached out to Go-Jek ahead of a potential car service launch. To meet LTA’s regulations, Go-Jek may have to change its business model. It may have to adopt unfamiliar practices. The LTA is currently reviewing the industry. It could recommend that all operators make changes.
What works for Go-Jek in Indonesia may not succeed in Singapore. In Indonesia, Go-Jek kept prices low to grow their business and earn a dominant position. The same approach may not work in Singapore, where it may dissuade consumers.
Go-Jek’s arrival could be good news for customers
Competition is always good for customers. It should keep prices competitive, especially if Grab raises its prices. Grab may suffer from Uber’s exit in the short-term, but locals will benefit if more services launch.
Meanwhile, Go-Jek could learn from their Singapore launch before moving to other countries. If Go-Jek can establish itself in Singapore, they stand a good chance of doing so elsewhere too. The Indonesian market is very different from Singapore’s. The markets in the Philippines, Thailand and Vietnam are not.
However, Go-Jek must adapt to survive and prosper. Go-Jek must leverage local resources to maximise this opportunity. Working with local firms such as ComfortDelGro suggests Makarim understands this. Its approach will be a complete contrast to how Uber ran its operations.
Their biggest challenge? Playing catch-up against Grab, the established market leader. Grab will take some toppling, but of all its competitors, Go-Jek stands out as the one most likely to make an impact. Makarim’s strategy from the start has helped Go-Jek become a significant player. If Go-Jek can identify gaps in the market – as it did with other services – it stands a chance.