With Uber exiting the Southeast Asian market scene earlier this year, the region is back up for Grab to dominate. However, the Singapore-based tech company is now facing growing competition from another startup in neighbouring Indonesia known as Go-Jek.
Also a ride-hailing unicorn company, or a startup that is valued at over $1 Billion, Go-Jek had stirred up the tides ever since it entered the Indonesian market in 2015, rivaling both Uber and Grab. Rather than using taxis or personal cars to carry out its services, Go-Jek, like the origin of its brand name ‘Ojek’, which means taxibike in Indonesian, provides motorbike services for its customers. Equipped with its own online app, Go-Jek has services ranging from ride-hailing to various kinds of delivery and online shopping services, including package deliveries, food deliveries, medicinal purchases, and even hiring a “to-go hairdresser”. As of March this year, Go-Jek CEO Nadiem Makarim claimed that the app had already reached over 20-million online users, who are all between the age of twelve and fifty. “That pretty much represents all of Indonesia,” claimed Makarim regarding users of the app during his interview at the 2018 Pertamina Digital Expo in Jakarta, Indonesia.
According to Jonathan Moed of Forbes, it is this “tech-savvy” majority of Southeast Asia’s overwhelming population of over 650 million that makes it such an attractive region for startups. A majority of this young population are heavy mobile internet users and in countries like Singapore, Malaysia and Thailand, recent large investments in STEM education have created greater technology-building potential and great expectations for various new startups to emerge from the region in the future. This promising new generation has also attracted more investment by tech giants like Tencent and Alibaba to invest millions into the region, amounting to $13 billion of investment.
Uber’s inability to efficiently provide for locals despite its aggressive investment in recruiting drivers may explain its failure within the region and the selling of its business there to Grab. However, Grab’s constant backup from its investors also gave it leverage over Uber from the start; the lack of strategy in the Uber team, such as appointing experts of the region, may have also been a contributing factor to its failure. With Uber out of the picture, this puts Grab up against Go-Jek to be the dominating ride-hailing service in Southeast Asia.
As Google joins the lineup with other tech giants like China’s Tencent Holdings Ltd as investors of Go-Jek, the company has now raised over $2 billion. On August this year, it started its $500 million Southeast Asian expansion with Vietnam, and Go-Viet motorbike services are now covering twelve districts in Ho Chi Minh City. “Our initial testing phase has gone extremely well,” said Duc Nguyen, Go-Viet’s co-founder and CEO, regarding the recent launch of Go-Viet and the positive feedbacks it received from testers (Singh, 2018). With over 1.5 million downloads of the Go-Viet app even before its official launch, it seems that Go-Jek’s expansion had started on a good note. The company is also set on expanding to Thailand and the Philippines by the end of this year, although its Singaporean expansion may not happen anytime soon.
On the other hand, Grab had also garnered a total of $6 billion of investment from notable investors like Toyota, OppenheimerFunds and SoftBank. With this and the recent Go-Jek expansion, Grab has started to expand its own local services to food delivery, a new offline-payment service, and the provision of micro-loans and insurance products to match that of Go-Jek’s (Russell, 2018). Grab’s launching of GrabPlatform, believed to be Southeast Asia’s first ‘everyday superapp', allows partners to integrate their services into the Grab app. An example of this is Grab’s collaboration with HappyFresh, a Southeast Asian grover delivery provider, forming an on-demand grocery delivery service - GrabFresh. Grab is also set to further expand its influence in its rival’s dominant country, Indonesia.
Despite this, Grab may not be able to take the reigns in Indonesia due to the limited amount of services it provides in comparison to Go-Jek. Additionally, it does not have a coveted e-money license issued by the central bank that enables Go-Jek to provide services to customers with no bank accounts or credit cards.
As of now, Grab still claims the title of being the most-funded startup company in Southeast Asia, with services operating in eight different countries. But with the boost from Go-Jek’s recent investors and the wider array of services that it provides compared to Grab, Go-Jek’s expansion and threat to Grab’s Southeast Asian dominance may be greater than we think. Although the question of who will prevail in the market is still up for debate, there is no doubt that Go-Jek’s potential must not be underestimated.
Jakarta Post newspaper: “Why Grab has no handle on Indonesia” - Shuli Ren, Bloomberg Opinion