Suki Lin is the Senior Director in Nativex, responsible for SEA & ANZ.
Go-Jek and Tokopedia, two of Indonesia’s e-commerce and ride-hailing giants, have merged to to create the largest digital consumer platform in the country and boost their overseas expansion. The companies announced their intention to merge and form a new company called GoTo Group on 17 May.
According to IPrice Group’s map of e-commerce for Indonesia, website visits for Tokopedia hit almost 84 million per month, with a total increase of 25% since early 2020. In Q1 2021, Tokopedia achieved its highest average monthly visit with a total of 135,076,700 visitors.
Go-Pay, one of the services available in the Go-Jek super app, snagged the highest active monthly users from Q2 2019 to Q2 2020. The total downloads of Go-Jek’s apps also ranked first when it comes to having the most downloads on both Android and iOS platforms.
“With all these facts we believe this merger of Gojek and Tokopedia, as GoTo, will have a huge impact not only on the e-commerce ecosystem but also on the growth of digital payment in Indonesia,” explains Dea Devita, a senior content marketing executive at IPrice Group.
“As their statement to accelerate the growth of Indonesia’s digital economy, GoTo Group will make it easier for people from all walks of life to access quality products and services, anytime and anywhere.”
Simon Paterson, the chief of e-commerce enablement at data and artificial intelligence company ADA points out Indonesia remains the blue ocean of e-commerce in South East Asia.
He says the merger of GoJek and Tokopedia addresses specific challenges for both platforms: to get more customers, increase revenue streams, and improve logistics and quick commerce.
“We expect this merger to force smaller entities to consider where they fit in the ecosystem and potentially formalise some of their existing strategic partnerships, joint ventures, or mergers. From a growth perspective, we expect this will fuel the e-commerce growth outside Jakarta.”
What will the merger mean beyond Indonesia?
Carlos Matriano, head of innovation and e-commerce for Singapore at Omnicom Media Group notes that while Go-Jek has had mixed success scaling across regional markets, their experience will benefit Tokopedia should it look to expand.
He predicts the Go-Jek and Tokopedia merger will apply more pressure on their competitors to fine-tune their own roadmaps and potentially expedite partnerships to combat this merger.
However, he adds even as Go-Jek and Tokopedia’s strength lies within Indonesia, their combined efforts could shake up the regional scene.
“From a consumer perspective, we will hopefully see more benefits such as new products and improved experiences. For example, while the merger between Grab and Uber saw the exit of Uber in SEA, Uber Eats was absorbed into Grab and re-branded as GrabFood, with users being able to use their credits/rewards across both food and transport,” he explains.
Paterson agrees, adding that Alibaba-owned Lazada’s acquisition of Redmart was an early realization that there are more efficient ways to build capabilities and scale a business.
Even though the merger creates the largest tech platform in the region, Anne Ridwan, the country director for Indonesia at R3 says the focus for GoTo Group now is on the Indonesian market. “That said, the merger also establishes a stronger personalized delivery to the e-commerce business, which could set a new logistic business trend across the Asia Pacific.”
What will the merger mean for other competitors?
The merger Go-Jek and Tokopedia has put its main rivals Grab, Shopee and Lazada on notice and these three companies are now fighting in the same space when it comes to groceries and instant commerce.
The GoJek and Tokopedia merger may also allow these companies to quickly take any learnings to other markets beyond Indonesia.
Besides e-commerce and logistics, payment and financial services are additional areas that Grab is competing in, points out Xiaofeng Wang, a senior analyst at Forrester.
“Grab has the competitive advantage over Go-Jek outside of Indonesia in terms of logistics and ride-hailing, but financial services are a new area for all players that is still in the early stages, it could be anyone’s game. Certainly, the merger will bring more pressure to Grab, Shopee and Lazada,” she explains.
Whilst Grab, Lazada and Shopee have all collaborated with various entities such as TV channels, social networks like TikTok and brands, Matriano stresses consolidation of a digital commerce offering is still the most pressing priority in the fight for dominance.
He also notes that while there are other interesting and potential partners like Foodpanda and Deliveroo for Lazada and Shopee, Grab remains the one with the most established logistics and manpower who have diversified and can scale regionally, putting them in a prime position as a potential partner.
“Partnerships, mergers and acquisitions have long been a successful way for organisations to innovate quickly. A great example is Apple, who through the purchase of Beats by Dre, greatly improved and advanced their audio products like Airpods,” he explains.
“In digital commerce, every serious player is looking to dominate the category by providing one ecosystem to service as many consumers demands as possible. This is because elements like wallets, digital currency and aggregating people in one ecosystem can lead to far greater revenue and sales opportunities as companies look to maximise each consumer’s individual spends.”
How should brand marketers and advertisers work with GoTo Group?
While being associated from a branding perspective is already a win for most brands, GoTo’s real value comes from its ability to engage consumers and drive sales.
Matriano explains that coupled with the ability to scale, brands will be able to benefit and achieve disproportionate ROI from GoTo’s already established mechanics, logistics and consumer behaviour insights.
“Additionally, with Go-Jek diversifying heavily in the last few years, from new product lines to the creation of a content studio, brands can now take advantage of those services and features that are more aligned with their brands on the Tokopedia platform and vice versa,” he says.
“This new ecosystem will make it easier for brands to effectively be on two platforms, potentially increasing both reaches but also the opportunity for sales, especially with the increased possibilities of O2O for both brands.”
Paterson urges brand marketers and advertisers to work with GoTo Group “aggressively”.
“We expect there to be another market share fight in Indonesia and brands should be investing closely with GoTo to gain share at the same time. Categories related to instant commerce should be particularly aggressive in their investment with GoTo,” he says.
Under the newly-formed entity, Gojek and Tokopedia will remain separate but work together across the areas of payments, logistics and food deliveries.
Suki Lin, senior director for APAC at Nativex notes given the size of GoTo, there will likely be an uptick in the number of organic downloads for both apps.
She predicts in the near future, this may present a unified platform offering a range of services to consumers, which offers brand marketers and advertisers a consolidated touchpoint to understand and engage with target audiences.
“The merger will unlock new consumer demographics for GoTo – enabling them to better understand consumer mindsets and preferences, by leveraging data such as those collected from first-party touchpoints and gleaning actionable insights,” she adds.
“Marketers can hence also work with GoTo to identify key user demographics on their platforms and develop data-informed and personalised digital campaigns to engage with them.”