Meeting of the "Green" Motorcycle Jacket and Box, the "GoTo" Map of Gojek and Tokopedia

For many Indonesian urbanites, their lives can be described in two phases: before Gojek, and after Gojek become part of their cell phone. Now, those green-and-white apps have become a staple. This includes transportation, payments, entertainment, food delivery and more. Then what about e-commerce? You may be wondering. Well, that's coming soon.

Gojek and Tokopedia, the largest e-commerce platform in Indonesia, getting closer to the merger which will create a new entity called GoTo, with a co-CEO Gojek Andre Soelistyo as the captain. GoTo could become a powerful technology ecosystem connecting millions of customers, merchants, and driver-partners, and will be in a strong position for the foreseeable future go public.

Both companies have a lot to gain from this merger. Tokopedia will have access to logistics resources Gojek for a more efficient, temporary delivery service Gojek will also receive support from the Tokopedia e-commerce delivery network. fintech branch Gojek, GoPay, and Bank Jago digital bank can target Tokopedia's small and medium businesses to offer payment and lending services.

Increasing the range of application functions can broaden the footprint Gojek in South East Asia. Despite its strength in Indonesia, Gojek still lagging behind its rivals, Grab, outside the cage. Gojek currently only available in four markets, namely Vietnam, Thailand, Singapore, and Indonesia. Grab present in all markets where Gojek operates plus Malaysia, Myanmar, and the Philippines, and has partnered with JapanTaxi to enable users Grab hail a taxi at popular tourist sites in Japan.

Regional expansion seems to be one of the main focuses Gojek at the moment. Last year, the company brought together its Vietnamese and Thai brands, while in Singapore, it has announced plans to launch new products, including new features for corporate clients, taxi orders and large vehicle services.

The move seems necessary to increase competition with Grab, yang prepare for go public in the US through the SPAC mega-merger with Altimeter Growth Corporation. GoTo is also likely to do dual listings in Indonesia and on US stock exchanges this year, a decision that could be driven by the US tech giant's high interest in Southeast Asian startups. Gojek already has several US investors such as Facebook, PayPal, Visa, and Google, while Tokopedia also has support from Google. The two companies even share the DNA of investors in Sequoia Capital India and Temasek.

“Any potential merger will be driven by convergence. The services provided by the two companies are highly complementary and will combine on a significant scale. The combined players will also be more financially sustainable given the more diversified revenue streams,” Kenny Liew, senior telecommunications, media and technology analyst at Fitch Solutions, told KrASIA.

Channeling the interest of foreign investors

Tech companies in Southeast Asia have attracted global investors thanks to the region's thriving internet economy, which is expected to generate a gross merchandise value of USD 309 billion (GMV) by 2025.

Sea Group's successful IPO on the New York Stock Exchange has also generated investor interest for companies in the region, according to Hian Goh, founding partner of the early investor. Gojek, Openspace Ventures.

Gojek able to convince investors thanks to the company's operations in several sectors and the merger with Tokopedia. Gojek can be seen as a fusion of Uber, DoorDash, Alipay, and Flipkart, which includes online transportation services, online food and grocery delivery, and online payments. "Diversity is typically similar to that of major US and Chinese tech players, which are generally well-received by public market investors," said Goh.

Fitch Solutions' Liew added that “unlike previous ride-hailing IPOs such as Uber and Lyft, Gojek has a diversified business model with a strong presence in areas such as fintech and food delivery, two sectors where there is already a clear path to profitability, and investors' interest is very high. "

Who's in control Gojek?

The projections for food delivery and digital payments in Southeast Asia are promising compared to transportation online. By 2025, the gross value of food shipments will reach USD23 billion, while the value of gross transactions for payments will reach USD1,2 trillion, according to reports by Google, Temasek, and Bain & Co. Transportation is predicted to only reach USD19 billion, according to the same report.

So far, companies operating in this sector have seen positive reactions in the capital market. Food delivery platform Doordash managed to make a successful debut on the stock market in late 2020, while Uber's food delivery business, UberEats, reported positive growth in March 2021.

"We believe this interest will continue to increase in the future as investors at all stages of investment want to seize the growing opportunities in Southeast Asia," said Goh.

Adding e-commerce services can be a competitive advantage for Gojek in competition against Grab, as the Singapore-based company does not have an e-commerce branch, nor has it announced any plans to join one yet. Grab entered into a partnership with Lazada in Vietnam in November 2020, giving Vietnamese consumers access to GrabFood from the Lazada app homepage and web page, while users Grab in Vietnam can access the Lazada platform via Banner and widget in app Grab.

Nearly 2 million driver partners Gojek can also give GoTo a better opportunity to build a solid delivery network to compete with Sea Group's e-commerce platform, Shopee.

However, GoTo needs to create a robust ecosystem and improve its offerings. “To be competitive and fend off tough competition from competitors such as Shopee and Grab, Tokopedia and Gojek need to create more synergies and develop a service ecosystem that will lead to greater spending and customer loyalty, rather than sticking to status quo and rely on the product as it is,” said Liew.

Driver Gojek later will send parcels to Tokopedia. Documentation by Gojek

Pumping up future valuations and opportunities

Like Google and Uber, Gojek has become a verb used by Indonesian people in everyday language: Gojek-in aja (“just send it through Gojek”) andGojek (“using a transportation service Gojek”). In metropolitan areas, drivers Gojek were everywhere, each wearing his signature green jacket, carrying passengers, delivering packages, or resting in the park on his lunch break.

Most offline traders also have machines and Barcode GoPay as a payment option, which reflects existence Gojekin all strata of Indonesian society.

Tokopedia's existence is more subtle. Unlike Amazon, the Indonesian e-commerce platform does not print its logo on packages leaving its central repository. However, it is the second most visited platform in Indonesia, with more than 114 million web visits each month, according to market aggregator site iPrice. The platform also claims to have more than 900.000 traders. The company has entered small roadside stalls — known as warungs — adding phone credit and electricity tokens to their stock.

Gojek reportedly worth USD 10,5 billion, while Tokopedia USD 7,5 billion. The merger between the two will create an entity worth USD 18 billion. Bloomberg predicts, with potential dual listings in Indonesia and the US, the company could achieve a valuation of around USD40 million, equaling the expected valuation Grab after joining Altimeter's SPAC.

Shareholders Gojek akan owns 58% stake in GoTo, and the owner of Tokopedia will take the rest, according to a familiar source who spoke to Bloomberg. GoTo will divide its operations into three business units: ride hailing under Gojek, e-commerce under Tokopedia, and a new payments and finance division called Dompet Karya Anak Bangsa, or DKAB.

“If the two companies can show potential investors how strong they are and in what new segments they can compete and grow after the merger, I think it will definitely reflect higher valuations,” Liew said.

“Combining the two businesses will open up a lot of synergies for both companies, and will likely make them even stronger players in their respective fields. Unlocking these synergies effectively can result in faster and more sustainable growth. A longer and stronger growth base is the key to higher valuations,” Liew added.

Goh Openspace Ventures has been observing Gojek since becoming a startup, believes that Gojek has a promising future. "We saw Gojek as a generation technology company,” he said. “It has reached an extraordinary number and still has significant room for growth. We believe this growth can be achieved with or without an IPO in the near future.”

-This article was first released by KRASIA. Re-released in Indonesian as part of the collaboration with DailySocial