GoTo (Gojek Tokopedia): Taking A Look At The Indonesian Superapp Giant
GoTo is Indonesia’s biggest superapp platform (the group’s total Gross Transaction Value of IDR 462 trillion accounts for about 2.7% of Indonesia’s GDP in 2021 which amounted to IDR 16,970.8 according to Statistics Indonesia), with its ecosystem of consumer services covering ride-hailing (Gojek), eCommerce (Tokopedia), payments (GoPay), food delivery (GoFood), online grocery (GoMart), courier services (GoSend), insurance (GoSure), and merchant financing (GoModal) among others. The company’s operations are largely in Indonesia and to a lesser extent in other Southeast Asian countries. Specifically, GoTo’s ride-hailing platform - Gojek - operates in Indonesia, Vietnam, Singapore, Thailand, and the Philippines.
In Indonesia, GoTo primarily competes against Singaporean superapps Grab, and Shopee, both of whom boast strong ecosystems in their own right. Grab, who is most known for its ride-hailing business, competes neck and neck with Gojek in Indonesia’s ride-hailing and food delivery space, while Shopee competes with GoTo’s eCommerce platform Tokopedia in Indonesia’s online shopping space. All three compete neck and neck in Indonesia’s mobile payments space (GoTo with GoPay, SEA with ShopeePay, and Grab with OVO).
Market share figures vary, but social media data figures are suggestive of the level of rivalry GoTo faces. As of 02 October 2022, Gojek Indonesia has one million followers on Twitter while Grab Indonesia has more than 600,000 followers. Gojek Indonesia and Grab Indonesia both have 1.1 million followers on Instagram. On Youtube, Gojek Indonesia has 280,000 subscribers while Grab Indonesia has 406,000 subscribers. Gojek and Grab roughly enjoy the same level of search interest on Google.
Tokopedia has one million followers on Twitter, while Shopee Indonesia has 865,000. On Instagram, Tokopedia has 5.2 million followers while Shopee Indonesia has 8.7 million. On Youtube, Tokopedia has 2.3 million subscribers while Shopee Indonesia has 2.5 million subscribers. Shopee’s search interest is considerably higher than Tokopedia however.
Over in Singapore where Gojek has a presence, Gojek Singapore has 18,300 followers on Instagram while Grab Singapore 68,800.
Robust Top Line Growth In FY 2021, However Lags Singaporean Superapp SEA Ltd
GoTo’s gross revenues rose 44% YoY to IDR 17 trillion for the financial year ended December 2021. GoTo’s annual revenue growth was on par with superapp rival Grab whose revenue rose 44% YoY to USD 675 million during its latest financial year, which like GoTo, ends in December 2021. Both however lagged supper app rival SEA Ltd who notched a 127% YoY increase in revenues which reached USD 10 billion for the financial year ended December 2021.
By segment, On-Demand Services, GoTo’s biggest segment by revenues generated IDR 10.3 trillion (accounting for about 60% of revenues), up 37% YoY. On-demand services covers GoTo’s ride-hailing, food delivery and courier services. The segment benefited from regional expansion during the year (Gojek launched GoCar in Vietnam in November 2021, as well as a new service for larger cars - GoCar XL - in Singapore the same month).
GoTo’s second-largest segment, eCommerce earned IDR 6.2 trillion (accounting for 36% of revenues), up 81% YoY. GoTo’s eCommerce segment covers its marketplace platform Tokopedia and online grocery business.
Financial Technology generated IDR 1.16 trillion (accounting for about 7% of revenues), down marginally by 1.5% YoY. This segment covers GoTo’s mobile wallet, payment gateway, and financial services such as insurance. The segment benefited from greater integration in Gojek’s ecosystem, enabling consumers to use GoPay and GoPayLater to make purchases and use their GoPay Coins loyalty points across Gojek’s entire ecosystem of services.
All Major Segments Have Bright Growth Prospects
With a vast ecosystem of consumer internet services, GoTo is well places to benefit from Indonesia’s expanding digital economy which still offers ample room for growth. Internet penetration in the country is just around 54% according to latest available data from The World Bank, behind Southeast Asian neighbors such as Singapore (92%), Malaysia (90%), Thailand (78%), and Vietnam (70%).
Moreover, Indonesia's population, already the fourth largest in the world at 277 million people as of 2022, is growing and projected to reach 320 million people 2045. About 40% of Indonesia's population are aged 24 and under, a youthful generation who having been raised in the 'internet era' could drive Indonesia's internet economy going forward as they rise up the income ladder.
All of GoTo’s business segments are in sunrise industries. Ride-hailing in Indonesia is very much an essential part of Indonesia’s mobility space, as the country’s public infrastructure is relatively under-developed (particularly in terms of last-mile connectivity) and car ownership is relatively low (at around 82 cars per 1,000 people, Indonesia trails Southeast Asian neighbors such as Brunei (614 cars per 1,000 people), Malaysia (542 cars per 1,000 people), Thailand (280 cars per 1,000 people), Singapore (149 cars per 1,000 people, and Myanmar (138 cars per 1,000 people).
eCommerce in Indonesia is blossoming and could see further expansion along with rising incomes. At USD 4,292, Indonesia’s per capita incomes are ahead of Southeast Asian neighbors such as Vietnam (USD 3,694), and Philippines (USD 3,548), but they lag neighbors such as Malaysia (USD 11,371) and Thailand (USD 7,233).
Per capita GDP however has been on the rise in Indonesia over the past several years and the country expects to regain its upper middle income status (which it lost during the pandemic). Indonesia’s per capita GDP grew at a CAGR of 1.65% during the ten year period between 2011 and 2021, lagging neighbors such as Vietnam (6.6%), Philippines (3.7%), Singapore (3.1%), Thailand (2.8%), but outpacing neighbors such as Malaysia (0.9%) and Myanmar (1.1%).
Risks And Threats
GoTo is currently unprofitable, and this could become a major disadvantage against super app titan SEA Ltd who is profitable and has a tremendous financial advantage thanks to its online gaming business - a cash cow that enables SEA to aggressively subsidize new businesses while still remaining cash flow positive (SEA is operating cash flow positive in contrast to GoTo whose operations have been burning cash for years). Barring a major improvement in its cash burn, GoTo may be forced to turn to investors or lenders for funding in the coming years.
Ride-Hailing Growth May Be Dampened By Growing Car Ownership In Indonesia
While Indonesia’s relatively low car ownership is a boon for ride-hailing platforms, as incomes rise in the country, car ownership could potentially rise in tandem, putting a lid on ride-hailing demand. For Gojek whose ride-hailing operations are largely concentrated in Indonesia (in contrast to rival rival Grab who has a strong presence across most Southeast Asian countries) Gojek could be particularly affected by this obstacle to ride-hailing demand.
Competition Rising In Food Delivery Space
What initially was a two-horse race between GoTo’s food delivery arm GoFood, and Grab’s food delivery arm GrabFood has morphed into a crowded space with the entry of several new food delivery players recently: eCommerce behemoth Shopee’s food delivery arm ShopeeFood launched in Indonesia in early 2021, while Malaysian budget airline AirAsia ventured into Indonesia’s food delivery space in early 2022 with its food delivery arm Airasia Food.
Indonesia’s notoriously competitive food delivery space has had its share of casualties, Foodpanda in 2016 and most recently, Traveloka Eats (the newly launched food delivery arm of homegrown travel app Traveloka) which closed shop in September 2022. However, Foodpanda’s business is largely limited to food delivery while Traveloka is entirely focused on travel which may have limited their ability to withstand competition. In contrast, both SEA and AirAsia have relatively diversified consumer service ecosystems and unlike GoTo, both have a strong presence across Southeast Asia (SEA is one of Southeast Asia’s leading superapp players with services in online gaming, eCommerce, and payments while AirAsia’s services covered flights, hotels, and travel insurance and is working hard at becoming a superapp in its own right).