【Grab vs. Go-Jek: Battle of the SEA Titans】
Grab recently pledged to invest $2B into Indonesia and establish a second HQ in Jakarta. If nothing else, Grab's latest announcement further justifies Indonesia's position as SEA's crown jewel. Aside from boasting the world's 4th largest population (and largest population of Muslims), the nation accounts for 40% of the region's population, 37% of its collective GDP, and 37% of its internet users, all the while still exhibiting a healthy growth rate relative to the rest of SEA at around 5.1% according to the IMF in 2018.
According to Google-Temasek's e-Conomy SEA report, these proportions will likely remaining consistent until 2025, which projects an internet economy worth US$ 240 billion in Southeast Asia, US$ 100 billion or 42% of which is attributed to Indonesia. If you're talking about ride hailing/online food delivery specifically, Indonesia will likely comprise half of the regional market by 2025.
While Go-Jek furthers its advance into the rest of SEA, namely in Thailand, Vietnam, and Singapore, it seems like Grab is now beefing up the resistance in Go-Jek's home turf. However, it certainly won't be a walk in the park. Go-Jek is the darling of Indonesia, the country's pride and joy, and also now one of the largest employers in the private sector. You can imagine, with such prestige, how favorably they are received among decision makers and native users alike.
Ride hailing, though, is still a commodity business dictated by price. Consumers at the end day will usually go for the cheaper option, if not the faster option. And for drivers, it'll come down to whichever app yields higher earnings potential. The super app and loyalty/rewards play will certainly raise the switching costs for the average user, but only to a certain degree.
Moving forward, Go-Jek will likely remain the leader in ID and Grab in the rest of SEA, but the overall market share will likely converge neck-and-neck as consumers embrace the luxury of choice and decision makers push for fair competition. At the end of the day, competition is good for the customer, but also good for the industry in terms of competitive pricing, pushing the ball on innovation, and creating a flawless user experience.
-Jun Wakabayashi
Analyst, AppWorks
