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How Is Go-Jek Different Than Uber?

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How Is Go-Jek Different Than Uber?

Last Friday, reports suggested that JD.Com Inc(ADR) (NASDAQ: JD) has invested about $100 million in Go-Jek, a ride-hailing service based in Indonesia. The news of the investment was first reported by technology-focused news service Information.

The investment, made as part of Go-Jek's latest funding round, is expected to generate proceeds of $1 billion. Tencent, a Chinese holding company having diverse interests such as media, entertainment, advertising, payment services, etc., is also reportedly participating in the funding round.

Prior to this, Go-Jek had raised $550 million in August 2016, at a valuation of $1.3 billion, with private equity firms KKR & Co. L.P. (NYSE: KKR) and Warburg Pincus; venture capital companies such as Sequoia, Northstar Group, DST Global and NSI ventures all invested in that funding round.

What Has Got Go-Jek Going?

Go-Jek, a homegrown company in the Southeast Asian nation home to 261.1 million people, was founded in 2010. Having started out as an on-demand motorbike taxi service, it now offers a whole gamut of diverse services — from grocery delivery to massages.

Go-Jek added cars to its fleet in April 2016 and started a service called Go-Car, which was seen as rivaling the services of Uber.

Go-Jek has also forayed in digital payment, which apart from paying for rides, is also seen as an avenue for building engagement and loyalty with customers.

Other services the company offers include Go-Massage, Go-Glam, Go-Clean, Go-Tix (an event ticker booking service) and Go-Auto (a car maintenance service).

Go-Jek's ride-hailing service now has 200,000 drivers and operates motorcycles, cars and trucks. The service is now available in 25 cities across Indonesia.

However, the road ahead is not entirely smooth for Go-Jek, as it faces stiff competition from another homegrown company, Grab. Recently, Grab had raised $2.5 billion in a bid to expand further in Indonesia, with China's state-run Didi Chuxing and Japan's SoftBank Group Corp (OTC: SFTBF) among other investors. Incidentally, Grab is also pushing its own digital payment service.

All these companies are battling for a substantial chunk of the lucrative Indonesian market, which according to Techcrunch, would grow from $2.5 billion in 2015 to $13 billion in 2025.

See also: Riding The Crest Of Ride Sharing – Uber Vs. Lyft Vs. Didi

Does Go-Jek Have Any Unique Selling Proposition?

Go-Jek's focus on scooters, according to The Conversation, vests it the advantage of a tapping into a large pool of drivers, given that scooter is more affordable than cars.

Traffic congestion in Indonesian cities has made scooters a preferred transportation option, given the flexibility they offer.

Go-Jek has thought on its feet, resulting in not only its success inm its core service of ride hailing, but its expansion into personal services.

Meanwhile, Uber hasn't differentiated its service much. Only recently, Uber has started food delivery in markets in which it is well established.

Go-Jek scores better than Uber in possessing a clearer understanding of the domestic market. Go-Jek has also navigated through local regulatory environments without causing much friction. At the same time, Uber has had run-ins with traditional taxi operators and, in the process, has rubbed the regulators and politicians the wrong way.

What Got JD.com Interested?

JD.com has a huge investment portfolio in Indonesia, which is its second largest market outside of China. Currently, JD.com has an e-commerce platform and a travel startup called Traveloka.

Incidentally, Tencent is also an investor in JD.com.

The ride-hailing market in Indonesia looks like it's headed toward a three-way battle, although the refreshingly new Go-Jek seems to possess all it takes to emerge as the frontrunner and solidify its standing.

Posted-In: News Education Emerging Markets Financing Travel Global Markets Tech Best of Benzinga

 

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