New tech giant GoTo plots global expansion on backbone of SME merchants

Drivers in Gojek-branded gear wait for delivery orders at a distribution center in Surabaya, East Java, on May 17, 2021, when Gojek and Tokopedia unveiled their merger to form GoTo Group, the largest Indonesian tech start-up to date. -AFP

JAKARTA (The Jakarta Post/ANN): During a media event on Tuesday (May 18), top executives from the newly minted tech giant GoTo, a merger of homegrown decacorn Gojek and e-commerce platform Tokopedia, joked about their companies’ taglines.

Tokopedia uses “Mulai Aja Dulu” (start first) while Gojek, which started out as a call centre for ojek (motorcycle taxi) ride-hailing and delivery services in congestion-choked Jakarta, has adopted the slogan “Pasti Ada Jalan” (there must be a way) in recent years.

“There’s a lot of things that we need to do and prepare for the IPO [initial public offering] and it will be very hard, but yes, there is certain to be a way, ” Andre Soelistyo, CEO of GoTo and GoTo Financial, said with a chuckle.

He was referring to the merged group's planned dual listing in the US and on the Indonesian Stock Exchange (IDX). Yet Andre’s modest statement and the two companies’ positive slogans belie the ambitiousness of the merger.

At the event, Andre took turns alongside Tokopedia CEO William Tanuwijaya and Gojek CEO Kevin Aluwi in presenting the company’s vision, which included plans for regional and global expansion and turning the combined Gojek-Tokopedia network into an e-commerce juggernaut a la Alibaba.

“It’s not a question of if, but when GoTo goes global. We want to be a global brand from Indonesia that future generations will remember, just like Alibaba in China, ” said William.

GoTo will need to build a solid base at home before it can expand overseas, however. Toward this end, it plans to continue to rely on the small and medium enterprises (SMEs) that make up the largest percentage of partnering merchants for both Tokopedia and Gojek.

The company’s next step would be to integrate the fleet of Gojek drivers with Tokopedia’s online marketplace as first and last mile carriers.

“With such a combination, we expect to have a logistical network that allows for fast and cheap, if not free, delivery for customers, ” said William.

They also have plans to use Tokopedia’s offline stores and Gojek’s "common kitchen" as fulfillment centres, and national postal service PT Pos Indonesia as an intermediary for long-distance shipping.

Following GoTo’s birth from the Gojek-Tokopedia merger, the new company has a combined resource of more than 2 million drivers and more than 11 million merchants. It also has more than 100 million monthly active users (MAU) that logged 1.8 billion transactions in 2020.

The two tech giants announced on Monday their merger, the largest ever business deal in the country. Based on independent valuations conducted prior to the merger of $10.5 billion for Gojek and $7.5 billion for Tokopedia, the new company is worth at least $18 billion.

The GoTo Group will now offer numerous services ranging from e-commerce to ride-hailing transportation and food delivery to financial services.

Gojek has been collaborating for years with Tokopedia by providing its GoSend delivery services arm, but in-depth merger talks took place only in the last six months, with much of the negotiations conducted online.

Andre and William both said that the Covid-19 pandemic had actually helped accelerate the deal, given the explosion in e-commerce and online payment transactions, most of which involved SMEs.

“During the pandemic, for instance, GoFood registered 400,000 new merchants, and as I understand it, ” said Andre, “Tokopedia [saw] 2 million new merchants registering, so the next challenge for us would be to continue improving the online platform to allow merchants to do business both online and offline.”

When asked about the dual listing in Indonesia and the US, William replied that it would be instrumental to determine if it is the time for the company to go global.

GoTo would likely use the money raised in the public markets for a scaling strategy, so it can take on regional competitors like Singapore-based archrivals Shopee of Sea Limited and Grab. The latter recently merged with Altimeter Growth Corp and announced plans to go public in the US.

“With this IPO, with the infusion of capital, will be able to determine if the time is right for us to go global, ” William said. - The Jakarta Post/Asia News Network

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Indonesia , Gojek , Tokopedia , GoTo , SMEs , global , expansion


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