GoTo Group: With the merger of Gojek and Tokopedia, what's the opportunity for brands?

Indonesia’s two biggest startups, ride-hailing giant Gojek and ecommerce marketplace Tokopedia, confirmed earlier this week they will merge to form GoTo Group. It is said to be Indonesia's largest merger ever, with estimates placing the deal in the neighbourhood of US$18 billion to US$22 billion.

GoTo executives claimed that the combined entity will contain over 100 million monthly active users, over 11 million merchant partners (as of December 2020) and a total registered driver fleet of over 2 million (as of December 2020). Moreover, the two companies registered over 1.8 billion transactions in 2020. Together, the two companies operate an ecosystem that encompasses 2% of Indonesia’s GDP.

Executives plan to use this position to more aggressively compete with Southeast Asian giants Grab and Shopee.

Campaign asked eight marketing experts how they expect brands to react to GoTo, and whether the new entity will win the race to capture Southeast Asia.

Umesh Phadke, president director, L'Oreal Indonesia

"The GoTo merger is a momentous occasion in the digital evolution of Indonesia. Not only will it create a massive entity that is uniquely Indonesian—born and grown for the benefit of Indonesia, Indonesian entrepreneurs and Indonesian consumers. It will also showcase the best of Indonesian abilities to the world and further reinforce the position that Indonesia is the land of O+O—optimism and opportunity, and offline and online. Moreover, success in a complex market like Indonesia with a diverse set of geographies, consumers and business models will uniquely prepare the new entity to take on challenges across the region and the world."

Paul Srivorakul, group CEO, aCommerce

"From a brand's perspective, they will benefit from the combined strength of having a robust and cohesive platform that enables them to create unique online and offline consumer experiences with all the marketing, operations, data, and infrastructure under one roof. Brands will get access to an extensive advertising, retail, and distribution platform supported by a powerful backend for centralising payments, financial services, loyalty rewards, customer service, and a vast logistics network. This means FMCG brands can market and sell their products across many channels: food delivery, transportation, financial services, home services, B2C and B2B marketplaces with O2O and omnichannel capabilities.

"Brands can utilise this new cross-platform to launch promotions around loyalty systems that enable them to provide smart deals and promotions to consumers without relying on discounts. With access to end-to-end data the advertising, product/service recommendations will be smarter and more relevant.

"It likely means that an already growing Southeast Asia ecommerce industry will get a substantial boost with the creation of well-funded and well-backed national champions furthering the digital infrastructure. Hence the shift of consumers from offline to online will speed up more-so and brands will likely need to focus even more on their ecommerce strategy and direct-to-consumer in particular, to ensure good access to consumer data and effective marketing ROI."

Shufen Goh, cofounder and principal, R3

"The merger will not change the direction of change in the market right now, it will just speed up the market's transformation from O2O. Of course, a budget shift into digital will come as a consequence. What will change though is that the centre of gravity for marketing, which used to be centred around FMCG (led by Unilever, Indofood) in Indonesia, will shift to a much more user/consumer-oriented marketing driven by Gojek & Tokopedia. In our view, traditional marketing companies know that they have to transform fast, but structure and culture are their roadblocks, and they will need to look outside for guidance to speed up their transformation.

"Assuming that Gojek and Tokopedia can organise their integration fast (they are two companies of different cultures and pride), the path of transformation is the same but will be on steroids. The key question is...is Gojek and Tokopedia's local knowledge in Indonesia a sufficient moat against bigger, much better funded, aggressive competitors like Grab and Shopee? If yes, then GoTo could be the next super-app in Indonesia (like WeChat is in China). If not, I think Grab may get there first, given their dominance outside Indonesia in Southeast Asia."

Justin Peyton, APAC chief transformation and strategy officer, Wunderman Thompson

"While the news is quick to report about the scale and value of these two as a combined business—especially in light of the upcoming shares listing—what I find more interesting is the potential for the combined entity to leverage their combined insights and visibility into consumer actions to create valuable new data products.

"With the deprecation of cookies on the horizon, brands will be looking for new strategies to enable personalisation and targeting in the ways they have become accustomed to. With so much consumer activity in ID going through their platforms and apps, the GoTo Group may well be able to develop highly compelling products and offer alternatives to the other digital giants."

Bayu Asmara, brand and strategy consultant, DKK Consulting

"For some Indonesians, the merger is something to be proud of. An Indonesian brand that is making headlines across the globe. Their campaign is also certainly very well done. Talking about social impact at scale, leveling the playing field for small businesses, and giving access to quality goods across the country. They both have always been great at these videos that touch people emotionally.

"But I think most Indonesians, including small businesses that rely on their services, are waiting to see what this merger actually means for them. Optimistically, there is potential for seamless integration between the services, for example, quicker and cheaper same-day delivery from Tokopedia. Loyalty points that become more useful. Integrated small business services.

"But pessimistically, I've heard some people worry if this will make things more difficult for them. Gojek's interface came under the spotlight several months ago for being slow and difficult to navigate. Will it become worse, as they add Tokopedia services to the app? Will I have to use Gojek when I buy from Tokopedia? Will other delivery options become more expensive as they prioritise Gojek?

"A group of people will also be concerned about their personal data. How will my data be used? How secure is it? How much do they share with 3rd party vendors? As personal data is shared between all the various services in GoTo, will data breaches become more common? As you may know, Tokopedia had a massive data breach last year.

"Small businesses and startups might also be worried if this causes monopoly and makes it harder for them to compete and provide alternatives to the market. As a company that impacts a huge proportion of the population they will undoubtedly come under more intense scrutiny. They will need to step-up their brand communication efforts, and strategically address these issues directly."

B Ramanathan, group CEO, Ogilvy Indonesia

"GoTo, the ‘duocorn’ super-app, at a broader level will further Indonesia’s digital economy and a cashless one at that. With the pandemic impact, the timing of this integration is a likely nitroboost!

"At a business and brand level, it is bound to fuel digital acceleration and adoption both on the supply and demand side of the business—with its wider offerings, better access, super convenience and a quality audience of 100 million plus monthly average users, the digital media and programmatic landscape is bound to change. 

"The most interesting growth opportunity is for Indonesian jewels to partner, leverage and hitch a ride with GoTo, as it opens doors in SEA and beyond in the future."

Lidyawati Aurelia, Indonesia country manager, AnyMind Group 

"Indonesia has a thriving and growing ecommerce ecosystem driven by various local and regional marketplaces, and this merger will open up a wider range of possibilities for brands especially in tapping on deeper first-party data. It will also open up more ideas and opportunities for other ecommerce platforms in Indonesia and the region to innovate and partner up.

"With pandemic-fuelled digital transformation continuing to take place in Indonesia, there will inevitably be brands that are born in this evolved digital stage. The way brands engage with their consumers will definitely have to evolve in the future."

Adri Reksodipoetro, managing director, Nation Insights

"Both are pioneers in the Indonesian tech landscape and from the start have been pushing the narrative of Indonesian pride, even associating their brands to the nation's progress. They reinforced this in a recent video of their manifesto, as well as their mission statement 'Empower Progress’.

"Many local brands across categories have been inspired by this spirit - it’s fuelled local entrepreneurialism from micro businesses to emerging tech startups, and many have emulated Gojek and Tokopedia’s narrative of 'Indonesian made'. So this merger will likely reinvigorate and amplify this spirit."