Gojek Tokopedia Merger Will Positively Impact Consumer and Industry
There are amazing possibilities lie ahead for the Gojek and Tokopedia post-merger, both exciting and frightening
Major news, the thing everybody was talking about in the first week of 2021, is the seemingly imminent merger of Gojek and Tokopedia, Indonesia's two most valuable tech startups. Unlike the weakly rumor of a merger with Grab, the discussion I've had in different channels about the potential integration between Gojek and Tokopedia is super exciting from a lot of different angles. Here's my analysis of how the merger can impact.
From a consumer point of view, this marriage of complementary products will be tremendously magical. Transportation infrastructure, e-commerce, and finance all under one integrated product? That's every consumer's dream, hyperlocal commerce! Today, we have same-day delivery which works most of the time. The integration between Gojek and Tokopedia can produce something even better, Amazon Prime-style instant same-hour delivery, helping push e-commerce transaction and customer satisfaction even more while increasing driver utilization rate making it more economical as a business.
Gojek has basically done this hyperlocal commerce model through their GoFood platform, where customers can get the food they order in an instant, sometimes less than 30 mins. The integration with Tokopedia will connect this logistical infrastructure with Tokopedia's merchants, which is a major advantage for Tokopedia amidst the neck on neck competition with SEA's Shopee.
And that brings us to another market that practically all the unicorns have been focusing on: the SME industry. Both Gojek and Tokopedia has a big user base of SMEs under their platform, albeit with a different type of needs. Minimum overlap, mostly complimentary. Gojek is a time-sensitive service-based SME (restaurants, stores, warungs) and Tokopedia is more like a craft, product-based SME. Both unicorns have also been doing a major effort in SME digitalization through Point-of-Sales, merchant marketing apps, even providing growth capital.
Aside from their core businesses, both unicorns also ventured around the financial technology (fintech) space. Tokopedia with its strategic investment in Ovo, which is well embedded and is the default payment method in its marketplace, and Gojek with its GoPay and GoPay Paylater platform. Both also have been facing major competition by ShopeePay, one of the fastest-growing fintech products in the market especially during the pandemic where Shopee further pushed ShopeePay customer acquisition like a bushfire using a seemingly endless marketing budget.
Combined, the two companies are valued at around $18 billion. And it's no secret that IPO is one of the major reason behind this merger, investors in both companies need liquidity and returns, and it won't hurt both companies to get some capital during these uncertain time. The combined company will most likely look at dual-listing if they choose to go public this year, BEI and maybe Nasdaq (possibly the friendliest market for tech IPOs this year).
The IPO will impact both the global and Indonesian markets. Both Gojek and Tokopedia are amazing companies but combined, it makes a very large and unique. As Bloomberg puts it, "a local mashup of Uber, PayPal, Amazon.com, and DoorDash." and they couldn't be more right. Although this can be exciting for some investors, it's a unique new and unfamiliar territory for some, and there's going to be a learning curve in understanding its business and fundamentals in full perspective. Nevertheless, the IPO will put Indonesia on the map the same way Yahoo! acquired made-in-Indonesia social media app, Koprol back in 2010 an event that sparked the startup growth.
For Indonesia itself, or more specifically investors who have been investing in Indonesia's tech startups, this IPO is a bright light at the end of their tunnel. The possibility of a major tech IPO exists but more importantly, the combined unicorn will instantly become a major destination for startups to aim for acquisition, like what Apple and Google are to Silicon Valley.
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