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Indonesia’s ride-hailing start-up Gojek is helping small businesses in the country survive the ongoing economic crisis by moving online, and it wants to bridge the gap between them and global tech companies, a senior executive told CNBC.
Gojek started in 2010 as a ride-hailing company in Indonesia and has since branched out into other business areas including food delivery, digital payments and logistics. It is now present across 207 cities in five Southeast Asian countries.
Last week, Gojek said it secured funding from Facebook and PayPal — investments the company said would help ramp up its payments and financial services in Indonesia and the broader region.
“When global companies want to come in into Indonesia and access the potential of the market, it’s not like you can do some big enterprise deal,” Aldi Haryopratomo, CEO of Gojek’s payments business, GoPay, told CNBC in a recent interview. “Our market is comprised fundamentally of small and medium-sized businesses.”
Experts say for global tech companies to succeed in Southeast Asia, they require deep local knowledge of each market — something that Gojek can provide for Facebook.
Mass migration online
The coronavirus pandemic, which has infected more than 7 million people worldwide, has disproportionately affected many small business owners who saw their revenue sources dry up as more people stayed indoors — either voluntarily or due to state-mandated lockdowns.
Haryopratomo explained that in Indonesia, the current situation has forced many business owners to move their brick-and-mortar businesses online — under normal circumstances, that might have taken tens of years, but the pandemic expedited the process.
The start-up said that over the past three months, around 100,000 micro, small and medium-sized businesses across the region that previously sold in physical stores moved online using Gojek’s services and platform.
In comparison, before the pandemic, that number was over 500,000 businesses in the last two years.
Not all of the businesses moving online necessarily have the ability, or tools, to access large swathes of customers on the internet and accept a wide variety of digital payments. Gojek wants to provide that access through its own gamut of services, as well as its collaboration with global tech, according to Haryopratomo.
I can say we are in a really good position to continue to grow and really serve our merchant partners and drivers. Right now what’s important is to make sure that you build the right foundations.
“What we want to do, as Gojek and GoPay, is be that person that helps these merchants, or that organization … that helps them get through this crisis — whether it’s providing food delivery services for them, logistics services, payment services and even access to these platforms,” he said.
“These merchants want access to Google, Facebook, PayPal, and then we become the bridge between the small merchant on the street to some of the world’s global tech companies,” he added.
Go-Jek is valued at $10 billion and has prominent backers, including Google, China’s Tencent, and Singapore state investor Temasek.
The move from offline to online presents an opportunity for digital payments services to process more transactions.
Forrester analyst Meng Liu said last week after Gojek’s announcement that the payments sector in Southeast Asia, particularly in a large market like Indonesia, is still under-serviced and the opportunity is worth billions of dollars.
Liu explained that Gojek would be able to embed Facebook’s digital wallet on its platform, while the social media network will take the first steps to expand its payments and financial services to Indonesia, and even more broadly, to the region.
Gojek’s digital payment service, GoPay, is currently available only in Indonesia, Thailand, and the Philippines.
About 50% of the transactions made on Gojek’s platform in Indonesia are processed by GoPay while, more than half a million local retailers in the country accept it as a mode of payment in physical stores, according to Haryopratomo.
Bike passengers wearing Helmet with Gojek logo.
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Those acquisitions helped Gojek build a payments processing ecosystem targeted toward business owners, Haryopratomo said.
“The goal is that we want to be the organization that provides a holistic solution for the merchants to grow their business,” he added.
He declined to say if Gojek had a timeline for when its payments services would be rolled out to other markets, or if the business unit is profitable. “I can say we are in a really good position to continue to grow and really serve our merchant partners and drivers. Right now what’s important is to make sure that you build the right foundations,” he said, adding that Gojek’s strategy has always been to build its services in Indonesia and then export them to other markets.
Indonesia’s internet economy is the largest and fastest-growing in Southeast Asia, according to a frequently-cited industry report last year from Google, Temasek, and consulting firm Bain & Company. It is on track to cross $130 billion by 2025 and is set to benefit from the growing adoption of digital payments, the report said. Southeast Asia’s overall internet economy is expected to reach $300 billion by 2025.