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250 million Indonesians have rapidly embraced the rise of ride-hailing apps to add convenience to their lives.

The three largest players in Indonesia – Go-Jek, Grab, and Uber – not only lower congestion on the roads by connecting drivers to multiple riders, they also offer food delivery, payments via e-wallet features, and almost any service you can think of on-demand.  

These value-added features are possible thanks to each player’s treasure chest topped up with billions of dollars from venture capital funds and massive corporates like Alibaba, Honda, and SoftBank.

But which app do users in the archipelago actually prefer and why?

Indonesians judge their favourite ride-hailing apps

Consumer Pulse by ecommerceIQ is a new series that dives into the minds of consumers to translate their trends and habits into actionable business strategies.

The team conducted an online survey answered by 515 people (46 percent men, 54 percent women) in major cities in Indonesia – Sumatra, Java, Kalimantan, Sulawesi, Bali, West Nusa Tenggara, to Papua – to find out which ride hailing application (Uber, Go-Jek and Grab) they use the most on a daily basis.

A general consensus is that price and number of promo codes are the two key factors that impact adoption in Indonesia, but, our results indicate otherwise.

The majority of respondents pointed to safety as the primary factor when choosing which ride-hailing application to use. It’s not hard to decipher when you consider Jakarta traffic and the thought of weaving through the streets on a high-speed motorcycle.

Indonesians choose safety as the primary factor when choosing which ride-hailing application to use. Image source: ecommerceIQ team.

According to the Head of Indonesia’s Traffic Police Unit, traffic related deaths in the country have hit worrisome levels at roughly 30,000 per year – higher than crime related and terrorism caused deaths combined.

He also added that the number of traffic incidents in Indonesia is the highest among ASEAN countries.  

“Think of the approximately 28,000 to 30,000 people who die on the road per year because of accidents. Compared to terrorism and crime (the difference) is huge,” — National Traffic Police Chief Royke Lumowa

Providers should focus on improving the quality of their riders and vehicles, protective gear and insurance policies to capture more users. Both online and offline elements should be considered during product development as they are equally crucial when it comes to consumer purchase decisions.

For added assurance to both passengers and drivers, the three major ride-hailing apps in the country offer insurance:

  • Go-Jek offers up to 10 million IDR ($751 USD) for death and 5 million IDR ($375,50 USD) for an injury.
  • Grab provides up to 50 million IDR ($3,755 USD) for deaths, and 25 million IDR ($1,877.50 USD) is given to users with severe injuries.
  • Uber provides the most; up to 100 million IDR ($7.510 USD) for deaths, and 10 million IDR ($751 USD) for the treatment.

In 2016, Grab Indonesia promoted a controversial ad campaign to highlight the importance of road safety and how standards in Indonesia can improve. Unfortunately, the images were too graphic and the video was removed but it succeeded in bringing awareness to safe driving practices.

Grab’s ad campaign in Indonesia received a less-than-positive reaction from netizens, with many calling it too gory and disrespectful but it did its job in increasing awareness. Image source: Brandingasia.com

The second most popular reason why people used one ride-hailing app over the others was (unsurprisingly) the ease of finding a driver (23 percent). The rest of the reasons are as follows:

  • Frequent promotions and discounts (22 percent)
  • Easy navigation within the app (16 percent)
  • Many payment options (5 percent)
  • Wide food delivery options (3 percent)
  • Helpful customer service (3 percent)
  • Loyalty rewards (2 percent)

Consumers also indicated that they’re not excited about e-wallet features. Unsurprising as there’s no widespread use apart from the apps own services.

Nevertheless, payments remain a priority area for senior management looking to build a super app like WeChat in China.

CEO and co-founder of Go-Jek, Nadiem Makarim, mentioned he wanted to separate Go-Pay from the Go-Jek ecosystem during an interview with CNBC,

“Payments will be our core focus in 2018, and it will become the year of Go-Pay leaves the Go-Jek app ecosystem and it goes online and offline and to start fulfilling its mission to be the number one financial inclusion tool for Indonesians to gain access to these digital goods and variety of financial services, that frankly they have been deprived of this thought.” — Nadiem Makarim

So which ride-hailing player wins Indonesia?

What’s the app used on a daily basis among our respondents?

First position goes to homegrown unicorn Go-Jek.

Working under the slogan, “Karya Anak Bangsa” (Made by Indonesians), the company has become a favorite among the survey respondents (56 percent) and Indonesians since its establishment in 2010.

The country’s first tech unicorn scaled from a call centre and fleet of 20 riders to more than 654,000 drivers in 50 cities.

Later entrants in the space benefitted from Go-Jek’s investments in marketing and awareness. Consumers, now educated about ride hailing and startups didn’t need to be persuaded too much to try a new option.

  • Grab placed second at 33 percent
  • Uber place last at 8 percent
  • 3 percent of the respondents reported they don’t use ride-hailing apps at all

When considering these results, there are a few factors that impact the ranking:

  • First mover advantage (Go-Jek)
  • Largest reach in the country (Grab)
  • Time of entry into the country (Go-Jek October 2010, Grab June 2014, Uber August 2014)
  • Location of the respondents

A couple of months ago, Grab announced its expansion to 100 cities in Indonesia, making it the dominant player in the country. Meanwhile, Go-Jek and Uber can be accessed in only 50 cities and 34 Indonesian cities, respectively.

Price and promos also carry more weight after the Indonesian Ministry of Transportation announced basic rates for all online car-hailing services; 3,000 – 6,000 IDR ($0.23 – $0.45 USD) per kilometer in the areas of Java, Bali, and Sumatra. For Kalimantan, Sulawesi, Nusa Tenggara, Maluku, and Papua, the rate is more at 3,700 – 6,500 IDR ($0.28 – $0.49 USD) per kilometer.

Meanwhile, the Indonesian government hasn’t announced any regulations for online motorcycle taxis. Based on eIQ research, rates vary between each app.

*The rates are based on a 15 kilometer trip that eIQ personally hailed on each app during rush hour.

46 percent of respondents admitted they have two ride-hailing applications installed on their smartphones. 23 percent of respondents had three applications installed, 29 percent owned one application and 2 percent didn’t use any apps.

Final takeaway

It’s not difficult to understand why residents in each city prioritize certain features over others. Respondents from Semarang, Surabaya and Greater Jakarta value discounts and promotions more than any other option, probably because they have more access to transportation choices.

The KRL Jabodetabek (Jakarta Commuter Line) and TransJakarta in Jakarta; TransJateng and BRT in Semarang; and TransSuroboyo in Surabaya.

Based on the data collected, providing a helmet, hairnet, and insurance is a safety standard all ride-hailing apps should meet.  

The other takeaway from this piece is that being first mover in an industry may not always guarantee an advantage. Go-Jek was the first company to introduce ride-hailing in Indonesia, seizing a head start on later entrants but Grab has been quick to develop and expand its operations in Indonesia and become the dominant player in the country.  

Growing your business without understanding your market and competitors is risky. Consumer Pulse by ecommerceIQ helps collect and analyze information about consumer behavior to help you to hone your marketing strategy.

Here’s what you should know:

1. Vietnam’s online travel market is valued at $9 billion in 2020

Up to 45% of Vietnamese internet users book hotel services or air tickets, with the figure increasing by 11% annually, according to Vietnam’s deputy director of the Ecommerce and Information Technology Agency, Lai Viet Anh.

The number of travelers booking tours online has increased considerably in the last two years. About 4,000 travelers booked tours online in 2015 and it increased by threefold last year (12,000 travelers). In the first half of 2017, the number of travelers booking tours online was equal to that of the entire year of 2016.

Forecasts say Vietnam’s online tourism market’s value may reach $9 billion in the next three years.

Read the full story here.

2. Didi Chuxing partners with car booking company Careem

Chinese ride-hailing company Didi Chuxing has announced a new partnership with Middle East transportation company Careem to further its expansion in North Africa and the Middle East.

With 12 million customers, Dubai based Careem has overtaken Uber within the Middle East since its launch five years ago, with investors such as Germany auto company Daimler, and Japan’s Rakuten.

Didi’s expansion into the Middle East will put it head-to-head with Uber, who have already gained ground within the region.

Read the full story here.

3. Payless emerges from bankruptcy

Payless is set to emerge from bankruptcy after disposing of half of $847 million of debt it had built up under its private-equity ownership.

Payless has closed roughly 700 mostly mall-based US stores, but is opening four mega stores here to add to some 3,200 post-bankruptcy locations in the US and abroad, and plans to invest $234 million over five years.

The company is banking on a strategy focused primarily on brick-and-mortar sales at a time and can withstand the onslaught of ecommerce.

Read the full story here

China’s Didi Chuxing and SoftBank Group Corp. are leading a new round of funding in the Southeast Asian ride-sharing service Grab that could exceed $600 million, according to Bloomberg. Grab is also seeking to raise a separate $400 million in the following weeks.

The talks signal that the truce between Didi and Uber Technologies Inc. in China this week is far from a global accord. Didi bought out Uber’s operations in the country and became a shareholder in the US company but the Chinese firm’s investment in Grab shows it will continue to clash with Uber in Southeast Asia and perhaps other regions.

Now Didi will be able to put the reserves in new growth markets like Southeast Asia and back a player they believe has a strong chance.

Grab CEO Anthony Tan said he expected Uber to concentrate on the relatively untapped Southeast Asian market after agreeing to sell its China business. Grab currently operates in 30 cities across six countries, and was valued at $1.5 billion in 2014. It is not clear yet what the company’s current valuation will be.

The alliance that Didi forged last year with Grab also included India’s Ola and the US’s Lyft Inc. It’s unclear what impact the Didi-Uber deal will have on the other members of that tie-up.

It seems that Didi is making a very complex, interwoven play at the ride hailing app market, no official word has been announced from Didi, regarding the operations of both deals. Didi’s move in Southeast Asia is perhaps a counter move to fight against Uber, which is poised for a more aggressive strategy in Southeast Asia following the sale of its business in China.

A version of this appeared in Bloomberg on August 3. Read the full version here.

Uber Technologies Inc. will sell its China business to Didi Chuxing, the dominant ride-hailing service in the country, reports Bloomberg. The deal ends a costly battle between the two companies, which competed for customers and drivers.

The valuation of the combined business will be $35 billion. Investors in Uber China, an entity owned by San Francisco-based Uber, Baidu Inc. and others, will receive a 20% stake in Didi and Uber will continue to operate its own app in China for now.

In addition to Uber selling its Chinese subsidiary, the complex deal involves Didi making a $1 billion investment in Uber. Both sides declined to comment.

Last year, China’s ride-hailing leaders Didi and Kuaidi joined forces. The merged company Didi Chuxing brought together backers Alibaba Group Holding Ltd. and Tencent Holdings Ltd., the country’s most valuable internet businesses. Apple Inc. joined in this year with a $1 billion investment in Didi. Uber simply could not compete with the power house.

Both Uber and Didi have been spending significantly to compete in China. Uber has lost more than $2 billion in the country.

Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term. Neither Uber or Didi has turned a profit in China.

The purchase of Uber’s China business may complicate Didi’s alliance with other ride-hailing startups around the world. Didi had agreed to work with the US’s Lyft Inc., India’s Ola and Southeast Asia’s Grab to create a global force to take on Uber.

 The impending deal is a victory for Didi and underscores how the ride-hailing business favors domestic players.

While Uber will walk away from operations in China, it is taking a significant stake in the largest player in China. By recovering from its massive losses in China, the move will potentially help Uber clear the path for an eventual IPO. This deal shows that sometimes if you can’t beat them, it’s better to join them.

A version of this appeared in Bloomberg on August 1. Read the full version here.

Anthony Tan, group chief executive and co-founder of ride-hailing service Grab said his company will be in Indonesia for the long term to provide multi-platform services to help solve the country’s perennial problems related to inadequate transportation infrastructure.

Grab operates in 30 cities in six countries in the region – Indonesia, Singapore, the Philippines, Malaysia, Thailand and Vietnam. The company competes against United States-based ride-hailing service Uber and local app-based service Go-Jek to provide services using private cars, taxis and motorcycle taxis.

Sustainability means removing subsidies

Indonesian drivers who are partners of Grab, like many other ride-hailing services, receive subsidies from their companies to ensure that they earn enough money, while also keeping customers happy with affordable fares. But Tan said he fully realizes that Grab must gradually remove the subsidies.

“How do you build a sustainable business model? The only way [to operate] without subsidies is to ensure [there are] many jobs for drivers,” said Tan, who prior to founding Grab, was the head of supply chain and marketing at Malaysia-listed automotive giant of Tan Chong Group. Tan appeared happy when he explained that his company’s business model did not involve burning huge amounts of cash to attract regular users.

“How much cash someone can burn is not a good relevant example to building a long-term solution. We have to solve a long-term problem,” – Grab Co-Founder

GrabBike in particular, he said, has seen 300%growth in its business since January, despite a 50% cut in its fare subsidies.

The key aspects of the business are technology and people

In his illustration of how he prioritizes Grab’s spending, he said, “if we have $100, we have to put $90 in IT,” referring to Grab’s back-end technology business that includes its consumer application team, application design team, database team, engineering and infrastructure engineering. He also mentioned Grab’s partnership with the World Bank to provide real-time traffic data to improve the startup’s mapping technology.

Tan said Grab is also not forgetting about security aspects. He was proud to reveal that he snatched his IT team from Palantir Technologies, an American software and services firm, which has served clients, including the US government and the Central Intelligence Agency (CIA), National Security Agency (NSA) and Federal Bureau of Investigation (FBI).

Grab is not shaken by regulatory challenges

Offering what he calls “constructive disruptive” technology, Tan is fully aware that Grab must maintain a good relationship with the government and calm discontent among traditional players in the industry who feel that their businesses are under threat. Protests have occurred in Indonesia, with people employed in the taxi industry, and those working as traditional motorcycle taxi, or ojek, drivers, accusing the company of introducing unfair business practices.

The deadline for this controversial regulation, expected to discourage driver partners from participating in the business, is Oct. 31 this year. When asked about the regulatory hurdles, Tan was largely unshaken by the challenge. “In the end, I believe the Indonesian government wants the best for the people of Indonesia. In the higher principle, I believe you are aligned, it is no longer me against you […] we both want to help Indonesian people have a much more efficient transportation system,” he said.

A version of this interview appeared in Jakarta Globe on July 26. Find the full version here