Super apps in emerging markets: The Grab & Gojek playbook

Southeast Asia's Gojek & Grab have laid out a super app playbook to follow for ride-hailing startups in emerging markets

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This essay is the second in a series about super apps — it follows up the WeChat focused essay, 'Why super apps are proliferating across emerging markets.’

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In the ASEAN region, there is a slew of companies valued at over $100 million USD. This chart from Cento Ventures provides a non-exhaustive overview:

At the top of the list, rubbing shoulders with publicly-traded Sea Limited, are two super apps: Grab & Gojek. Unlike China’s WeChat which began as a messaging service (see the previous article: Why super apps are proliferating across emerging markets), Gojek & Grab both offer ride-hailing as their core service and have become ‘must-own’ apps, not least due to the region’s underdeveloped public transport infrastructure (outside of Singapore).

Together, they’ve raised ~$15 billion dollars from some of the biggest names in tech — Gojek is backed by Google, Tencent, and JD.com, while Grab’s investors include Microsoft, SoftBank, and Didi Chuxing. This war chest hasn’t been sitting idle; over the past several years, the two companies have burnt through billions as they’ve jostled to establish dominant positions across the region and outcompeted world-class rivals.

In early 2013, Uber entered the region and spent, according to the Wall Street Journal, ~$200 million annually to compete against the young upstarts. Ultimately, however, in March 2018 Uber sold its Southeast Asia operations to Grab, receiving a 27.5% stake of the company in return. 

“We used to be called the Uber of Southeast Asia, until we acquired them.”Hooi Ling Tan, Co-Founder of Grab

Today, according to App Annie data, both apps have over 170 million downloads, suggesting that they’ve penetrated nearly one-third of the ASEAN region’s population. Furthermore, Gojek is estimated to have ~2 million drivers and ~500,000 merchants to Grab’s ~3 million drivers and ~200,000 merchants.

Although Grab President Ming Maa told the Financial Times at the end of 2019 that “our current business plan does not require any additional capital being raised,” the company went on to raise ~$1.06 billion in 2020 (so far). Not to be outdone, Gojek itself has so far raised ~$1.6 billion in 2020, including a June investment from Facebook and PayPal focused on the company’s fintech service, GoPay.

A brief history

Founded in 2010 in Indonesia as a motorcycle ride-hailing & courier service call center, Gojek launched its app in 2015. And today, the company also operates in Thailand, Vietnam, and Singapore.

Grab, on the other hand, was launched in 2012 in Malaysia, where it started with a taxi-hailing app, and today operates in Singapore, Indonesia, Thailand, Vietnam, Philippines, Myanmar, and Cambodia as well.

Despite this international expansion, Indonesia, the single largest market in the region, is the epicenter of both companies’ activities and their main battleground; the country accounts for over 90% of Gojek’s city operations and ~66% of Grab’s.

Below is a timeline of selected key moments in Gojek’s history:

And here’s a look at the various services Gojek offers today:

Similarly, here’s a timeline of selected key moments in Grab’s history as well as a look at the various services it offers today:

And here’s a look at the various services Grab offers today:

The Grab & Gojek playbook

Gojek and Grab both began as ride-hailing apps and have since leveraged large driver fleets to roll out complementary services. Unlike Grab however, Gojek initially focused on growth in its home market (the region’s jewel) — foregoing international expansion until August 2018, more than three years after it initially launched its app and only after it had expanded across various verticals. Grab, on the other hand, chose a path of swift and aggressive expansion across Southeast Asia. The company launched a ride-hailing service in 2012, entered three new ASEAN markets in 2013, and entered two additional ones in 2014 before expanding its service offering.

Despite these differences, a generic ride-hailing super app playbook can be extrapolated from the paths taken by Gojek and Grab. Initially, both companies focused aggressively on growing their driver fleets in order to drive user satisfaction, user acquisition, and usage frequency — regular, recurring use of the app.

“At Grab, we have a saying that high frequency always trumps low frequency.” — Ming Maa, Grab President

They then extended their product offerings to adjacent services such as food delivery, grocery delivery, and courier services that could increase the efficiency and utilization (& earnings) of their underlying driver fleets, concurrently focusing on growing their delivery ecosystem by increasing the number of merchants on their platform.

And afterward, having thoroughly developed the ecosystem around their core fleet asset, they undertook further product extension including full-service wallet & financial services offerings and other ancillary services that are less linked to the efficiency/utilization of their driver fleets.

A simplified version of this is below:

Ultimately for both Gojek & Grab, ride-hailing, a generally high-frequency, low-margin business, is about acquiring customers, not profitability. For example, speaking with the Nikkei Asian Review in May 2019, Gojek’s Founder & then-CEO Nadiem Makarim said, “Profitability in ride-hailing is an optimistic scenario…The motorbike-hailing is an important component to Go-Jek's overall business not because it is a cash cow, but because it is the most frequently used service that draws users to the app and provides a constant source of income for…drivers.”

Profitability will come from other services that are likely to be lower frequency but higher-margin, and the prime candidates are financial services and food delivery. Kell Jay Lim, Grab’s co-chief of staff, for example, told CNBC in September 2019 that “we believe that the food business is going to really fuel our growth and get us to profitability in the long run.”

With super apps continuing to proliferate in emerging markets (e.g., Tata’s recent announcement of its plans to launch a super app in India by January 2021), it’s worthwhile for those in this space to study and learn from the strategies of predecessors such as WeChat, Grab, and Gojek. Indeed, the Grab & Gojek playbook extrapolated here should be of interest to startups pursuing a super app strategy based on a core ride-hailing asset.


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