Go-Jek’s hands-off approach to regional expansion may be a risky gamble

Photo credit: Go-Jek

Go-Jek’s recent unveiling of its US$500 million regional expansion plan was one of the most anticipated – and least surprising – developments in Southeast Asia’s tech ecosystem. It seemed obvious that Indonesia’s star startup would have to expand beyond its home soil at some point. It was a matter of when, rather than if.

While it appears to be a market leader in Indonesia, Go-Jek will face a far tougher test in the countries it is targeting: Singapore, Thailand, Vietnam, and the Philippines. In all four, Grab dominates the ride-hailing industry, having shored up its position by taking over Uber’s regional business.

But questions are already being raised about Go-Jek’s expansion strategy – particularly with regards to branding and the “autonomy” to be afforded its planned local branches.

Diluted branding

Mevira Munindra, Indonesia head of consulting at research firm IDC, tells Tech in Asia that although Go-Jek will be starting on the back foot in all four countries, being a “second mover” can come with its own advantages.

“Asian markets are dynamic and unique, and Go-Jek has taken some time to understand the markets better and prepare what is needed to expand,” she says. “Go-Jek has been working hard in the domestic market and has successfully increased its brand value.”

But rather than pushing a unified brand to consumers, Go-Jek seems to be opting for an unorthodox strategy.

The company said in a statement that while it will provide technological support and expertise, its operations in new markets will be run by local founding teams.

“The local companies will determine their own brands and identities to ensure good traction in each new market,” the statement said.

We don’t mind if a country owns their own brand and creates… a different brand other than just Go-Jek.

Co-founder and CEO Nadiem Makarim indicated in an interview with Channel NewsAsia that this could mean the Go-Jek brand is supplemented with specific local branding, or could even disappear in new markets altogether. Such decisions will depend on “what the local teams say in terms of what brand will resonate much greater in that local market.”

“I think one of the really unique and interesting things about Go-Jek is that we don’t mind if a country owns their own brand and creates something that is a different brand other than just Go-Jek,” Makarim added.

It wasn’t immediately clear if these “local founding teams” would be new businesses set up from scratch or existing ride-hailing players that Go-Jek will bring on board through strategic investment or acquisition. It wasn’t also certain if Go-Jek was looking at joint ventures, or arrangments like franchising and licensing agreements.

Munindra thinks it unlikely that Go-Jek will allow local units to drop its house brand altogether. The more likely outcome is that the brand will be modified to align with consumer tastes and preferences in each country. This means that payment methods, marketing strategies, user interfaces, and so on could differ from country to country.

Ideal markets