GoTo performs addition by subtraction

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Hello readers,

The phrase “addition by subtraction” may sound like the type of nonsense only spouted in the world of sports, but I think it’s applicable in all parts of life.

Just as in a football team, if you remove a malcontent who’s lowering morale in a software development team, the performance of those left behind should improve.

Or look at something as simple as cash. Now that many societies have essentially removed it in favor of card payments or apps, life is a tiny bit more convenient for most people, who now don’t have to carry cash everywhere they go.

Some analysts reckon that GoTo’s deal to sell a controlling stake in Tokopedia to TikTok may be another example of addition by subtraction for the Indonesian tech giant. Though it’s not as good news for Shopee.

Today we look at:

• Why the TikTok-Tokopedia deal takes the pressure off GoTo and heaps it on Shopee
• Delivery Hero closes tech hubs, cuts workforce in search of efficiencies
• Other newsy highlights such as Indian B2B trade platform Udaan announcing layoffs days after receiving funding and a capital injection for EDP Renewables APAC.

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TikTok puts Shopee on the clock

Image credit: Timmy Loen

The deal between TikTok and GoTo is expected to relieve the Indonesian tech giant’s cash-burning burden, according to analysts.

On the other hand, TikTok Shop and Tokopedia combining looks set to put pressure on Shopee and hurt its margins.

• Downbeat forecast: DBS Group Research analyst Sachin Mittal thinks the agreement will deal a big blow to Shopee, causing its losses for the 2024 financial year to increase by 25.1% compared to previous estimates. Mittal added that he expects competition in the ecommerce space to remain high for the next two years.
• Arms race: Citi Research believes the deal will force the likes of Shopee and Lazada to invest more in their businesses to defend market share. TikTok has committed an initial US$1.5 billion investment into the new combined entity.
• Savings: Morningstar Equity Research said selling off its ecommerce arm would allow GoTo to “better allocate its resources and save on corporate costs and marketing expenses in the long run.” On the other hand, brokerage firm UOB Kay Hian said the deal was a negative for GoTo in the long run due to Tokopedia’s “sizable upside.”

Read more: TikTok partnership reduces GoTo’s burden, pressures Sea: analysts

Holding out for an efficiency hero

Making convenience affordable

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