Following the GoTo merger, should Grab buy an ecommerce marketplace?

Now that Gojek and Tokopedia have officially merged, a question rises to the fore. Will Grab follow suit and marry its super-app ecosystem with an ecommerce marketplace of its own?

The main motivation may seem obvious: the sheer size of ecommerce.

If Grab is indeed eyeing a merger or an acquisition, then ecommerce unicorn Bukalapak is a potential candidate. This rumor was fueled by Grab’s recent alliance with Indonesian conglomerate Emtek, which backs Bukalapak and e-wallet Dana.

GrabFood driver on a bike / Photo credit: Grab

But according to an industry source who declined to be named, it’s unlikely that Grab would compete head on against traditional ecommerce marketplaces since that business model’s “extremely high cash burn” is unattractive to the super app.

The source cites Sea Group’s Shopee as an example, saying that it’s only sustainable because it’s funded by the profits of its sister company, gaming platform Garena. “GoTo has no profit center, so ecommerce only makes the path to profitability more challenging,” the person adds.

This strategy could therefore take away Grab’s resources from its core competencies – some of which are close to profitability – as it moves towards an initial public offering in the US.

However, the fact remains that having an ecommerce marketplace provides Grab’s two chief rivals with an advantage.

How ecommerce gives super apps an edge

Ecommerce’s numbers don’t lie. Southeast Asia’s ecommerce gross merchandise volume (GMV) is estimated to reach 4x the size of transportation and food by 2025, according to the eConomy SEA 2020 report by Google, Temasek, and Bain & Company.

But there are other reasons why ecommerce can be compelling to super apps.

For instance, ecommerce gives additional leverage in attracting consumers and enables the cross-selling of other services, says Roshan Raj, a partner at research firm RedSeer. Having more services means getting more flexibility to cross sales. “It’s good insight into the consumer profiles and spending behaviors, and it gives you opportunities for the other services,” he explains.

Aldi Hartanto, vice president of investments at MDI Ventures, echoes that statement, stressing that digital payments solutions would particularly benefit from an ecommerce platform. That last point is apparent for Ovo: CEO Jason Thompson previously told Tech in Asia said that the Indonesian e-wallet’s use case and transaction values increased significantly during its partnership with Tokopedia.

The costs may outweigh the advantages