4 Critical Success Factors for Go-Jek Branches Outside Jakarta and Other Big Cities

Even in the payments space, Gojek lacks coordination in Thailand. Its local GET service lets users load money into their account for cashless payments in several ways, including by giving cash to a driver. But, to the frustration of many, that account credit can only be used to pay for motorbike taxi rides. Its food delivery service, which is extensively marketed and seemingly more popular, must be paid for using cash.

Like Go-Viet in Vietnam, GET has struggled to make a mark in Thailand. The company’s services are limited to food delivery and motorbike taxi rides. Grab offers those services alongside private cars, licensed taxis, courier deliveries and more.

The Age of China’s Glory

Grab is the frontrunner across the Southeast Asia region. Its presence was enough to convince Uber to pack its bags and focus on more winnable battles elsewhere in the world. Today, Grab operates in around 200 cities, claiming more than 150 million app downloads to date and more than 6 million completed rides per day. Little is known of its financials, but Grab said its revenue reached $1 billion in 2018, with the figure estimated to double in 2019.

Gojek holds home-court advantage in Indonesia, where it claims to have been downloaded over 125 million times since launching its app in 2015. Across all its services, annualised transaction value has reached $9 billion, the company claimed, of which $6.3 billion comes via its GoPay service. But, it remains unclear how it calculates that figure. An internal document shared with us covering Gojek’s 2017 financial data, suggests the company double-counts some transactions—once as a ride, food delivery or courier transaction, and then again as GoPay if the booking is paid for using the e-wallet—which would inflate the final number significantly.

What is more clear, however, is that Grab is increasingly encroaching on Gojek’s turf. In 2017, Grab doubled down on Indonesia with a $700 million investment commitment, which was boosted by a further $2 billion in 2019. Beyond figures, its operations have shifted, too. Its second headquarters are in Indonesia, and CEO Anthony Tan is said to spend 70% of his time in the archipelago.

“Regardless of how it expands, Gojek needs to remain strong in Indonesia, a market that on its own already drives success in the region,” said Yinglan Tan, founding managing partner at Insignia Venture Partners. Instead of going head-to-head with Grab, Gojek may focus on certain services that work across Southeast Asia, such as logistics and cross-border payments, added Tan.

Thorn in Grab’s side

For Gojek to replicate its Indonesian ride-hailing empire—where it claims to have over 2 million drivers—elsewhere was always going to be a challenge of the highest order. But it appeared a necessary one in post-Uber Southeast Asia.

An investor in one of Gojek’s subsidiaries said Grab had successfully used its regional growth story to secure funding from investors through the years. Now, Gojek appears to have adopted the same approach, the investor added.

What Went Wrong at GoPlay? Why the Costly hiccup in growth

While Covid-19 is being treated for free in government hospitals, as the number of cases rise, private hospitals will increasingly come into play. “We expect hospitals to see a 100-120% utilisation of capacity,” said Dr Prakash. On average, mature hospital chains like Apollo and Fortis see 60%-70% occupation.

But with no standard operating procedure or price for treatment of Covid-19 in private hospitals, the disease is also shining the light on the health insurance sector’s vulnerabilities.

Insurance’s Achilles heel

Insurance’s Achilles heel

Insurance is a pool of risk. On a good day, less than 10% of policyholders claim the majority of the premium. But if the claim amount or the number of people making claims changes, it spells trouble. With Covid-19, it’s both. As it is, insurance companies work on very thin margins, so the sector usually is not able to absorb too much of a shock.

“When we have a bad monsoon and the claims increase by two percentage points, that wipes out a third of our profits,” said a senior executive at HDFC Ergo Health Insurance. Insurers generally see a spike in claims during the monsoon season because of a rise in cases of dengue, malaria, and cholera.

Another important source of income for insurers is investments. But insurers are restricted when it comes to what they can invest in. “We are not allowed to invest in risky assets, only in bonds, and that is also going down now (due to the economy). So we are in the worst possible place,” the senior executive explains.

Covid-19 is also bringing a long-standing problem to the fore—India’s healthcare prices are not regulated, but insurance prices are. As a result, Covid-19 treatment prices in hospitals range from Rs 70,000 ($918.9) to Rs 7 lakh ($9,189.2). The severity of cases also varies. About 80% of Covid-19 cases are mild and need about five days of hospitalisation, while 15% are moderate, and 5% severe.

“This makes it very hard for us to price our policies,” said Dr Prakash of Star Health. “That is why we have been urging hospitals to adopt a standard operating rate.”

Hospitals charge like hotels, said a senior executive from HDFC Ergo. “A hotel can charge Rs 25,000 ($328.2) or Rs 10,000 ($131.3). Nothing stops them. But the amount of profit we can make is linked to the hospitals’ pricing. So if there is a wide variance in price, our loss ratio can go wonky.”

Pernicious burden

Of the 100 claims Star Health saw, 14 are confirmed and the rest are suspected cases. Dr Prakash is worried about the suspected cases as they can add to the burden of people rushing to hospitals, undergoing treatment on suspicion and claiming insurance. ‘This population is nearly six-fold and we get all that additional volume. It is a pernicious burden,’ he said

IRDAI keeps a close eye on insurers’ loss ratios and takes action if it crosses a threshold. “If the loss ratios fall below 60%, IRDAI asks us to change the price as it feels insurers are making too much of a profit on a policy,” added the executive. HDFC Ergo has not launched a Covid-19 policy yet.

Exploring the Local Selling Points to Regulate Digital Currencies Safely

“The Act provides regulatory certainty to industry players,” said Luno’s Goh. “More importantly, it gives consumers a clear sense of the players they can trust, ensuring they are in a position to make informed choices of the companies who will safeguard their funds.”

A necessary move

A necessary move

Lawyers that we spoke to believe the PSA was a necessary regulation. Not only did it plug loopholes in the old Money-Changing and Remittance Businesses Act 1979, which did not govern e-wallets and cryptocurrency exchanges, but it brings the law into this century, by addressing the entire chain of electronic payments.

“The [new] Act has been positioned in trying to update the legislation and to bring it under one roof,” said Pinsent’s Tan.

London-based fintech company Revolut sees the PSA as encouraging innovation and growth of e-payments services in Singapore. “Revolut views the Act as timely as it provides regulatory certainty over a number of different activities,” said Eddie Lee, regional director of operations, Asia Pacific, Revolut. “At the same time, it strengthens consumer protection and promotes confidence in the use of e-payments.”

E-payments Services Act’s major changes

E-payments companies can be licensed as a major or standard payment institution
Transaction limits
Fintech companies can only store S$5,000 in a wallet at any time. There’s also a S$30,000 annual transaction limit
ATM withdrawals
Fintech companies cannot allow customers to withdraw money directly from their account via ATMs
Cryptocurrency exchanges have now gained a semblance of legitimacy by being licensed under the Act. Before the PSA, cryptocurrency exchanges walked a fine line, as the Monetary Authority of Singapore kept a close eye to ensure that digital tokens did not constitute securities. These exchanges worked with no real formal regulation on operating their business in Singapore.

The clarity of the PSA has been lauded by many, with transparency being the key that will help these licensed startups attract investors, according to Stefanie Yuen Thio, joint managing director, TSMP Law Corporation. “Third parties also have the benefit of knowing that the ecosystem has rigorous regulatory oversight,” she said.

Singapore is one of the latecomers to the licensing game in the fintech sector. In Malaysia and Thailand, e-payments startups and cryptocurrency exchanges have been licensed since 2019. The Philippines has regulated e-wallets since 2009 and crypto exchanges since 2017.

Lucky winners

It’s easy to see that crypto startups are one of the biggest beneficiaries of the PSA. Being licensed will not only bring them legitimacy, but also allow them to open and maintain bank accounts in Singapore. In 2017, Singapore banks closed the accounts of several cryptocurrency and payments services companies, without providing a reason. “Being regulated under PSA, banks should not be able to refuse you an account,” said Golden Gate Ventures’ Drijkoningen.

Luno’s Goh believes the PSA is the herald for more countries to make such frameworks if it still doesn’t exist, or refine them if they do. Ultimately this will lead to a boost in customer trust and confidence in licensed operators. Luno’s credibility propelled after it attained a licence in Malaysia, not just with partners and customers in the country but in other Southeast Asian markets as well.

Fighting the Covid-19 Chill: How Filipino MSMEs are Experimenting and Huddling to Survive

A collapse of MSMEs, which account for a third of the economy, could set off a snowball effect. Not only would it slash jobs and household spending, it risks sapping demand for suppliers, landlords and lenders. As the financial ordeal ripples through to more businesses, more jobs get threatened. A downward economic spiral ensues.

MSMEs get creative

But Catimbang resists the idea of handing pink slips. Saying employees are his biggest asset, he’s determined to sustain salary payments.

“When things bounce back, we’re going to need everyone, so it’s important that my employees know I share in the pain,” he said.

Another company that was forced to scale back is Mercato Centrale, which runs food markets—huge open tents filled with third-party food stalls—in three locations around the metro. It also acts as an “incubator,” training micro and small food vendors in operations, finance and marketing so they can professionalise their business.

It’s a tough time having to pay rent without sales, but owner RJ Ledesma looks at the crisis as a chance to innovate. Ledesma said Mercato Centrale just launched online ordering on Facebook, providing logistics services to its roster of food vendors. He said he intends to convert this into a cloud kitchen once quarantine measures are lifted. A cloud kitchen provides space for vendors to cook meals, along with delivery services.

Catimbang’s first response to the unfolding crisis was focussed on making concessions. He pleaded with his landlord and spa and restaurant suppliers to postpone collections, essentially halving what Tribu Babaylan was supposed to shell out on a normal month.

Then came the more crucial question: How can the business continue to earn?

Initially barred from operating when the quarantine was declared, restaurants were allowed to reopen on the condition that they’d be restricted to takeaway and delivery. Catimbang saw an opening.

“We’ve never done a single delivery, but I told my team let’s go for it – just so we don’t experience zero sales,” he said.

He reached out to firms that were still operational, and in under 24 hours, heard from local pharmaceutical company Unilab. Unilab sponsors meals for doctors, nurses and other medical personnel on the coronavirus front lines. On the first day of the enhanced quarantine, Catimbang kicked off deliveries for Unilab recipients in top Manila hospitals. To his surprise, orders grew from 10 meals to 300 by the end of the day to 500 the next day. “I was glad I took the chance.”

While the delivery service accounts for only a small share of the overall business, the hope is that it will generate enough income to help support the staff, who’ve been worried about their jobs, said Catimbang.

But the task is neither easy nor 100% safe. He, his wife, three of their closest friends and five employees—all staying at Tribu Babaylan—split the tasks of cooking, packing and delivering meals using their personal cars and motorcycles.

“There’s that fear that you might get exposed to the virus. I have three kids, all of them still young,” he said.

But his biggest motivator is to keep his people employed and support those battling the pandemic. The team does ensure that they take the necessary precautions like wearing protective gear and limiting deliveries to a hospital’s reception area.



How Data Points Prove That Southeast Asians are Crazy About Apps

Operating systems: Indonesian smartphone users lag behind because the country has 93% Android users. Apps on Google’s Play Store tend to be free, while being part of Apple’s ecosystem more often requires paying a small sum for an app. It also forms a habit of paying.In comparison, in Vietnam it’s 64% Android, and in the Philippines, 83% people use it. Globally, the iOS App Store generates much higher revenue than Google’s Play Store—App Store revenue was US$25.5 billion in the second quarter of the year ended 2019 vs Play Store’s US$14.2 billion in the same period.

Growing app in Southeast Asia

Growing app in Southeast Asia

The growth rate of new app downloads in Southeast Asia is the highest in Indonesia. Singapore and Thailand aren’t downloading much. Interestingly, the countries which have seen a slowdown in new app downloads have higher growth rates of in-app spend.

In other words, there are two kinds of users. The download-use-chuck-download variety, and the download-pay-keep variety. That these user behaviours also extend to the macro level of a whole country shows the state of the economy.

As an economy matures, long-term users become more willing to spend for apps and in-app purchases. Take the infamous Candy Crush, for example. It has been around since 2012, and while the game no longer features in top downloads, it was still raking in record numbers in revenue many years after its inception thanks to high in-app spends.

Different Southeast Asian countries are at different stages of economic maturity. While Singapore is on one extreme end of the spectrum, Indonesia is in many ways the region’s most immature app economy, still demonstrating high growth rates of new downloads, but slow progress in monetisation.

According to Chaudhary of M&C Saatchi, growth in downloads will only happen in markets where there’s still room for internet penetration. In an emerging market like Indonesia and the Philippines, for example, internet users make up 64% and 67% of the population, as per the We Are Social report, versus Singapore’s 88% and Thailand’s 75%.

App spend, on the other hand, is directly related to per capita income the market has, said Chaudhary. But considering that Indonesia and the Philippines have a much bigger population than, say, Singapore, Chaudhary sees these emerging markets surpassing the city-state’s app spend at some point.

One hour more than the global average. That’s how much screen-time most people living in Southeast Asia get. The data reveals a fair bit: Facebook frenzy, a Chinese dark horse, Grab’s stronghold, and more

Population by country

260 million
105 million
5.6 million
That’s despite Singapore being an affluent market. “As the affluence of the huge emerging markets increases, you will see higher growth.”

It’s not just Singapore’s ranking that could tip though. With internet penetration, rapidly evolving technology, and a willingness to spend, apps are only going to mushroom. Even Facebook’s Fantastic Four will need to reinvent to maintain that iron grip over Southeast Asia.

Blocking Websites At Work Aims To Prevent Smartphone Break Time

Shopee, founded in 2015—a unit of New York Stock Exchange-listed internet platform Sea—has dethroned Alibaba-backed Lazada, founded in 2012, both in downloads and MAUs. Between the two metrics though, MAU is more crucial since download numbers tend to plateau over time for older apps. App Annie’s more granular country data shows that Shopee nabbed the top spots in MAU in Indonesia and Vietnam, the region’s two fastest growing internet economies, in 2019, as per the Google-Temasek-Bain industry report.

Yes, you can argue the data doesn’t paint a full picture since it only covers apps. But according to year-end 2019 data from SimilarWeb—acquired by product comparison website iPrice—Shopee also holds the top spot for total regional traffic on desktop and mobile.

Shopee vs Lazada visits in 2019

2.062 billion
1.844 billion
Vincent Fernando, a financial analyst who writes for Smartkarma, attributes Shopee’s rise to its “aggressive” investments in subsidies. This follows parent Sea’s US$884 million initial public offering in October 2017 and its US$1.5 billion follow-on offer specifically for the shopping unit.
Shopee has been absorbing things like shipping and insurance fees to attract more merchants to its platform, says an executive of a logistics firm servicing both Shopee and Lazada in the Philippines. The executive requested anonymity for fear of upsetting the companies. Lazada also incurs expenses due to subsidies, but it has been charging sellers for logistics services such as shipping and fulfillment.

web blocking software

web blocking software

Besides, Shopee’s monthly promotional events started in 2018—similar to the wildly popular 11.11 regional shopping festival, only much smaller—must’ve boosted its rankings, the executive suggests. Last year’s 11.11 shopping bonanza topped US$38 billion in sales.

“The theory being: when you peak, you never go back to your regular volume,” she says. “The more frequently you do the promo events, the higher and higher your base grows. Lazada doesn’t do the monthly thing.”

Shopee’s move to sign on regional brand ambassadors like Portugese football star Cristiano Ronaldo might have also shored up activity on its platform, according to M&C Saatchi’s Chaudhary.

Still, even as Shopee enjoys superior ranking in terms of traffic and usage, the subsidies it employs take a toll on its financials. In January-March 2019, Shopee’s sales and marketing expenses stood at US$254.7 million, a 38% year-on-year jump from US$184.5 million in the same period the previous year. As a result, its adjusted EBITDA loss widened to US$306.2 million compared to US$277.5 million the previous year.

In either case, Lazada is unfettered by the app and web rankings. Responding to us request for comment, a Lazada spokesperson said “the metric that we focus on is the consumer,” adding that the company has more than 60 million annual active consumers. Unlike MAU, which refers to the number of users who open the app, annual active consumers as a metric looks at actual purchases on the app and site. Lazada is yet to make its financials available.

3 Major Apps That Deliver During COVID-19 – Foodpanda, Grab and LINE! What to Order?

pproval takes one day, according to a spokesperson. That fastrack system led LINE MAN to increase the number of new restaurants joining its platform by 5X compared to January, but it remains to be seen whether there’s a compromise on quality or customer experience.

The process requires adaptation from restaurants, too.

“The premium restaurants are all desperately flocking [to] delivery. It’s interesting how many of them are super desperate now but were playing hard-to-get previously,” a senior executive at a company that works with food delivery services said. They requested anonymity because they’re not authorised to discuss client business with the media.

The food delivery companies declined to discuss specific merchants, but Nittayakasetwat shares that some eateries, including high-end Japanese restaurants, are “adapting their menu to be more ready-to-eat or suitable for food delivery packages.”

It isn’t just the restaurant menus that are adapting, there’s an opportunity for staff impacted by the ban to pick up new work as delivery drivers. That’s significant given that the partial shutdown on business has left tens of thousands of daily wage workers in the capital without income.

Mass exodus

Mass exodus

Some 100,000 workers are estimated to have returned to their home provinces, or—in the case of overseas workers—to neighbouring countries Laos and Cambodia.

“Demand for F&B jobs went to zero, but other industries are seeing a huge boom,” an executive at a recruitment company specialising in daily wage work in Thailand tells us. “For on-demand services, it is literally insane, demand is spiking.’

Beyond simply hiring for their fleets—which covers those with a motorbike license or simply on-foot ‘walkers’—companies like Foodpanda are adding customer support and admin roles to handle increased business. These roles require working from home and are often filled by workers whose jobs in hospitality or F&B industries are on pause right now, the executive quoted above explained.

Food delivery aside, grocery delivery services such as HappyFresh—which includes Grab among its investors; Grab offers the service as ‘GrabMart’—are hiring in significant numbers. As is conglomerate CP, which has said it wants 20,000 delivery people for a new on-demand service for Thailand’s ubiquitous 7-11 stores.

“We’re talking about tens of thousands of people,” the recruitment executive says.

Appetite for expansion

Despite the Covid-19 outbreak, Thailand’s food delivery firms are hungry to reach more of the population. Foodpanda currently operates in 50 provinces across Thailand, but it plans to reach all 76 this year. Grab, meanwhile, is aiming to more than double its Grab Food coverage from 14 provinces to 30, and LINE MAN’s expansion plan includes growing from 5 to 15 provinces.

1 million a day
But restaurants are still on the back foot.

“The rise in food delivery revenues is not sufficient to offset lower restaurant revenues,” Anantaporn Lapsakkarn, a senior researcher at K-Research, told The Bangkok Post this week. Lapsakkarn suggested that restaurants will try to handle their own delivery rather than relying on apps.

How 3 Major Apps are Helping Working Singles and Couples who aren’t Cooking During COVID-19

Restaurants that were once dine in-only are now rushing to sign up for delivery. Grab says new merchant applications have tripled. LINE MAN claims the number of restaurants applying to join its platform rose by 5X. Neither company provided raw numbers.

What’s Happened So Far with Precautions And What’s Being Done?

Thailand’s food delivery companies are enjoying their moment in the sun, but it remains unclear whether this sudden boom can help make their businesses sustainable. Discounts, promotions and free-delivery codes have been standard in recent weeks, indicating that platforms are burning more money than ever to gain new users and restaurants.

And it’s not like delivery can save Thailand’s restaurant industry.

Kasikorn Research Center—K-Research, a division of Thailand’s Kasikorn Bank—downgraded its 2020 revenue forecast for restaurants in the country by nearly 10% to 402-412 billion baht (US$12-12.7 billion). The food delivery industry, though, is projected to gross 38.61 billion baht (US$1.19 billion). That’s barely 10% of the restaurant industry and leaves a significant shortfall for eateries, even without accounting for platform operators’ revenue share.

Then there’s the very real possibility of a thorough lockdown, in which case systems will further collapse. Thailand’s Deputy Prime Minister Wissanu Krua-ngam has said publicly that it’s a possibility. Would that mean a whole new order?

Foodpanda, others in a fast food rush

Foodpanda, others in a fast food rush

Unlike neighbours Singapore, Malaysia and the Philippines, Thailand’s response to the Covid-19 outbreak has been gradual with no strict lockdown. However, that changed for restaurants with the 21 March order.

“We saw the impact the next day with new users in Bangkok and the surrounding areas seeing heavy uplift,” Felde says.

Bangkok’s outdoor advertising industry is a major beneficiary of Thailand’s four-way food fight, with the city’s billboards decorated with promotions and discounts for each company. Adding new users is the easy bit for food delivery apps—far harder, however, is managing this new demand from restaurants.

A LINE MAN driver giving a ride to a Lalamove driver is looked over by a GET advert [Image: Jon Russell/The Ken]

Foodpanda onboards restaurants through a field-based team that visits each establishment. It also draws up a contract, supplies point-of-sale tablets and trains merchants on the tech and processes. Those methods have had to adapt to the Covid-period, with online verification taking over.

Still, Felde says the process tops out at verifying 3,000 new restaurants per week—although last week, Foodpanda managed 2,000—which would leave as many as 7,000 applicants unmet. The Foodpanda Thailand CEO admits that “there will be a backlash” from restaurants forced to wait due to the process. Foodpanda claims to work with 50,000 restaurants.

In an emailed response, Tarin Thaniyavarn—country head of Grab Thailand—said GrabFood is working to reduce restaurant onboarding to 7-10 days from a usual 14-21 days. GET, too, is reducing its process from what was typically one month prior to the Covid-19 outbreak to one week, CEO Pinya Nittayakasetwat told The Ken.

LINE MAN has taken a contrarian approach with a focus on self-service. It has synchronised its listings with Wongnai—a popular restaurant finding service—so that new restaurant listings on Wongnai are fast-tracked to the LINE MAN platform.