Justin Peyton
Mar 11, 2020

Grab + Gojek = ?

A rumoured merger may or may not happen. But it would make a lot of sense to both companies, argues Wunderman Thompson's chief transformation and strategy officer.

Grab + Gojek = ?

Rumours have been swirling about the prospects of a merger between Grab and Gojek. And while Gojek has most recently denied the rumours, there are logical benefits to such a move. But merger or no merger, both companies have been raising new rounds of capital, making it clear that they are planning another phase of growth and expansion. And this time, it is likely to extend far beyond ride hailing.

While ride hailing sits at the heart of both brands’ services, the unit economics per ride will make it challenging for brands to grow in what appears to be contracting capital markets. This was proven by Uber as it rapidly expanded across markets but saw no real economies of scale and instead had to manage rapidly expanding costs. This culminated in it selling off its Asean services to Grab, and most recently watching its public market value decline to approximately US$58 billion—nearly $20 billion below the private market value at the time of its last raise.

In short, ride hailing alone is not a business model that either Grab or Gojek can survive on, and with Grab having recently raised $856 million and Gojek having reportedly raised $1 billion in January, it would seem they are preparing to fuel and diversify the revenue streams from their 'super app' strategies; potentially together if they merge.

But what does this mean for consumers and marketers? Three obvious areas for growth stand out—and in all cases, a merger could make sense.


Both Grab and Gojek have developed their own respective payment apps. Go-Pay has already claimed significant market share in Indonesia and Grab is publicly taking steps to push payment further forward through its application for a digital banking license in Singapore (jointly applied with Singtel). While ride sharing and food delivery have high costs and limited margin, payment offers the chance to capture small commissions on a much greater volume of transactions. And with low banking penetration in Indonesia and many of the ASEAN markets served by Grab, the e-wallet and payment services provide genuine benefit to local consumers.

The prize for both is to become the new standard for payment in the same way that WeChat Pay and AliPay have done in China. Using strategies that allow consumers to pay any merchant through a QR code allows them to bypass the traditional credit card terminals and offers merchants a much cheaper way to accept digital currency—ultimately allowing businesses that have always existed as cash-only to modernize.

This sounds promising. But after feeling the cost of direct competition when Uber was still in the region, the prospect of a merger would out greater focus on scaling rather than competing.

Data monetisation

The second and perhaps greatest opportunity for both is to better monetize their data. With their apps installed on nearly everyone’s phone, they are already one of the greatest sources of individual location data. But the value of this still pales in comparison to the intent and behavior data available through both Google and Facebook. However, if Gojek and Grab were to combine location data with scaled up payment data, the value would increase dramatically. After all, knowing what you buy would be very valuable to advertisers.

Further to this, Google’s recent announcement that it is killing off cookies makes the penetration of the app(s) across mobile devices and the persistent login a strategic advantage. As third-party data decreases in value, fully addressable first-party data offers the ability to compete very effectively for digital ad spend.

However, this is an area where scale is required to compete effectively. And with Google and Facebook casting long shadows, we can see why there would be speculation about a potential merger as it could GrabGojek (?) to scale quickly and focus its competitive efforts on the traditional ad giants rather than on each other.


The last reason to speculate about a merger is that both companies' core business of ride hailing and long-tail services, such as food delivery, have high operating costs and low margins. By joining forces, they would likely see some operating efficiencies but more importantly, they would likely be able to increase prices, as was seen in Singapore after Grab’s acquisition of Uber. The increase would likely be small, but the potential for margin improvement would be significant.

Now all that said, there is no way to know at the moment if a merger will happen, and with Gojek denying the rumours there is reason to doubt it. In fact, there are plenty of reasons for it not to happen, including things as basic as who would take control of the unified company. Both brands have been built by visionary leaders who undoubtedly want to maintain their ability to steer and control their growth.

So while all we can do for now is speculate, the investments we have recently seen in both businesses tell us to expect change, and to expect significant effort to scale as they aim to position themselves as leading payment providers, a marketing alternative to Google and Facebook, and as lifestyle, food and transportation providers for the masses.

Justin Peyton is chief transformation and strategy officer with Wunderman Thompson.








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