GoTo, formed by the merger of ride-hailing firm Gojek and e-commerce giant Tokopedia in 2021, has seen its share price fall by 55 per cent year to date.
Tough competition from their larger, regional rivals as well as slower innovation are largely to blame, say experts. These rivals can also use cash generated from their other profitable businesses to gain market share in Indonesia. Shopee’s parent Sea Limited has said it is fully committed to using the group’s global gaming subsidiary Garena to fund cash-burning strategies for its main e-commerce market in Indonesia.
There have also been missteps. In January 2022, Bukalapak spent US$81 million to buy a 11.5 per cent stake in Jakarta-based digital bank Allo Bank, but the initial boost to its profits turned into unrealised losses a year later. An attempt starting in 2020 to get Indonesia’s thousands of mom-and-pop shops to use Bukalapak’s app for their business processes also failed to properly take off.
Economist Wijayanto Samirin said that the majority of tech companies are funded by investors whose investment time frame ranges between five to seven years. After that, the companies are expected to turn a profit and be financially independent.
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Source: The Straits Times - 🏆 8. / 63 Read more »