Jeffrey Bahar, group deputy chief executive of Spire Research and Consulting, presents the survey results in Jakarta on Wednesday. (Photo courtesy of Spire Research and Consulting Indonesia)

Ride-Hailing Giants Enjoy Solid Growth in Indonesia, but Face Fraud Challenge, Survey Finds

BY : SARAH YUNIARNI

JANUARY 30, 2019

Jakarta. Grab and Go-Jek, two of Southeast Asia's biggest technology startups, have successfully grown their food delivery and ride-hailing services, but both must pay special attention to better detection of fraudulent orders, a recent study by Spire Research and Consulting Indonesia showed.

The local unit of the Tokyo-based research company surveyed driver partners and customers to establish what ride-hailing services they prefer, based on various criteria, including consumer awareness, usage frequency and the use of e-money.

Grab Leads in Product Usage

Based on Spire's consumer awareness survey, 75 percent of respondents said they used Grab's services over the past six months, while 61 percent indicated that they had done so in the past three months.

For Go-Jek, it was 62 percent and 58 percent, respectively.

"Regardless, 50 percent of respondents agree that both Grab and Go-Jek are their favorite brands," the consultancy said.

Regarding product usage frequency, customers more often used Grab's services than those of Go-Jek in the last quarter of 2018.

The survey also found that 34 percent of GrabCar customers were more likely to use the service three to four times a week on average, while for Go-Car, 25 percent of customers were more likely to use the service once or twice a week on an average.

Grab Leads in Four-Wheel Segment, Go-Jek Leads in Two-Wheel

On the other spectrum of the survey, it found that Go-Jek's Go-Ride was still the customer favorite, with 64 percent saying that they use the service once or twice a day, while for Grab it was 58 percent.

"When it comes to food delivery, Go-Food is in the lead with 35 percent of respondents saying Go-Food was the brand they most often used, but Grab is catching up quickly with 27 percent saying they used GrabFood the most," Spire said in a press release on Tuesday.

E-Money

As of 2018, both services introduced the use of e-money to facilitate digital payments.

Grab launched an e-payment service in cooperation with OVO, while Go-Jek established its own, Go-Pay.

"Based on the survey results, OVO usage exhibits strong O2O [online-to-offline] usage, while Go-Pay's strength is in Go-Jek's mobile app ecosystem. For example, OVO is the preferred payment for offline items like phone balance, parking bills and bills for nonfood merchants, while Go-Pay is used to pay food-merchant bills [Go-Food] and electricity bills through the Go-Jek app," Spire said in the statement.

Natural Selection

Indonesia has seen monumental growth in the ride-hailing sector over the past few years, with the mergence of dozens of startup companies. However, natural selection resulted in only two surviving and dominating the market.

Indonesia is still a magnet for tech companies, including ride-hailing services, thanks to the high consumption rate and mobility of its citizens.

The two survivors have seen intense competition, with both drastically increasing their product offerings.

Their services such as food delivery and ride-hailing are similar in nature, but the two companies' more unique offerings are distinguishing factors.

Fraud

Spire said the most interesting finding of its study was the prevalence of fraud.

"The most interesting finding by Spire is the existence of fraud and how the drivers perceive it," Jeffrey Bahar, group deputy chief executive of Spire Research and Consulting, said in the statement.

Spire said fraud in online ride-hailing services is an open secret among drivers and that most who commit it gave similar reasons for doing so, which is to increase their monthly earnings.

Fraud is seen as a major threat to the industry as it results in economic losses to the companies and highlights vulnerabilities in their systems.

Spire's research showed that nearly 30 percent of Go-Jek's total transportation orders might be fraudulent, compared with 5 percent for Grab.

"This is based on an estimation of fraudulent orders against total orders. This is a systemic problem for both companies and one that Go-Jek needs to address," Spire said in the statement.

According to Spire's driver survey, "as of 2018, nearly 60 percent of Go-Jek's drivers say they commit fraud on a daily basis to boost their order numbers, which affect their bonuses and daily income."

The drivers who were surveyed said Go-Jek's system was easier to trick by using applications that modify their location data. On the other hand, less than 10 percent of Grab's drivers admitted to committing fraud.

Grab's drivers said the company's system was not easy to trick and that the sanctions imposed for such offenses was a deterrent. Drivers also commented that both companies had been improving their systems to better detect fraud.

"Overall, both companies are growing rapidly in food delivery and ride-hailing but special attention must be paid to the issue of fraud to ensure the healthy development of the technology ecosystem in the country," Spire said.

Spire Research and Consulting, established in Singapore in 2000, is a global market research and business consulting company specializing in developing countries. It has a presence in nearly all Asia-Pacific countries under the auspices of the Yamada Business Consulting Group of Japan.

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