Back in 2004, when JMP and I were living in Jakarta, we often used Pesan Delivery [= order delivery] to get our favorite food delivered to our apartment. It was great, just call and tell them what you want and from where, then delivered to your door in 45 minutes—which is unbelievable given Jakarta traffic. You could even mix and match, Izzi Pizza for JMP and Ganesha ek Sanskriti for me. Pesan Delivery relied on the ubiquity of the motorbike in urban Indonesia. Motorcycle taxis called ojek are a common mode of transport for middle class Indonesians, and many delivery firms use motorbikes to deliver office documents, food, groceries, and other small items.
That was many years ago. Now, the new player in Jakarta is a company called GO-JEK. Think Uber + Instacart on motorbikes, plus they’ll perform Pesan Delivery’s service of picking up some food too. They guarantee delivery within 90 minutes anywhere in Jabodetabek, which seems absolutely impossible to me. They have completely embraced the Bay Area marketing lingo, translated into Indonesian. From the FAQ:
GO-JEK adalah perusahaan berjiwa sosial yang memimpin revolusi industri transportasi Ojek.
GO-JEK is a social enterprise that’s leading a revolution in the ojek transportation industry.
Interestingly, the English language version of the FAQ makes a totally different claim to an English-speaking clientele.
GO-JEK is a social enterprise that partners with a group of experienced and trustworthy ojek drivers to deliver a one-stop-shop convenience service for Indonesians.
Fitra Faisal discusses how GO-JEK reflects a long-overdue wave of disruptive innovation in Indonesia, and predicts that GO-JEK will be the ultimate winner. It’s clear that GO-JEK fills a market niche. But it’s interesting to think just how and what GO-JEK disrupts. Contrary to the classic examples of disruptive technologies like the automobile or Facebook, GO-JEK isn’t disrupting an inefficient monopoly of established firms that’s failing to innovate. Rather, GO-JEK brings a modern corporate structure to a disorganized and unregulated market of individual transactions between ojek drivers and their clients. Such individual transactions are episodic, impersonal, uncertain, and therefore massively inefficient, subject to all sorts of transactions costs. GO-JEK makes each transaction regular, personal, and therefore much more efficient.
Here’s what I mean. There is nothing about GO-JEK that is actually innovative as a service. GO-JEK drivers don’t drive faster, or know the lay of the land in Jakarta any better, than other ojek drivers. If GO-JEK can get you somewhere in 90 minutes, than the guy on the corner can too. It’s also been true that you can hail an ojek driver and ask him to do you an errand on his bike for a fee, something that I’ve done once or twice. Other services like Pesan Delivery could get you your food.
But I never ever use ojek and only on the rarest occasion will hire a driver to do an errand. Why? Because how can you trust a driver to get you somewhere safely? What’s the right price? How can he trust you that you’ll pay him (in my experience, drivers are universally men)?
Now, this doesn’t mean that the ojek market fails to function. It works, it’s just inefficient. In the best of cases, a kind of norm can emerge. If you take an ojek from the same place to the same place over months, you can learn what the right cost is, and perhaps a local thug has carved out control over a street corner to regulate which drivers get to drive from there so you can get repeat transactions with the same drivers. But this is rare, and there is still massive uncertainty. To whom do you complain if your ojek driver gets you muddy? What if it’s raining and all the ojek are engaged already—a real concern in Jakarta?
GO-JEK works because it standardizes and regulates the chaotic market for motorbike services, which is literally hundreds of thousands of transactions every day in Jakarta alone. Yes, it has community rating of drivers. The firm’s value, though, is that it provides you with a driver, in a uniform, who gives you a transparent price and transparent service, and who is accountable to someone other than you.
That’s worth quite a bit. But it’s not a disruptive innovation, it’s just a corporation selling a consistent product. And it is popular for all the reasons that chains are popular everywhere. (See e.g. my old review of Bakmi GM.)