in business lines are e-commerce, on-demand services (primarily ride-hailing and food delivery) and fintech (financial services, consisting mainly of e-payment systems). Currently, GoTo, which is the entity formed from the May 2021 merger of Tokopedia and Gojek, is believed to be the market leader in Indonesia across all three services, but Sea has made significant inroads. Khaveen Investments, a Kuala Lumpur-based hedge fund that covers the sector, states that as recently as the beginning of 2019, Tokopedia had 29 per cent of the Indonesia e-commerce market ,compared with Shopee’s 16 per cent. But by the end of 2021, the squeeze was well and truly on, with Tokopedia at 39 per cent and Shopee at 34 per cent. Reading between the lines, both Tokopedia and Shopee had eliminated smaller competitors in the fragmented Indonesian market, but it appears that Shopee has been a bigger beneficiary. Tokopedia, which began (like Shopee, in Singapore) as a C2C marketplace and expanded into the B2C/C2C space, claims to have more than 12 million merchants in its marketplace, offering nearly 640 million SKUs. The company has 2.5 million driver partners, who can be quickly toggled between ride-hailing and delivery services. This is one of the great synergies of superapps and Shopee is able to do the same with Sea’s own ride-hailing network. Shopee, which is number one in the six other South-east Asian markets in which it operates, arrived in Indonesia in 2015, which was six years after the launch of Tokopedia. At that time, three players – Tokopedia, Lazada, and Bukalapak – owned the market. That all changed when Shopee launched in the archipelago, doing what it has done so efficiently elsewhere in the region: quickly scaling up with promotions, free deliveries and a differentiated approach to merchandising that emphasised lower-ticket but higher-margin items (fashion, accessories, and beauty) over the higher-ticket/lower-margin categories (digital and electronics), in which Tokopedia and the other incumbents were the dominant players. Shopee really took off when Covid-19 did, and even acquired more monthly active users than Tokopedia. Online food delivery: dead heat on a major battleground Tokopedia’s merger with Gojek last year to form GoTo created an opportunity for the combined entity to push back against Shopee’s onslaught, but the going is still very much neck and neck. Food delivery became a key battlefield during the pandemic lockdowns and movement restrictions; the market has grown to an estimated $7.2 billion.  One estimate states that the number of food vendors that partner with online platforms has crossed 1 million, with many getting their impetus from the pandemic to move from the traditional physical store model to physical plus online. At the same time, there has been massive growth in the number of cloud kitchens, which have provided restaurant operators with a cost-effective way of servicing a digital storefront. So who is winning the food delivery battle? There is now very little to separate the two companies in the eyes of Indonesian consumers. A survey of 1,624 people across Indonesian cities aged 18-39, released on 6 July by research firm Jakpat (titled The Habit of Online Food Delivery), found that, on average, respondents ordered food using an online app three times a week. Students favoured Shopee (51 per cent), while employees leaned toward GoTo (40 per cent), but overall it was pretty much a dead heat, with 39 per cent of respondents who ‘mostly used’ GoTo and 38 per cent who ‘mostly used’ Shopee. Singapore-based Grab was a distant third. Is ‘Hyperlocal’ the answer? GoTo is relying heavily on its ability to use local logistical advantages to provide consumers with what it calls “hyperlocal” experiences. With competition rising, so are consumer expectations and their ability to switch loyalty if the customer experience is a bit off, particularly when it comes to convenience and delivery speed. The company believes it can match its delivery fleet more effectively than the competition with stores, warehouses, and dark kitchens proximate to the end-consumer, which isn’t a small advantage in a country whose cities are among the most traffic-choked in Asia. GoTo claims to make 60 per cent of its deliveries by next day or sooner. GoTo also believes it is better at bunching its orders, and by leveraging the Gojek mobility fleet, it has been able to make the economics of the ‘last mile’, which have been the Achilles’ heel of e-commerce operators, more manageable. And with 2.5 million drivers on its books, the company’s reach across Indonesia is almost 100 per cent.  The Indonesian market opportunity looks formidable The company also has a particular focus on bringing better service to regional cities and rural areas. This is ambitious to say the least, Indonesia consists of literally thousands of islands, but the collective market opportunity is formidable. The country has a vast population – fourth-largest in the world – of 274 million people. The demographic profile skews very young, with 50 per cent of the population under age 30, compared with a little over one-third in China and the US. Young populations are fast technology adopters and Indonesia is no exception, so using the multiple integrated functions on a phone superapp like GoTo comes naturally and easily to people here. Smartphone penetration is already at roughly 70 per cent of the population. Spending power at the individual level is still an issue and will remain so for some time, though the middle class is expanding and the World Bank reckoned it numbered about 50 million already in 2019.  GoTo listed on the Indonesian stock exchange in April 2022 and will probably list in the US, following in the footsteps of Sea and giving it access to public-market capital to fund growth, while also heightening that same competition for capital. So in all respects, GoTo and Sea are locked in close combat, and neither looks likely to land a knockout blow. Along with the Grab superapp, they will be in a competitive footrace over the next few years, not just in Indonesia but throughout South-east Asia. It will be one of the most interesting ones in retail.