Sharing Economy: a Drive to Success the Case of GO-JEK in Jakarta, Indonesia

Louvain School of Management Sharing economy: a drive to success The case of GO-JEK in Jakarta, Indonesia Research Master’s Thesis submitted by Alice Coupez With a view of getting the degree Master 120 credits in Management, professional focus Supervisors Christophe Brognaux Christophe Lejeune Academic Year 2016-2017 ii First and foremost, I would like to express my sincere gratitude to my two thesis supervisors, Professor Christophe Lejeune and Christophe Brognaux, for supporting my ideas while providing me valuable remarks and reflexions. Their trust and support helped me lead this project during an enriching year in South East Asia. I would also like to deeply thank two professors who particularly developed my interest and understanding of sharing economy and platform management, Professor Paul Belleflamme (Université Catholique de Louvain) and Professor Mark Chong (Singapore Management University). i ABSTRACT Over the past decade, sharing economy has grown into a worldwide phenomenon. It has now arrived at a mature state of development, characterized by an intense competition on some markets. This master thesis analyses the development of this international phenomenon and focuses on the unexpected success of the Indonesian start-up GO-JEK in Jakarta. In fact, since its launch in 2015, GO-JEK has expanded its range of services, beating its international competitors Uber and Grab, and has become the first Indonesian unicorn (start-up valued at over US$1 billion). This research proposes an environment analysis and an analysis of GO- JEK’s strategies, put into perspective with its competitors’. The success of GO-JEK is found to heavily rely on its deep understanding and adaptation to the Indonesian market and to the needs and preferences of its key groups of actors: platform consumers, providers, and regulators. Key words: sharing economy, platforms, mobility, Go-Jek, Jakarta. Au cours des dix dernières années, l’économie de partage s’est développée pour devenir un phénomène mondial. Elle est aujourd’hui arrivée à un stade mature de développement, caractérisé par une concurrence intense sur certains marchés. Ce mémoire analyse le développement de ce phénomène international et s’intéresse au succès inattendu de la start-up indonésienne GO-JEK à Jakarta. En effet, depuis son lancement en 2015, GO-JEK a étendu sa gamme de services, battant ainsi ses concurrents internationaux Uber et Grab et devenant la première start-up indonésienne à être évaluée financièrement à plus d’un million de dollars. Cette recherche propose une analyse de l’environnement ainsi qu’une analyse des stratégies de GO-JEK, mises en perspective avec celles de ses concurrents. Le succès de GO-JEK s’avère profondément fondé sur sa compréhension et son adaptation au marché indonésien et aux besoins et préférences de ses groupes d’acteurs clés : les utilisateurs, les fournisseurs et les régulateurs de la platform. Mots-clés : économie de partage, plateformes, mobilité, Go-Jek, Jakarta. ii TABLE OF CONTENTS INTRODUCTION ...................................................................................................................... 1 PART I: LITERATURE REVIEW ............................................................................................ 2 1. INTRODUCTION .................................................................................................................. 2 2. DEFINITION ......................................................................................................................... 2 2.1 Introduction ...................................................................................................................... 2 2.2 What is the sharing economy? .......................................................................................... 3 2.2.1 Definitions .................................................................................................................. 3 2.2.2 Sharing? ..................................................................................................................... 3 2.2.3 Sharing what? ............................................................................................................. 4 2.2.4 Sharing how? ............................................................................................................. 5 2.2.5 Sharing among whom? .............................................................................................. 5 2.3 Other terms used ............................................................................................................... 6 2.4 What the sharing economy is not? .................................................................................... 6 2.5 Conclusion ........................................................................................................................ 8 3. ORIGINS AND DEVELOPMENT ....................................................................................... 8 3.1 Introduction ...................................................................................................................... 8 3.2 Economical drivers ........................................................................................................... 9 3.3 Societal drivers ............................................................................................................... 10 3.4 Technological drivers ..................................................................................................... 11 3.5 Conclusion ...................................................................................................................... 12 4. BUSINESS ASPECTS BEHIND THE SHARING ECONOMY ........................................ 13 4.1 Introduction .................................................................................................................... 13 4.2 Sharers ............................................................................................................................ 13 4.2.1 Who are they? .......................................................................................................... 14 4.2.2 Why do they take part in sharing economy? ............................................................ 15 4.3 Business model ............................................................................................................... 16 4.3.1 Customer value proposition ..................................................................................... 16 4.3.2 Key resources and processes .................................................................................... 17 4.3.3 Profit formula ........................................................................................................... 18 4.4 Competition .................................................................................................................... 19 4.4.1 How to compete in the sharing economy? ............................................................... 19 iii 4.4.2 How to adapt to the sharing economy? .................................................................... 20 4.5 Conclusion ...................................................................................................................... 22 5. CONTROVERSIES SURRONDING THE SHARING ECONOMY ................................. 23 5.1 Introduction .................................................................................................................... 23 5.2 Consumption ................................................................................................................... 23 5.3 Environment ................................................................................................................... 24 5.4 Labor ............................................................................................................................... 25 5.5 Social connections .......................................................................................................... 26 5.6 Regulation ....................................................................................................................... 27 5.7 Conclusion ...................................................................................................................... 27 6. CONCLUSION .................................................................................................................... 28 PART II: PRACTICAL RESEARCH ...................................................................................... 30 1. INTRODUCTION ................................................................................................................ 30 2. METHODOLOGY ............................................................................................................... 30 3. ENVIRONMENT ANALYSIS ............................................................................................ 32 3.1 Introduction .................................................................................................................... 32 3.2 General development ...................................................................................................... 32 3.2.1 Population ................................................................................................................ 32 3.2.2 Economy .................................................................................................................. 33 3.3 Mobility development ....................................................................................................

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