Will InDriver dislodge Grab & Gojek’s ride hailing duopoly in Indonesia?

Recently, Russian-founded, US-headquartered ride-hailing company InDriver seems to be upping its current game to snatch market share from incumbents in Southeast Asia. 

The app is now available in Indonesia, Malaysia, Thailand and Vietnam, and 36 other countries in the world. A few investor friends asked us: will they stand a chance to challenge the current Grab and Gojek duo-poly in Indonesia? Can they win the market?

I’ve known InDriver for a while actually – my sister has been using it since mid-2021 for example. InDriver provides the same ride-hailing service as others, but with a quite unique economic model. 

InDriver allows passengers and drivers to set their own prices. They provide a recommended price with caps in place but also give room for passengers and drivers to negotiate. Passengers are allowed to suggest their price and drivers can either accept the offer or make a counteroffer. Both passengers and drivers then can choose which rides they want to accept. 

The concept is similar to a very quick and efficient auction done within the app (or, some of the decenralised crypto exchanges that we have seen). 

Unlike Grab & Gojek, InDriver does not use surge pricing. Instead, fares are unaffected by demand changes or factors like weather. Under normal circumstances, the price difference between InDriver and the incumbents is often less than IDR 5,000 (US$0.3). However, at times (such as the test below, which I did last Monday), the price differences can be significant. 

However, we need to be aware that ride hailing, as a platform, needs to cater to both demand as well as supply. So when consumers enjoy lower prices, how about drivers?
Drivers I spoke to told me that commissions by Grab and GoJek start from 20% and can go further up depending on the price surge, while for InDriver it is kept at 11%.

And since Indonesia is a very price-sensitive country, offering a lower price is what a few other challengers use to capture the market share from Grab and Gojek. InDriver is not even the first Russian-founded company to attempt the market. Maxim, another company, started earlier. It came with some excitement although now it is really hard to see any Maxim rider in Jakarta the capital. In my hometown Bandung, which is by different accounts the 3rd or the 4th biggest city in Indonesia, there are more yellow (Maxim) helmets in the street but still the green (Grab and Gojek) dominate. 

Will InDriver stand a chance? My sense is that by taking some market share, yes, to dislodge the incumbents is probably highly unlikely. Ride hailing still requires a lot of operations on the ground, and the regional/local incumbents, well capitalized, have evolved into super apps for a reason. 

Grab, for example, not only has food deliveries but also more profitable markets such as Singapore and Malaysia to subsidize the long term investment into Indonesia. Will InDriver, with its operations in 40+ countries, have the same commitment?