Indonesian internet giant GoTo, which owns e-commerce platform Tokopedia and ride-hailing service Gojek, has announced a cost-cutting strategy in an effort to boost profitability. The move comes as GoTo faces intense competition from other tech giants, such as Singapore-based Sea Group and China’s Alibaba.
According to GoTo’s CEO Andre Soelistyo, the company aims to achieve positive cash flow by 2023, and profitability by 2024. As part of the strategy, the company plans to reduce costs by streamlining operations, cutting back on certain services, and laying off some of its workforce.
The cost-cutting measures have already begun, with GoTo announcing in January 2022 that it would lay off around 9% of its workforce, or approximately 1,200 employees. The company has also closed some of its offices and reduced spending on marketing and promotions.
The announcement of the cost-cutting strategy has been met with mixed reactions from investors and industry experts. Some see it as a necessary step for GoTo to remain competitive and achieve long-term profitability, while others question whether the measures will be enough to turn the company’s fortunes around.
GoTo’s financial performance has been under scrutiny in recent years, with the company reporting losses in both 2020 and 2021. In 2021, GoTo reported a net loss of $1.3 billion, despite a 53% increase in revenue compared to the previous year.
One of the challenges that GoTo faces is the intense competition in Indonesia’s tech industry. Sea Group, which owns the e-commerce platform Shopee, has been rapidly expanding in the country and is now the market leader in terms of e-commerce sales. Meanwhile, Alibaba has also been investing heavily in Indonesia, with a particular focus on the e-commerce sector.
In addition to competition from other tech giants, GoTo has also faced criticism over its business practices. The company has been accused of anti-competitive behavior, with some smaller e-commerce players alleging that GoTo has used its dominant position in the market to unfairly promote its own services.
Despite these challenges, some experts remain optimistic about GoTo’s prospects. The company has a strong presence in Indonesia, which has a large and growing population of internet users. In addition, GoTo’s diverse portfolio of services, which includes e-commerce, ride-hailing, and payments, means that it is well positioned to capitalize on the growth of the digital economy in Indonesia.
However, it remains to be seen whether GoTo’s cost-cutting strategy will be enough to achieve its goals of positive cash flow and profitability. The company faces a difficult balancing act of cutting costs while continuing to invest in new services and technologies to remain competitive.
In conclusion, GoTo’s cost-cutting strategy is a necessary step for the company to remain competitive and achieve profitability in the long term. However, the company faces significant challenges from intense competition and criticism of its business practices. The success of GoTo’s strategy will depend on its ability to balance cost-cutting measures with continued investment in new services and technologies.
