In 2018, GoViet made a splash in Vietnam, an ambitious offshoot of Indonesia’s Gojek, led by Duc Phung, my first-ever guest on the Vietnam Innovators podcast.
The brand’s launch attracted attention, not just for its local aspirations, but also for its regional backing, with Indonesian policymakers, including the president, attending the debut.
GoViet was poised to disrupt Vietnam’s competitive ride-hailing and delivery market, going head-to-head with Grab and a host of local challengers.
But as we look back at what has happened since, it’s clear that GoViet—and by extension, Gojek—faced an uphill battle. After rebranding to Gojek, the company struggled to capture significant market share.
Despite aggressive expansion, offering promotions and attempting to localize, profitability remained elusive. Gojek reportedly represented less than 1% of platform gross revenue in Vietnam, a stark contrast to its dominance in Indonesia.
This month, Gojek officially announced its exit from the Vietnam market. It’s a move emblematic of the changing business landscape in Southeast Asia, where growth at all costs has been replaced by a focus on sustainability and profitability.
The big question is: Who’s next? And will other regional companies eyeing Vietnam face similar challenges?
The Race For Profitability
In the early days, GoViet’s entry was met with optimism. Vietnam’s rapid urbanization, digital adoption, and youthful population made it an attractive market. But as the dust settled, it became apparent that Gojek’s business model, which thrived in Indonesia, didn’t translate as smoothly in Vietnam.
The company faced fierce competition from Grab, which had already established a dominant presence, as well as local platforms like Be and XanhSM. In addition, Vietnam’s regulatory landscape is unique, with rules on taxation, employment, and competition that differ significantly from other markets in the region.
These factors combined with thin margins and customer price sensitivity, made it hard for Gojek to gain a foothold.
Many companies are now facing a tough market as Vietnam’s economy recalibrates after years of hyper-growth. While Vietnam remains a strong destination for foreign investment, the sentiment has shifted. We’re seeing a greater emphasis on profitability and long-term sustainability over rapid expansion.
Gojek’s exit highlights this shift. Investors and stakeholders are increasingly demanding returns, not just growth. While Southeast Asia remains one of the fastest-growing digital economies, the playbook that worked during the “growth at all costs” era isn’t cutting it anymore.
Companies need to show a clear path to profitability, and Vietnam’s fragmented market can make this challenging.
What’s Next For Regional Players?
Gojek’s departure raises questions about the future for other regional players in Vietnam. Ride-hailing, food delivery, and e-commerce have been fiercely competitive sectors. Many companies entered Vietnam with deep pockets and high hopes but are now finding it tough to sustain operations.
But it’s not all doom and gloom. Vietnam still holds tremendous potential for companies that can navigate its complexities and offer localized solutions. Fintech and logistics, in particular, remain ripe for innovation. Vietnam’s underbanked population presents an opportunity for mobile banking and financial services, while the rise of e-commerce has created a demand for more efficient logistics and last-mile delivery solutions.
The ride-hailing and delivery space may be more challenging, but sectors like fintech or education technology could thrive as Vietnam’s economy matures. Vietnam is still one of the most attractive investment destinations in the region, but companies need to be patient and willing to adapt their strategies.
One of the key areas where opportunities exist is in the digitization of traditional sectors. With a strong focus on Industry 4.0 and digital transformation, the Vietnamese government has been pushing for more innovation in manufacturing, agriculture, and healthcare.
For tech companies, this presents an opening to offer solutions that are not just disruptive but also aligned with Vietnam’s long-term development goals.
Opportunities Amidst Challenges
Despite Gojek’s exit, there are success stories to be found in Vietnam.
Grab, while dominant, also faces pressure to turn a profit, and local companies like Be Group continue to show resilience by offering hyper-localized services. Be Group, for instance, has diversified into financial services and logistics, capitalizing on Vietnam’s specific needs.
The key for companies looking to enter or expand in Vietnam will be adaptability. The “copy-paste” approach, where a model successful in one market is applied in another, rarely works in Vietnam.
Companies need to understand local consumer behavior, regulations, and the competitive landscape. This might mean smaller-scale, sustainable growth rather than fast and furious expansion.
Vietnam’s workforce and digital infrastructure have grown rapidly, but businesses must be prepared for challenges, including evolving regulations and market saturation in some sectors.
Meanwhile, opportunities in Vietnam continue to thrive, particularly for companies willing to innovate within sectors like digital payments, logistics, and green technology.
A Market At A Crossroads
As Gojek departs Vietnam, it leaves behind a valuable lesson for other regional players. The market may be lucrative, but it’s not without its challenges.
Vietnam is still one of the fastest-growing economies in Southeast Asia, with a tech-savvy population and rising digital adoption. But profitability, not just market share, is becoming the name of the game.
The next wave of regional companies entering Vietnam must approach with clear-eyed strategies focused on long-term gains. With sectors like fintech, logistics, and digital transformation still untapped, opportunities abound for those willing to localize, innovate, and adapt.