BloombergTOKYO (Bloomberg) — Uber Technologies Inc.’s strategy for Japan, where ride-sharing is banned, is as unique as the country itself — think grandma in running shoes delivering ramen noodles.
Chief Executive Officer Dara Khosrowshahi was in the country this week to stress the importance of the market, where the San Francisco-based company has built a growing food-delivery business but kept rides limited to black-car hires and taxi dispatches. The archipelago is also home to Uber’s biggest shareholder, SoftBank Group Corp., and where he’s planning to boost staff in the coming year.
“The elderly are actually signing up for Eats couriers,” Khosrowshahi told Bloomberg News. “Eats has been a huge success for us in Japan. It is going to be a very effective introduction to the Uber brand.”
Building up Uber Eats could be the company’s best chance, for now, to capture revenue in the world’s third-largest economy. More than 10,000 restaurants and 15,000 couriers are part of a delivery network spanning 10 Japanese cities, according to the CEO. That puts the service within reach of about 15 percent of the population, compared with 70 percent in the United States, leaving plenty of room to grow, he said.
With an unemployment rate of 2.4 percent, near quarter-century lows, Japan’s labor market is tight. The population is aging; adult diapers outsell baby diapers. Seniors are tapping into food delivery to find jobs, in addition to getting hot meals delivered to their doors.
While most workers deliver using a bicycle or scooter, seniors in search of exercise are doing it on foot, Khosrowshahi said. “This is one area unique to Japan, and we are looking if we can expand to the rest of the world,” the CEO said.
To support its Eats business, as well as its nascent efforts to offer dispatch services for taxi companies, Uber is planning to increase full-time staffing in Japan by more than 30 percent over the next year from about 100 now, in areas such as account management, sales and local operations. Even at that pace, that’s still a tiny proportion of Uber’s global headcount of 22,000.
Shares in small-cap food-delivery firms Yume No Machi Souzou Iinkai Co. and Ride on Express Holdings Co. slid more than 3 percent in Tokyo. “Uber Eats has a cutting-edge, cool image, so concerns could easily develop that young users might switch to Uber Eats,” said Iwai Cosmo Securities equities manager Toshikazu Horiuchi.
Given Japan’s strict regulations against ride-sharing, Uber has chosen to work with regulators. It rolled out a pilot program in 2016 to provide rides to seniors in the small coastal town of Tangocho, where an aging population was left with dwindling public transport services.
Last year, Uber pivoted to partnerships with local taxi companies. It now has deals with eight cab companies in as many cities, including popular tourist destinations Kyoto, Osaka and Hiroshima.Speech