Uber (UBER) – B2B & Japan – December 22, 2023
B2B
Uber is a consumer giant. It owns commanding market share positions across rideshare and food delivery throughout most of the developed world. It enjoys leading driver supply, 15 million loyalty program members (so lower marketing intensity) and verb status. But? It isn’t satisfied with merely being a consumer-facing transportation firm. Its sites are set far wider than that.
For review, Uber-for-Business is one of the firm’s many promising growth vectors. It’s a full service B2B offering that handles all employee transportation and meal costs for employee bases of large enterprises. It manages business travel, enforces spend limits in real time and offers meal and catering programs. It also boasts Uber One corporate membership options with added perks vs. the consumer subscription.
This week, Uber announced new receipt matching capabilities for Uber Business clients. It will offer this through new Brex and Ramp integrations to streamline expense reporting and organization. While this added layer of automation seems and is subtle, it’s just one tool in the expanding product kit. Uber for consumers laces more product breadth and utility into its product suite than competition can to drive engagement and retention. It makes sure consumers can get whatever they want whenever they want it through that program to reduce churn. It uses this base of retained users to greatly lower marketing spend per customer. This makes growth more efficient and its margin profile best-in-class. Now? It’s beginning to unpack this exact same playbook for enterprise customers. Not only should this drive broader traction for B2B, but it should also create top of the funnel delight for users who are new to Uber. That, in turn, could drive consumer-facing cross-selling. Another product lever. Another competitive differentiation lever. Another success lever. These things add up.
Japan
Japan is perhaps the most tightly regulated major market in ride-sharing and transportation. It’s illegal there to use a personal car to offer rides. Uber’s product suite is effectively limited to using the app to call for a taxi in some situations like airport travel. UberEats also functions there with leading market share. Japanese regulation has pretty much prevented Uber from winning any share of the $17 billion taxi market. Based on some rough calculations, for context, the UK taxi + ride-sharing market is worth about $20 billion. This is a large opportunity considering the UK makes up a high single digit percent of Uber’s total business.
The handcuffs will be removed in April. Prime Minister Fumio Kishida told the public this week that Japan will lift its ride-sharing ban next year. It will not become a free-for-all, but regulation will become significantly more relaxed. Uber has been spending time and money lobbying there for several years and it now seems like those investments will pay off and this could be huge for the company.
Starting in April, non-taxi drivers will be used to supplement taxi supply during demand spikes. These drivers will be supervised by taxi operators and must work under one. Uber works with many of the operators in the country. That should be step one. Kishida also told the public that he plans to sign another law next year that would remove this requirement and make Japanese ride-sharing wide open for business. Frequent taxi shortages in that country lead to sky-high fares for the service. Uber should be able to rapidly improve service levels by easing supply constraints, surcharges and wait times. There are some fierce competitors across Asian markets. Uber is a fierce competitor too. With its existing lead in food delivery, it is poised to lead in ride-sharing too.
In other news, Uber also received a favorable court order in France during the week. A $500 million anti-competition lawsuit with Paris taxi drivers was thrown out.
