The domestic delivery app company Coupang Eats recently established a Japanese corporation and began pilot operations for food delivery services in certain areas of Tokyo. Currently, the leading player in the Japanese delivery app market is Uber Eats, which has a market share of 70%. It is considered unusual that a foreign platform like Uber Eats has successfully penetrated the deeply ingrained analog culture of the Japanese market. There are suggestions that Coupang Eats, following suit, needs to establish a proper differentiation strategy to compete with Uber Eats in Japan.
According to industry sources on the 3rd, the name of Coupang Eats' service in Japan is "Rocket Now," and it has been recruiting riders locally since the 5th of last month. However, it has not officially announced its entry into the Japanese market, and pilot operations are reported to have begun in the upscale residential area of Minato.
Previously, Coupang operated a quick commerce service that delivered food and daily necessities in 10 minutes in certain areas of Tokyo in 2021. Unlike the domestic "Rocket Delivery," which delivers the next day after ordering, this service delivered items immediately upon ordering. After Coupang's entry, competing corporations jumped into the quick commerce market, and Coupang exited the Japanese market after two years.
The field Coupang is now challenging is food delivery. Unlike quick commerce, which requires significant logistics investment, food delivery has the advantage of relatively low initial expense. The Japanese delivery market is being noted as a high-growth potential blue ocean. According to the Japan Management Association Research Institute, the Japanese food delivery market grew from 170 billion yen (1.6 trillion won) in 2019 to 330 billion yen (3.2 trillion won) in 2022. Global market research firm Grand View Research forecasts an average annual growth rate (CAGR) of 8.4% for the Japanese food delivery market through 2030.
However, the Japanese food delivery market has been a difficult one where foreign platform companies have repeatedly faced challenges. Notably, Baedal Minjok, the leading delivery app in South Korea, also attempted to enter the Japanese market twice but failed.
Baemin established a joint venture with Japan's "national messenger" LINE, named "Line Bros," in 2014 to offer the "Line Wow" service. However, at the time, the delivery app culture had not yet taken root in Japan, leading to the termination of operations after one year. As the delivery culture began to develop in Japan during the COVID-19 pandemic, Baemin made a renewed attempt in 2020 by launching "Food Neko." However, the parent company, Delivery Hero (DH), exited the Japanese market after selling the business.
Uber Eats, which entered Japan about nine years ago, has successfully localized in the Japanese market, achieving an overwhelming market share of 70% and is regarded as a success story in the global platform industry.
One of the reasons Uber Eats has relatively successfully established itself in the Japanese market is its integration of delivery services with taxi dispatch services. For instance, Uber offers a service that provides cashback on a portion of fees to users of Uber One, its premium service, allowing users to utilize Uber's key services such as taxis and deliveries within a single app. Recently, Uber Eats has partnered with Aeon, a major supermarket company in Japan, to expand its reach into not only food delivery but also grocery delivery from small supermarkets.
Uber's app is also noted for its "global versatility," which can be used in major city markets such as the U.S. and Australia. Recently, Uber persuaded the Japanese government to launch the "Uber Teens" service aimed at teenagers aged 13 to 17, which is a further step in solidifying its presence in the Japanese market. An upper management official from Uber's Asia division expressed confidence in a recent interview with local media, stating, "Uber can summon a car in 3 minutes and 32 seconds."
Shintaro Nakagawa, the representative of Uber Eats Japan, noted, "If we raise delivery fees, we, as the platform operator, can make a profit, but someone has to bear the increased expense, leading to a vicious cycle where the number of deliveries decreases." He emphasized the importance and difficulty of configuring prices to encourage an increase in order volume while also achieving profitability. He added, "Uber has expertise garnered from operating globally, and the app's features, efficiency, and algorithms are rapidly evolving. This positively influences our business development in Japan."
Demaekan, the second-largest delivery app in Japan, was acquired in 2020 by Naver in partnership with LINE, its Japanese subsidiary. Its competitive edge lies in offering services integrated with the LINE messenger.
In this situation, it remains uncertain what kind of "carrot" Coupang Eats will present to attract users among Japanese consumers. While Coupang Eats in South Korea has been able to grow based on its parent company Coupang's Wow Membership, it is difficult to utilize this in Japan. A retail industry source stated, "The Japanese market is not one where simply presenting unique services or cash-like coupon support can easily cultivate loyal customers," and noted that attention should be paid to how Coupang will collaborate with local partners to expand into the Japanese market in the future.