This article is written by Ritesh Gupta, reporter at TravelDaily China.
For any burgeoning global brand, despite its hefty valuation, if it’s new to China then nothing can be taken for granted.
So when San Francisco-based Uber, backed by the likes of Google Ventures and TPG Capital, forayed into China late last year, the move was expectedly minutely scrutinized.
The entity also faced the usual conundrum that every multinational brand faces: China isn’t easy, is this new on-demand car service mobile app up for it?
Few months later media reports and reviews went even deeper to assess – how is Uber performing in China?
All this when Beijing emerged as Uber’s fourth Chinese city and its 100 market in the world!
The battle is interestingly poised in China in this segment.
Talking of Uber, there has been talk about its minimum fare (reportedly $5), margins being paid to chauffeurs etc in China. One also can’t ignore how Uber is being perceived in other markets. Interestingly, the strength of Uber can also be gauged from the fact that a national daily in the U. K. recently came up with a headline: “Will Uber kill the black cab?” As for the size, the entity closed a financing round in early June, raising $1.2B of primary capital at a $17B pre-money valuation.
So what makes Uber stand out in an increasingly fragmented market like China?
“Uber is all about simplicity and magic. Imagine you are waiting for a pick-up and a luxury car is right at your door in no time. The experience never ceases to amaze one,” this is how Allen Penn, Head of Asia Operations at Uber, believes the app delights a user.
Obviously, pricing counts, but how much you are willing to pay for using a proficient app, plus on-time pick up and courteous driver is your call. Though the company isn’t sharing any details, it’s surely interesting to assess how the app pricing strategy and its localisation efforts are going to complement is technology.
Promising start
Uber is currently present in Shanghai, Shenzhen, Guangzhou and Beijing.
Assessing the progress in China, Allen says, “When we reflect upon our operations in a city like Shanghai, we observe that the growth trajectory of our business has been much faster than what we managed in other markets such as the U. S., the U. K., France or Singapore.”
“What has helped us in achieving this is our focus on simplicity and magic – imagine an Audi 6 waiting for you outside your door in matter of few minutes. We have the ability to create that differentiated experience,” says
Allen, who is scheduled to speak at the upcoming 2014 TravelDaily Conference, to be held in Shanghai (September 3-4, 2014).
As for how the team has focused on combating competition, Allen says Uber is wholly focused on creating a high quality, reliable, and distinctive experience for users and an efficient system for the partners that work with Uber. Be it for completion of a task in a matter of seconds or enabling an app user to be in control throughout the journey, Uber believes it offering a superior experience. For instance, app delights users with critical pieces of information. Uber enables users in visualizing how far drivers are from initiating their journey. How is the vehicle moving amidst the traffic? Also, letting drivers optimize their daily routine is very important. They should be able to fulfil maximum rides, rather than waiting for long, says Allen. “We’ve seen that when riders have that type of experience that allows them to earn a good living, that marketplace just works.
And the growth that we're seeing in China underscores that distinctiveness and value that both riders and drivers are coming to embrace.”
Expansion
“We have had a fruitful launch so far, including the testing phase in Beijing. We are constantly looking at our data. Who is opening the app, who is ready to use the app etc.? Also, we diligently plan aspects like what would it take set up a great team to serve that city,” says Allen.
For Uber, expansion isn’t about finalizing a city in advance.
“Ideally we would like to be everywhere but the next move is dependent upon how quickly we learn and adapt to meet the arising opportunity,” says Allen.
Word-of-mouth
Any category that starts to get fragmented witnesses marketing gimmicks such as cashbacks or other promotional offers.
But Allen is clear that nothing comes in the way of quality and innovation.
“Uber is all about surprising and delighting consumers. If the experience is amazing, the word spreads. This makes sense for us to rely on word-of-mouth. We have a referral program. It is about a user telling his friends/ connections about our app. If our service is availed, both the parties can benefit in term of 50 RMB credit,” he says.
Equally important to understand what’s generally popular with citizens, and how to create buzz around the same.
For instance, Uber celebrated the Chinese New Year by offering Lion Dance on-demand. Lion Dance troupes were on the road for one day in different cities, and the idea was to offer joy on this auspicious day. So once an app user requested Lion Dance, they were charged RMB 188 directly to their Uber account. There was also an option to follow live on Weibo and WeChat. Each dance sequence lasted around 20 minutes.
“Such relevant initiatives go a long way in creating that lasting impression and connect with existing app users/ potential users,” says Allen.
Future
Commenting on the future of ground transportation here, Allen says the future will be driven by technology and data, predicated on choice and flexiblity.
“Choice on the consumer side as they have a new, high quality option like Uber, that they can access with the tap of a button. That choice that didn’t exist before, and we’re now seeing customers in 37 countries, including China, flocking to it,” he says.
“Flexibility on the driver side, where drivers now have more options in when and how they work. Uber's system is flexible and allows drivers to work whenever they want, allowing them to maximize both their earnings and fit their lifestyle choices, added Allen. He asserts this is really technology at it's best, not just for technology's sake, but improving people's lives and fundamentally changing how they get around their city.
Expectations from 2014 TravelDaily Conference
Uber is planning to showcase its expertise in Shanghai this September.
“Travel is about putting together many difference pieces. We believe TravelDaily conference is an ideal platform to share our expertise in the arena of on-demand car service. It would be appropriate to highlight use cases for our service – how we possess the capability to cater to a business traveler or make that one night special for someone who has a wonderful plan in the pipeline,” says Allen.
Allen is scheduled to speak at the upcoming 2014 TravelDaily Conference in Shanghai (September 3-4, 2014).
