Brand Health Check: Is it the end of the road for Uber in APAC?

The road has been treacherous for Uber in APAC. It has retreated from markets such as Southeast Asia in its ridesharing business, seen mixed performance in key places such as India and faced growing regulatory scrutiny in Australia. In early May, it announced a loss of nearly $6 billion as the value of its Asian investments—in businesses including Didi and Grab—plummeted. 

The pandemic of the last couple of years further battered key parts of Uber's business, compounding its woes. However, the company isn’t ready to move away from APAC just yet. In Japan, it teamed up with local giant Rakuten to expand its reach in food delivery and is growing its ‘dark stores’ (delivery only) in the market.

Elsewhere, in Hong Kong, the firm’s business has been mixed—it acquired HKTaxi, the most popular hailing app, but months later Uber Eats quit the market. Meanwhile, Grab, to which Uber ceded its Southeast Asia business, launched an IPO last year. Other local rivals, ranging from Ola in India to Foodpanda across APAC have had mixed results, as they were hammered by Covid, but turned their businesses slowly around as the pandemic eased.

So, is brand Uber still relevant in APAC or is it time for the company to drive into the sunset? We ask marketing and brand experts for their views. 

How strong do you think brand Uber is in APAC, given the presence of strong, well-funded competition?

Ed Booty, chief strategy officer, Publicis Groupe APAC & MEA, Singapore

I’m not convinced Uber has ever been a strong brand in the region. Yes, initially Uber was the MBA poster child for tech-led category disruption. However, it appears to have become a different type of marketing case study; mistaking user frequency for loyalty, an app for a platform, and first-mover advantage as a right to win. Up against strong competitors with locally tailored offerings (#grabdurian, Ola’s e-rickshaws etc.) Uber’s lack of brand loyalty has been thrown into sharp relief. Tears were not shed when the brand exited Southeast Asia. 

In Uber’s defence, the reality for all brands in this category is that their so-called ‘walled gardens’ have very low walls, and there is very little network effect within them. This creates a highly transactional consumer relationship and consequently market share tends to be bought rather than earned. It’s currently a race to the bottom. Brands in this space need to think seriously about how to create sustainable competitive advantage. How to meaningfully add value rather than just extract it.

Thomas Sutton, general manager, Southeast Asia, Landor & Fitch

Uber’s brand benefits from having a first mover advantage. Despite not being present in some APAC markets, the once exclusively ride-hailing company has transformed its business to be a delivery and logistics powerhouse that is well-known across the world. In APAC, where price and fleet size is going to be the main determinant for consumers, Uber’s emboldened ‘Silicon Valley’ brand identity can come across as ‘luxury’ and be a turn-off for most customers in Asia. Competition will remain fierce, particularly in Southeast Asia where a growing smartphone population is the key to the industry’s growth engine in the region.

What has and hasn’t worked for Uber in terms of brand development in APAC?

Nitin Pangarkar, academic director, MBA and NUS-HEC Paris MBA Programs, and associate professor (Educator Track), NUS Business School

Other than the couple of successes you mention, Uber has struggled. Uber’s technology was not difficult to replicate and nor were its deep pockets (at least for a large part of the last two or three years). It meant that competitors could go toe-to-toe with Uber. Fighting to build market share (and losing money while doing so) across multiple geographies was difficult even with plentiful supply of capital. There are indeed well-established brands in specific countries. Grab is one of the few with a good presence across multiple countries.

Jacqueline Alexis Thng, partner and ASEAN lead at Prophet

The core reason why Uber has not succeeded in many parts of less developed markets, especially those in Southeast Asia, is due to its lack of localisation and understanding of the ecosystem for emerging economies. For example, motor rides are more dominant and therefore an important part of the transportation ecosystem. This calls for a fundamental localisation of Uber’s offer. We have also commonly seen Western players try to implement their brand models in Asia in a 'wholesale' manner, without first trying to understand the local cultures and radically different customer needs, wants and expectations.

Mauro Marescialli, managing director, MetaDesign

I believe some companies approach China and Asia with aggressive expansion plans. There’s nothing wrong with that, but you have to be very careful with such an approach. Some companies underestimate the challenges that different regulatory systems could pose to them. They underestimate the ability, the speed of development, the flexibility and local knowledge that domestic players have. They underestimate the time and amount of knowledge and resources needed to understand and adapt to local habits. 

From a brand development perspective, what can Uber do to fix its position in APAC?

Pangarkar

They will have to pick their battles. Some of the countries and services have entrenched players and it is going to be very difficult for Uber to make headway in those. The brand matters less in these businesses than the ecosystem of partners and a loyal customer base, which is a function of how many partners you have and the service you give. [Uber should] pick countries and services where it has a good chance of succeeding. Be selective in focusing on the most attractive opportunities. Be selective in building the position, instead of spending lots of money on customer acquisition as it has done in the past.

Sutton

Doubling down where you are strong is certainly a viable business strategy, but growth is the gold standard for every company wanting to do business in APAC. The ride-hailing market will get bigger, but most players have already gained a foothold in key markets, Gojek and Grab being the most formidable in Southeast Asia and Didi in China. Uber will be a challenger if they decide to do business in these markets again and will require significant financial investment to stand a chance. Where Uber can leverage its brand is by expanding to other verticals within the logistics and delivery space in Southeast Asia. The current brands are all mass consumer facing, which begs the question if an enterprise solution that hybridises Grab, UPS, FedEx and the like might be the way to go.

Uber needs to take a more localised approach to its business in each APAC market. The brand can do more in terms of partnering with local companies, celebrities and organisations to show they are more than just another Western company looking to turn a quick profit. Uber’s brand has an opportunity to repair its reputation but will struggle to compete with competitors who are too well rooted in the markets they operate in.

Thng

As a brand, Uber still has relatively high recall and it is seen as the innovator that has changed the ride hailing landscape. In this regard, the brand can still leverage its reputation to rebuild its business in APAC. But it will also need to recognise that some of its competitors such as Grab and Didi have carved their own market shares and dominance by evolving their business models beyond the initial ride-hailing feature (Grab Food, Grab Wallet etc). Focusing on growing markets such as Hong Kong and Japan is still a better bet at this juncture unless new innovation that allows a new proposition can be developed.

The grounds lost are huge, and to regain or rebuild an APAC-wide business will require a complete reboot of Uber’s business model and new innovations. That’s what Apple did. It started as a computing company but completely rethought its business model and has since developed an ecosystem with a core loyal customer base. The reboot will be tougher but not impossible.

Marescialli

I think that they should be focusing on pockets that have proven viable for their business, and start building from the ground up. It will take some time, but that’s the deal when it comes to brand building: it just takes time. As for any brand building exercise, they should be delivering on their promise to customers, in their case, providing a service that adds value to customers in a meaningful, distinctive and competitive way, consistently. To do this in Asia is a hell of a challenge, and it requires focus, flexibility, perseverance, humbleness and massive investments over a long period of time.

This post is filed under... Brand Health Check: We assess and (if necessary) solicit suggested remedies