The buzz around on-demand car hailing service Uber continues to get stronger, perhaps even more than Airbnb.
Uber’s story so far has stood out for its expansion strategy, attempting to disrupt the ground transportation at a local level in a big way, and the odd controversy or two.
NB: This article is written by Charlie Li, founder of TravelDaily China.
China has proven to be one of the most challenging markets for Uber. Not only in terms of understanding the cultural nuances and buying behavior, but also for the sort of fragmentation that has already taken place.
The San Francisco, US-based company has made some major adjustments since its entry in late-2014.
Just one example, after all the talk of a minimum fare of $5 in February this year, the company then added mid-tier options, essentially bringing down its base fare.
Promising start
Uber is currently present in Shanghai, Shenzhen, Guangzhou and Beijing, plus Hong Kong, which was added earlier this month.
The company states that when it reflects upon its operations in a city like Shanghai, it observes that the growth trajectory of its business has been much faster than what the team managed in other markets such as the US, the UK, France etc.
So, what makes Uber stand out in China?
Uber’s head of operations in Asia, Allen Penn, says:
"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.
"Imagine an Audi 6 waiting for you outside your door in matter of few minutes. We have the ability to create that differentiated experience."
Uber is clear that its mission statement of sorts is about being everyone’s private driver. It isn’t only about a premium offering, as the company also continues to target the middle-tier market, an example for this is the launch of its UberX service in all the four cities.
With UberX, for example, the company has challenged its main competitor Yongche which has base fare of $2.41.
Uber has also managed to bring down the arrival time of vehicles (from the time when a user places an order) from 13-14 minutes to 8-9 minutes, even in a city like Shanghai.
Catering to local preferences
As expected, the Uber China team initially faced challenges. For example, a core aspect of the service is to location the user’s position with precision, yet that there are now plans to integrate a local map app as its current system does not perform reliably in some Chinese cities.
Another critical aspect has been how to accept payments. Uber is cashless, it accepts credit cards. But this option wasn’t enough to boost use of the app in China.
"It was imperative to introduce a local payment option." admits Penn. Note: Chinese payment system Alipay was introduced as an option earlier this year.
As Hong Kong-based HotelQuickly co-founder Raphael Cohen argues, trust is a big issue and customers have shown the traditional tendency to want to pay on arrival at destination.
Cohen recommends that Uber should also offer cash on arrival and integrate other local payment platforms such as the WeChat payment service.
As Cohen recommends, human touch is also important here.
He says:
"Wechat has an API. It would be nice to chat with the drivers. One can also focus on using a WeChat service account to help answer customer questions, educate them about the app etc."
Kuadi Dache and Didi Dache, for example, both have a function that allows to speak to taxi drivers on the main home screen, similar to the WeChat voice messages function.
As an on-demand car service, the app is available as you would expect via both Apple and Android platforms. But, Uber also quickly realized that it had to target several Android stores to expand its reach here.
The Android market is very fragmented in China, with various App marketplaces such as Wandoujia, Xiaomi, QQ, Anzhi, AppChina, Renren and Meizu.
Cohen argues Uber would obviously capitalise if it could secure some kind of pre-installation on the local telecom operator such as China Mobile and China Unicom or the local smartphone manufacturers (Xiaomi, Meizu, Lenovo etc).
Word-of-mouth
Any category that starts to get fragmented witnesses marketing gimmicks such as cashbacks. But Penn is clear that nothing comes in the way of quality and innovation.
Penn says:
"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 friends/connections about our app. If our service is availed, both the parties can benefit in term of 50 RMB credit."
It is also 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 bring a bit joy to users on this important in the Chinese calendar.
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 the events 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 Penn.
NB: Penn is scheduled to speak at the upcoming 2014 Travel Daily Conference, to be held in Shanghai (September 3-4, 2014).
NB2: This article is written by Charlie Li, founder of TravelDaily China. It appears here as part of Tnooz’s sponsored content initiative.