TOKYO -- Uber Technologies is planning to expand its grocery and non-food delivery business in Japan as the company looks to tighten its grip on a key Asian market.
By increasing the range of items offered through its Uber Eats app, the company hopes to become a one-stop shop for grocery, alcohol and more, and deliver them in 30 minutes or less.
The value of supermarket orders on the Uber Eats app in the first half of this year was already 2.5 times higher than a year earlier, Raj Beri, vice president of grocery and new verticals, said in an interview. Overall, orders on Uber for groceries and other nonrestaurant items globally is around $3 billion on an annualized basis, of which around 10% comes from Japan and Taiwan.
"We're far ahead of expectations ... but we do think this type of growth, and similar growth, will be here for a period of time," he said. "Because compared to online restaurant food delivery, grocery or convenience is still much earlier in adoption."
Uber Eats is considered Japan's largest food delivery service, with about 100,000 stores signed up, the majority of which are restaurants. But Uber has also added offerings from 2,000 outlets of convenience store chain Lawson, high-end supermarket chain Seijo Ishii and wine shop Enoteca. Groceries, convenience stores and alcohol are the three categories that Uber will be most focused on, Beri said.
The push comes as demand for delivery services grows during the COVID-19 pandemic. Food delivery sales in June increased 95% compared to the same month in 2019, according to market research group NPD Japan.
"A year or two ago, there was not even any opportunity for [merchants] to think about online delivery. There is a lot of demand, especially through the pandemic, where merchants were very excited that Uber is starting to offer this," Beri said.
By diversifying its offerings beyond restaurant meals, Uber aims to attract more users and increase the frequency of orders. That in turn should help Uber attract more stores to sign up, creating a virtuous circle. Uber takes a cut from each order as commission, and also sells advertisements to help merchants show their listings more prominently on the app.
Demand for Uber's fast deliveries beyond food will be put to the test as tech companies increasingly move into the space. Amazon recently said it offers grocery delivery in some parts of Tokyo and nearby areas in as little as two hours. South Korea's Coupang, known for its high-speed "rocket" delivery service, recently began offering grocery delivery in a small part of Tokyo.
Some retailers also operate their own delivery apps, which allows them to avoid paying commissions or to take greater control of the user experience. Those include major supermarket chains Seiyu and Ito Yokado. Nikkei recently reported that 7-Eleven, Japan's top convenience store operator, plans to offer a delivery business from its 20,000 stores in 2026.
Beri said Uber plans to offer its army of 100,000 delivery personnel in Japan, who are not Uber employees but work as independent contractors, for retailers that run their own websites and apps. The service, called Uber Direct, was launched in the U.S. last year, and Beri said it is in talks with partners to bring the service to Japan.
Uber is also considering running "dark stores," or warehouses specialized for delivery, in Japan, Beri said. The company recently launched trials in Taiwan.
The success in Japan will be key in maintaining Uber's foothold in Asia. The company has sold its businesses in Southeast Asia and China, plus its food delivery business in India, and halted its food delivery business in South Korea. Markets where Uber still operates include Australia, Hong Kong and Taiwan.
Uber's ride-hailing business in Japan is small because it only partners with taxi companies and does not allow individuals to carry paying passengers, due to local regulations.