US food delivery leader DoorDash launches in Japan

The US food delivery app DoorDash has launched in Japan, marking the company’s first foray into the Asian market and the latest move by a big delivery group to expand globally to tap a pandemic-driven boom in demand.

DoorDash, the US market leader, said the move would give it access to one of the most “restaurant-dense countries in the world”, although it would be starting relatively small.

Emulating its US strategy, where it first focused on suburban areas outside major cities, DoorDash said it had enlisted “hundreds” of restaurants in Sendai, a city north of Tokyo with a population of about 1m.

“It’s a very underserved market,” said Tony Xu, chief executive, speaking to the Financial Times on Tuesday, describing Sendai as a “microcosm” of the country at large. “Nationwide in Japan, based on what we’ve seen, the most generous estimates have it at 10 per cent of merchants adopting delivery. So I think it’s just very early days.”

Japan’s restaurant culture means people tend to stop and eat on the way home, rather than ordering food for delivery, but new entrants see an opportunity in the growing population of retirees and dual-income families.

When we’re talking about an investment like Japan, we’re talking about a multiyear, decade-plus kind of investment

The move comes as the major app delivery companies aggressively expand into new markets, betting that the habits formed during pandemic-related lockdowns will become permanent. At the height of lockdown measures in the US, DoorDash’s revenues jumped more than 200 per cent, spurring it on to a blockbuster initial public offering that raised almost $3.4bn for the company.

Last month, the Financial Times reported DoorDash was preparing to launch in Germany, another highly-contested market that will pit the company against Just Eat Takeaway and Delivery Hero, as well as Uber Eats, which told the FT in April it planned to launch in Europe’s largest economy within “weeks”.

Meanwhile, through its acquisition of Grubhub, which has yet to close, Just Eat Takeaway will establish its first presence in the US, putting DoorDash’s US market share of more than 50 per cent under threat.

In Japan, DoorDash will come up against familiar opponents but also well-established local players.

“It’s certainly going to be very difficult,” Xu said. “When we’re talking about an investment like Japan, we’re talking about a multiyear, decade-plus kind of investment.”

Uber Eats launched in the country in 2016, followed in 2020 by Delivery Hero and China’s Didi Chuxing. Tokyo-headquartered Demae-can has partnered with almost 60,000 merchants and has 5.82m active users. It also offers a wider range of services such as mail order and dry cleaning.

DoorDash will also have to contend with a range of powerful local companies in adjacent markets, including grocery delivery co-operatives and the Yamato and Sagawa parcel services.

While DoorDash has begun to expand into convenience store items in the US, Xu said it would not rush into making similar moves in Japan.

“It’s crawl, walk, run,” he said. “We definitely do not want to make any mistakes of just trying to copy and paste what we’ve seen possibly work in other geographies. I think that for us, we’re going to have to build a very Japanese product.”