Kakao Mobility spins off from Kakao
Kakao, South Korea’s IT giant that operates Korea’s dominant messenger app, KakaoTalk, has been growing to diversify its business units, which now include Kakao Pay, Kakao Bank and Kakao Mobility. Last May, Kakao decided to spin off its mobility business which runs Kakao Taxi (a taxi hailing service), Kakao Driver (a chauffeur service), and Kakao Navi (a navigation service) in order to accelerate its growth and improve profitability. In June 2017, Kakao Mobility made a strategic partnership with TPG, a global alternative asset investor, and, as part of that partnership, raised an investment worth USD 450 million (KRW 500 billion) from the TPG-led consortium. On August 1st, Kakao Mobility became an independent legal entity.
Jung Jooh-wan, who had been directing the mobility business unit since its inception, has been appointed CEO of Kakao Mobility. The new company currently has 150 employees.
Kakao Mobility plans to upgrade its current services and introduce a variety of new features to better achieve its goal of making every moment of “moving” a faster, easier and safer experience.
According to Kakao, Kakao Taxi receives 1.5 million calls daily. And, as its first order of business, Kakao Taxi will introduce ‘Business Taxi Service’ and ‘Kakao Pay Automatic Payment’ during the third quarter.
Business Taxi Service connects taxi companies with corporate clients. More specifically, companies sign a contract with Kakao Taxi, under which employees of a client company can readily use the taxi-hailing service for business purposes. At the same time, Kakao Taxi also provides corporate clients with an all-in-one solution of taxi calling, billing and managing. This way, the firms can manage their employees’ traveling budget and tax management needs. Kakao, in turn, would earn profit by commissions from client firms for each trip made.
Kakao Pay, Kakao’s automatic payment system, will be integrated with Kakao Taxi. When the ride is over, the payment is automatically made through Kakao Pay, which is already tied with the user’s Kakao Taxi service app. Users will no longer have to take out their card or cash to pay for their rides. Thus, Kakao Taxi plans to implement a one-stop service by using the power of Kakao’s ecosystem and by collaborating with Korea Smart Card Corporation.
The company also plans to launch a mobile parking service, Kakao Parking (tentative name) in the fourth quarter. By partnering with Korea’s parking space operators, Kakao Parking will allow users to search for parking lots in their desired areas much more quickly and to pay the parking fee using Kakao Pay.
Kakao Driver and Kakao Navi plan to further boost Kakao Mobility’s current growth trajectory. Kakao Driver currently has 2.7 million users with a retention rate of 70% within the first four weeks of use. From the fourth quarter of last year to the first quarter of this year, the number of rides have increased by 30%, and the usage trend continues to grow despite a lack in marketing efforts.
Kakao Mobility is continuously enhancing Kakao Navi through big data aggregation and analysis of travel routes and traffic patterns. Kakao Mobility expects the service to provide more accurate navigation by using real-time traffic information, prediction of traffic volume and so on. The profit model uses brand partnerships since Kakao Navi can induce consumer spending by sending coupons to users heading to certain destinations. As of June 2017, Kakao Navi had 10 million users, with the number of users and monthly usage growing by 87% and 92%, respectively.
Collaboration with global business partners is also on-going. Last May, Kakao Mobility signed a business agreement with Japan Taxi, Japan’s largest taxi-hailing company. The two companies are in the process of binding their services, and before long, Japanese users will be able to use their Japan Taxi app in Korea to call a cab and Korean users will be able to use the Kakao Taxi app in Japan.
In July, Kakao’s CEO, Jimmy Rim and Kakao Mobility’s CEO, Jung Jooh-wan had a meeting with key executives of Volkswagen in Germany to discuss collaboration in areas such as connected cars and autonomous driving.
Jooh-wan said, “We are excited to create new value in the mobility business. As a leading company in Korea’s mobility industry, Kakao Mobility will work hard to continuously introduce innovations in the global market, alongside US’s Uber, SEA’s Grab, and China’s Didi”.
This article, entitled “Kakao Mobility spins off from Kakao”, was written in Korean by Platum, edited by AllTechAsia.