Why Lyft’s Scheduling Feature is Just the First Step

Yesterday, Lyft made several changes to their platform, including the creation of a standalone driver app. The big news, however, is that now Lyft is allowing customers and drivers to schedule rides in advance. This is a significant change for two reasons:

First, from a driver’s perspective, this is a major quality of life change. Now drivers can avoid idling and waiting for rides. Several studies have found that the unpredictable nature of this work is the biggest concern for drivers (and freelancers in general).

This change helps address a major concern for their drivers and will help advance Lyft’s goal of being seen as a ‘pro-driver’ platform.

Second, from a platform-strategy perspective, this is an attempt to create durable network effects. There is plenty of consumer research that suggests consumers are not attached to a particular rideshare company. There is no Apple computer of the rideshare world — instead, consumers are looking for the lowest price and closest car. Since drivers can operate on multiple platforms, this makes it difficult to lock-in consumers or workers to a single platform.

Uber has tried several tactics to lock-in customers and drivers to its platform: last year in San Francisco they sold bulk rides at a discount, pushes new jobs to drivers when their previous job is nearly complete, “gamified” their platform, and even pushed additional jobs to drivers who used multiple platforms (using the program they called ‘Hell’).

It is easy to see where Lyft is going here: once Lyft reaches a critical mass of riders who sign up in advance, they can start to build routes for drivers. Say you want to work from 7AM-9AM, Lyft can offer you a “package” of rides during that entire time block. This gives drivers more certainty about their earnings, endpoint, and allows the platform to lock-in both drivers and consumers. Drivers can always keep going after the designated time, but the certainty of bulk packaging allows platforms to lock-in passengers and drivers for a period of time.

Additionally, this may get to the point where drivers can ask themselves: Why use a second app if you already know you can get all the business you want on a single platform?

Packaging rides could also help reduce the number of “dead” miles drivers take on during their work. Cities will be happy about this because could reduce the amount of CO2 per ride (dead miles plus the trip).

Almost all the delivery companies — UPS, etc. — already have some sort of distribution network similar to rideshare app “packaging”. It will be interesting to see if Uber follows Lyft’s footsteps in allowing customers to schedule rides. If so, this could be the first step in a major shift in the way people go about working and using rideshare.