Your Next Ride is Just a Few Taps Away
As one of the leading ride-sharing companies in the industry, Uber came with the storm to disrupt the susceptible incumbent taxi service providers. Since 2008, Uber has had a special place in our phones whenever we need a ride, and currently, we can enjoy much more than just A RIDE due to continuously expanding offerings. After all, none of it would be made possible without technology, which is at the heart of Uber’s services. Despite uncovering many new opportunities for development, technology is the source of inevitable challenges Uber needs to face.
Even if you have never ridden with Uber (fair enough), you have definitely heard of it before. Uber is an app, which allows you to book a ride online in available regions. The business model is similar to the one of regular taxis but with significant differences — mainly enabled through tech. Everything happens seamlessly from the comfort of your smartphone: looking for drivers nearby, live tracking their location and paying for the service. It could not be easier. At least for smartphone users. A study shows that in 2019 in the UK only around 30% of younger generations aged 18 to 34 have never used Uber, comparing to whooping 78% of the surveyed 55 year-olds.
Ride-hailing Market
According to Statista, in 2026 ride-sharing market size is expected to be more than doubled compared to 2021, reaching $185.1 billion. Although it sheds a positive light on Uber’s potential future, the success is not guaranteed, even with the heavy investments in the company ($24B in 2019). There are strong players out there, just with a smaller global reach, but with technology at stake, it can change any time. Along with global-scale competition from DiDi, the Chinese Uber equivalent, over the market share, other ride-hailing companies compete with Uber locally. As an example, Lyft is a popular service available in the U.S. and Canada, similar to Uber, offers subscription plans in limited locations. As mentioned by Marti, a fellow digital society member, the Lyft subscription is $5 cheaper and a better deal for what you pay for.
Speaking of the subscription, why would Uber want to offer such a service? The answer is pretty easy — to create more loyal customers and keep them for longer. But let’s take one step back.
Uber’s Network
Uber is a platform and benefits from network externalities. If you are not familiar with what network externalities are, I’m here to explain. In a nutshell, the value of Uber depends on how many people join the network. It goes both ways: more drivers joining the platform will allow more customers to find their ride quicker, and with more customers joining in, more drivers will find opportunities to earn money. Nevertheless, a single ride is a rather non-binding transaction. To overcome it, Uber came up with a subscription plan to increase the loyalty of its users in exchange for stable price rates.
Money Talk
What does stable price rates mean in the case of Uber?
Well, if you have ever booked an Uber after a big event or in a busy city centre, you probably already know what I want to say. If the demand for rides is high, the price goes up. That way, loyal customers (with the subscription) don’t need to worry about price fluctuations. On the other hand, Uber will benefit from both users paying for the ride, on top of their subscription, and the users who pay extra during peak times. WINNING.
Another smart move from Uber was recognising the opportunity to offer a range of cars with different standards (and of course, charge accordingly). These are UberX, UberXL (for up to 6 people), Uber Comfort (comfortable cars with extra legroom) and Uber Black (luxury cars) and more. Consequently, the company can increase their revenue on each ride when people don’t mind spending a bit more on a better standard. Again, with Ride Pass subscription from Uber, the users will enjoy a discount on each of the car options.
Safety First
Uber is committed to the safety of both drivers and riders. Within the app you can find plenty of features introduced to ensure that you feel confident and safe. Some of them include GPS tracking and sharing location with your loved ones, 24/7 incident support, PIN checks to know that you got in to the right car, and frequent driver and car checks. Even though technology is used to put safety to a higher level, there are still reports of incidents concerning the safety and wellbeing of the passengers. The U.S Safety Report, published by Uber in 2019, revealed over 3,000 sexual assaults, 9 murders and 58 fatal crashes involving riders, drivers and people pretending to be Uber drivers in 2018. It is hard to predict such challenges but the introduction of the safety features is a step towards preventing future incidents.
Piggybacking New Opportunities
With ever-expanding mobility service network, Uber decided to take advantage of it and present the users with new services. During the pandemic UberEats, Uber’s food delivery service, experienced a 30% surge in users signing-up, ready to have their bellies filled with takeaway meals. Additionally, the offer was extended to grocery shopping by partnering with a range of stores, which became a great convenience especially for people isolating at home.
Although it may seem like Uber and Taxi companies are the biggest rivals in the market, Uber actually added an option to book local cabs straight from the app. Surely, the prices are still higher than Ubers’ (I’m looking at you, black cabs) but it provides more opportunities for both parties. The new drivers joining the network, and old-fashioned taxi lovers to benefit from the convenience too.
Uber proved that you don’t even need to own the cars to successfully operate in the ride-sharing industry. It is the power of network and being a platform connecting both drivers and riders together. All thanks to technology, which opened many doors for the company, and there are still plenty of new opportunities yet to be discovered. Nevertheless, Uber needs to be on the lookout for the challenges, such as the competitors and unpredictable threats to its users.
