Day 11: Getting taken for a ride?

Today I travelled from London down to Bristol for the day. This is crazy in British terms because it is gasp — about 2 hours. But being Australian I don’t get what all the fuss is about. I used today as an opportunity to try travel in the sharing economy and I learnt a few things that really surprised me.

So I’ll start with Blabla Car. I’ll be brief here and do a slightly more in depth review on another post, but here is the gist. Blabla Car if you haven’t heard about it is a ridesharing platform that lets you hook up with strangers to get a lift in a direction they are already going. It’s a popular platform in France and Germany but not so popular in the UK which is where my first problem came in. I could get a ride back from Bristol to London at £10 but not from London to Bristol, so I was forced to buy a train ticket for £32.90. In the end I came out financially worse than if I had just bought a return but it was an interesting exercise. The drive was great. My driving buddies were sweet and funny and we had a pretty effortless conversation all the way, even when we got stuck in traffic. My driver Nazir and the other passenger Alex knew each other as they had ridden together before and this is an interesting side product of Blabla Car, many people need lifts along the same route regularly as they do a weekly commute. I wonder if this eats into Blabla Car’s profits? As so often when people do something regularly they just end up bypassing the platform — not sure.

I’m struggling to find you the figures from my ride broken down into how much Nazir got and how much Blabla Car made, but in a previous booking that I had to cancel I paid £16.40 and was refunded £14 (as they removed the booking fee). When you do the math you realize that the booking fee is around the 17% mark. Keep this figure in mind.

Now as I mentioned I had to get a train down to Bristol. In order to save about £10 I got a train that got me in quite late, cutting my time until my meeting pretty short, so it was time to try out another sharing economy platform Uber.

Uber is pretty new to Bristol. Last time I was there at the end of May they hadn’t actually launched yet, so I was pleasantly surprised when I got an Uber that was just 5 minutes away. Jumping in the car, I started quizzing my driver Zac, and he was quite the font of information. Zac used to be a cab driver (and I think he still is sometimes). As a cab driver he told me he would make about £500 to 550 a week, but have to pay the taxi company between £100 and 150 for his taxi license. When Uber entered the market they undercut the taxis’ fares, charging on average 80p less per mile. This meant that Zac got less money from each fare, but there were more fares. Uber also has a different pricing policy where you don’t pay a license they just keep 20% of the fare (there is that number again).

For Zac at the moment this is a good deal as Bristol is a town with a young, connected population and Uber is in high demand. What also works well for him is that in Bristol there aren’t that many Uber drivers so lower fares but more fares. But what happens if Uber forces the taxi industry into bankruptcy? Then suddenly Bristol will be flooded with Uber drivers and then no one will be making enough money to survive. There is also another problem that Uber can and does change the rates at any time. Again I feel like employees in this economy are being put in a precarious position. Is this the free market truly at work? Or something else?

What is interesting to me is the number 20% that seems to come up again and a again. It shocked me on Fiverr but now I am starting to see if everywhere. People are willing to give away 20% for platform facilitation, but is that fair?

I don’t know the answer and I feel like I need to dig into the numbers a bit more before I cast judgment. In the end Zac told me that he was much happier working for Uber than he was for the taxi company, and that has to stand for something.

The economics of the sharing economy really interest me (being an old economics student from way back), so I might see if I can find someone to talk to about it next week.

Stay tuned.