Uber driving away traditional business
The ‘sharing economy’ may result in the end of the taxi industry as rideshare services like Uber are on the brink of market domination.
When was the last time you caught a taxi? My last time was on my 18th birthday, where I had to had to call ages in advance to book, get each of my friends to bring cash to split the bill and the taxi driver purposely took a longer route just to get a few extra dollars out of my pocket.
Since ride-share apps like Uber have hit the market, me, alongside many other consumers, have never had to deal with these frustrations again. In the digitally competitive world, taxi companies struggle to compete and their slow advancement may see the end of traditional ride-share.
The new model of business
Uber’s disruption to the transportation industry is based on the new sharing economy business model, which captures the unused value of goods. As the name suggests, the model uses digital platforms to connect individuals who ‘share’ assets at a price. The services promise greater flexibility for both consumers and providers, and increased freedom from the restrictions of traditional models of doing business.
Think of it this way — you have a drill sitting in your garage which is not currently being used. I am assembling some furniture for my new house but I do not have a drill. Instead of me having to buy a drill, I can jump onto a sharing economy platform and rent yours. This helps you to make a bit of extra cash, whilst I have been provided with a lower cost option to buying.
Uber works off the same premise and was arguably was the flagship of this new business model. It took advantage of the affordances digital platform technologies by effortlessly connecting passengers with drivers to turn vehicles that would otherwise sit unused, into on-demand taxis.
Uber killing the Australian taxi industry
Since hitting the Australian market in 2012, Uber has established itself as a dominant force in the transportation realm. New research from Roy Morgan found that Uber is set to overtake taxis in Australia as the preferred private transportation service.
Taxis market share has already been surpassed in three Australian States including Victoria, Queensland and Western Australia, proving the collaborative consumption model a big hit with Australian consumers. But what exactly has this meant for the taxi industry?
Ubers domination has had a direct impact on Australian taxi licence prices. Around the country taxi handlers are required to purchase a licence, which gives them the right to register and use a motor vehicle as a taxi. Originally these licences were advertised as assets — an investment as safe as a house. Nowadays very few licences are being sold, and those people still holding them are gasping for air at the thought their ‘stable’ investment has plummeted.
Brisbane cab driver Jagjit Singh purchased his licence 18-months ago to “have enough money to support our old age once we sell it”. However, he has watched the value drop to record lows noting, “$150,000 for a taxi licence is now considered a good price”. Like Jagjit, many taxi drivers believe it is now doomsday for cabbies and blames it all on Uber.
With stats coming out like, “people wasted an extra three minutes waiting for a taxi”, or, “Uber trips in August last year were almost 20 percent cheaper than similar rides in taxis”, there is no question why we are seeing a downward trend.
Uber captured market needs
Ask anyone, and I bet they will tell you the reason they switched to Uber has something to do with the company’s innovative use of internet-based platform abilities.
The GPS tracking technology is one of the biggest advantages that sees customers steering towards Ubers. Using this technology, the platform allows passengers to track the wait time for the car, record the route the driver is taking and estimate the fare based on the travel distance. All these features and more have led to an increased feeling of safety among passengers compared to when they use taxi services.
Payment is also ten times easier, with frictionless payment from the app meaning users don’t even have to get out their wallet. The bigger plus — the ease of splitting fares with your friends. Gone are the days like my 18th birthday where you had to collect everyone’s $10 notes.
Uber’s digital developments were miles ahead of what taxis were offering at the time the platform hit the Australian shores in 2012. Consumers have not looked back since, leaving the the taxi industry scrambling to keep up, and no choice but to reassess their business models today. The only thing left to ask is, what is the future of the Australian taxi industry?
The future of the taxi industry
In the age of high-speed internet and mobile devices, platform technology has shaken traditional business structures. The taxi industry can no longer survive on the small technological advancements they have made since the 1940s. Continuing on the current trend, I simply see no future for taxis in the Australian economy, which thrives on technological advancement. As Uber look-alikes begin to flood the market, taxis are bound to be left on the curb.
