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“The Uber Business Model: A Deep Dive into Its Structure and Functioning”

Due to the fact that it links drivers (the offer) and customers (the demand) in order to provide less expensive transportation and an extra source of revenue, the Uber business model is sometimes referred to as a multisided platform business model. The current CEO of Uber, Dara Khosrowshahi, claims that fewer than 1% of all kilometers travelled worldwide are driven on Uber. In nations where Uber is offered, just a tiny portion of individuals have ever utilized our services. Even so, I am certain that you are well aware of this business, have probably previously taken use of its offerings, and have most likely downloaded the app into your smartphone.

Uber is a technology platform that has transformed urban transportation, but it has also caused a lot of trouble for taxi drivers and cab firms. In a nutshell, it’s an app that utilizes a smartphone to link drivers and those in need of a ride.

An overview of Uber’s history
The beginning of Uber’s history was in Paris in 2008. When Travis Kalanick and Garrett Camp couldn’t find a taxi one night while at the city’s annual tech conference (LeWeb), they began to consider what it would be like if people could just request cabs using their smartphones.

Camp continued considering it, so he returned to San Francisco and purchased the domain name ubercab.com. Interestingly, Kalanick also sold his firm, Red Swoosh, to Akamai Technologies for $19 million in the same year that Camp sold StumbleUpon to eBay for $75 million; nevertheless, Kalanick started working on UberCab as a side project.

Camp convinced Kalanick to join UberCab over the course of the summer, and the company launched in 2010. The business expanded swiftly. It would be introduced to the world a year later, naturally in Paris. Uber began raising a lot of money in 2009 and was the most valuable company in the world in 2015 ($51 billion).

Uber, which has been around for more than 10 years, is now active in more than 900 locations globally and is valued at more than $70 billion. Let’s examine the business strategy of this forward-thinking leader in urban transportation, which enables us to order a car with a single click.

Owners of Uber

In June 2017, Travis Kalanick got into a conversation with the driver of an UberBlack vehicle. Following the event, Travis gave up his role as CEO of Uber. Later, he established the venture capital firm 10100 and the real estate business City Storage Systems.

After Kalanick resigned, Dara Khosrowshahi, the former CEO of Expedia, was selected to take over as CEO of Uber and has held the post as of this writing.

The Mission Statement of Uber

“By moving the world, we ignite opportunity.”

How does Uber function?

You need a smartphone with a GPS system, internet access, and the Uber app loaded in order to order an Uber. The software will then find a driver who is available based on both of your locations once you input your destination in the app. As soon as you get in the vehicle, the driver will use the app’s built-in navigation system to drive you to the place you’ve selected.

Depending on the city you want to use the app in, there are many kinds of cars available. Accordingly, there are minor variations in the rates for each group. An Uber algorithm determines the race’s worth by taking into account the distance covered, the passing of time, and the gasoline used.

Various payment options are also available, depending on where you use the app. Additionally, Uber has a rating system, which is a crucial component. Both the driver and the passenger judge each other: the rider and the driver. As a result, before taking a ride, everyone may assess each other’s level of confidence.

Pros and Cons of Uber

Convenience is Uber’s major selling point for customers. The app is initially user-friendly and seldom unavailable. The majority of people nowadays may request a vehicle without moving an inch from wherever they are since almost everyone in metropolitan areas has a mobile phone, most of which have an internet connection.

Users who submit a request are provided with a wealth of details on the driver and the vehicle, including the license plate, name, photograph, length of service, and rating. This gives the user extra security. In fact, customers have the option of sending someone else their transportation details in real time, which also ensures their increased security and peace of mind.The main advantage for drivers is the ability to find employment with only a vehicle and a mobile phone, the freedom to choose their own hours, and a steady stream of revenue. Additionally, the ranking system gives the driver more security since they can verify the user’s profile and score on the app before deciding to continue the trip or not.

Uber’s first-mover advantage in this industry is undoubtedly a major benefit. Although it’s true that taxis are Uber’s rivals, the target market is different since we’re talking about people who would request a trip via an app rather than honking at a visible automobile in their path.Additionally, Uber has made a name for itself in the market not only because its business model was the first, but also because it has developed a practical framework that really works and has earned the trust of both drivers and passengers.

Negative aspects include the liability and insurance concerns that the business still faces in both the places where Uber is expanding and the ones where it is already established. This involves conflicts with taxi driver unions as well as with various local governments all across the globe.

Customers, both users and drivers, suffer specifically from a lack of fierce competition. Although there is currently competition in certain areas, for example, Uber cannot be forced to pick how much to charge the consumer and, more importantly, how much to pass along to the driver.

How does Uber get paid?

The commission-based business model of Uber makes this its primary source of income. Each ride’s total cost includes the driver’s payment as well as any applicable fees, taxes, and business commission. Typically, the driver receives between 75% and 80% of the value, with Uber keeping the remaining portion.

However, because of the costs and minimum fare, the commission might be as high as 50% when it comes to the short term. However, this is not the sole revenue stream for the business. Uber also profits from collaborations with marketing companies. These are advertising campaigns that are carried out via the app and on several occasions during the actual journey (for instance, the BMW 7 Series provided free excursions in its new automobile to advertise it). Additionally, it is important to keep in mind that Uber has been growing the services it offers.

Uber Eats is perhaps the most well-known, particularly during the Covid-19 pandemic’s time of social isolation. It is a meal delivery service, and it has the same features as a transportation app: it uses a partner delivery service to link restaurants with customers over an online platform. In this instance, there are three income sources: advertising, delivery fees, and revenue-sharing agreements with eateries. Depending on where the procedure is conducted, each of these numbers and percentages varies.

Customer Segments for Uber

The two main client groups for Uber are drivers and passengers. People who don’t own a vehicle, need to go outside of their home city, or don’t want to drive at a certain time, such as when they know they’ll be drinking at a party, concert, or celebration, fall under the category of riders. The folks who are out of work or in need of some additional cash, and who may be able to start a new career merely by driving and using an app, are on the side of the drivers.

Value Propositions of Uber

The biggest value proposition for clients is the ease of not needing to find a cab since the automobile arrives to you. You may follow a car’s path and it is accessible around-the-clock. Additionally, prices are often less expensive than those charged by taxi drivers, and before summoning the driver, the passenger may calculate the cost of the trip. For drivers, it is a primary or secondary source of income, one that doesn’t need prior expertise, has flexible hours, and has simple access to passengers. Additionally, let’s not forget that the passenger specifies the destination on the app, which helps both parties prevent misunderstandings when dealing with persons who do not speak the same language.

The Channels of Uber

Word of mouth has historically been the most effective way to reach clients over those 10 years. Social media has also been another popular dissemination route. Of course, there are other app shops where users may download the Uber app.

Customer Relationships at Uber

Customer, driver, and regulators are the three parties involved in the customer interaction. The consumer is at the center of Uber’s attention. The corporation has little motivation to develop a connection with the other two if it has no credibility with the end consumer. Here, it’s crucial to have faith in security and privacy, as well as transparency about time and costs. Uber’s own driver is the company’s second-largest client. Although there are several cases worldwide about this, the fact that the driver is not an Uber employee and that their car is not Uber’s property means that the firm must provide them with favorable working and payment circumstances in order to continue operating. Regarding regulators, Uber strives for accountability and compliance within the law, up to a point when it is also permitted to abide by market regulations.

Key Resources for Uber

Uber has two main assets: 1) the platform that links drivers and passengers, with an emphasis on ongoing development of its tools and algorithms, and 2) the Uber name, which is recognized across the locations in which the business operates.

Key Activities of EzoicUber

Uber’s two major tasks are: 1) Creating and maintaining the app (and its algorithms); and 2) Keeping passengers and drivers engaged and enhancing it. Its primary operations also include marketing, interparty communication, customer service, and other things in order for these activities to be successful.

Key Partners for Uber

The driver is Uber’s most crucial critical partner since without them, the business cannot reach its ultimate customers, fulfill its value propositions, and generate income. They make up the chain’s supply side. Investors are another crucial vital partner who enables the business to grow and execute at higher levels. They provide the first investment for developing the app, the algorithms, and novel ideas like autonomous automobiles. Of course, additional expenses are also covered by this income. Then there are the technological companies, who provide services like cloud storage, data analytics, cloud payments, communication, and GPS.

Cost Structure of Uber

Uber’s cost structure is mostly focused on platform upkeep and marketing expenses for customer acquisition (CAC). Legal fees, credit card fees, insurance, expenditures in research and development, customer service, and other expenses are also involved.Pricing for uber surge

Competitors of Uber

This is the main rival, Lyft. The startup, which was founded in 2012, offers services throughout the United States and in more than 220 locations, giving 18.5 billion trips each month. It was valued at $24 billion when it went public;

VeriFoneSystems owns the business, and it operates using its systems and credit card terminals. Launched in 2015, Curb runs the majority of New York City’s green and yellow cabs and aspires to serve all of the nation’s major cities;

DidiChuxing is a 2009 startup that is now among the biggest businesses in China. Through its app, it provides services including DiDi Chauffeur, Didi Test Drive, taxi-hailing, DiDi Minibus, and DiDi private automobile rental. The firm provided 1.4 billion rides in 2015, and in 2016 it was valued at $28 billion;

OlaCabs: It started as an online cab aggregator in Mumbai in 2010. The network now spans the UK, Australia, and New Zealand, and in 2015, its worth topped $5 billion. Ola now has a market share of more than 60% in India;

Grab was established in 2011 in Singapore and provides services in Malaysia, the Philippines, Indonesia, Vietnam, Thailand, Myanmar, and the Philippines. By allowing language translations in its messaging service towards the end of 2016, Grab helped break down this barrier in Asia;

Cabify: With contemporary cars, knowledgeable drivers, and geo-tracking, it was introduced in 2011 in Spain and is regarded as the most secure in the sector. The business is active, among other locations, in Spain, Mexico, Chile, Brazil, Peru, Argentina, and Portugal;

A leader in the development of autonomous cars, Yandex Taxi is a Russian firm that provides food and ride-sharing services throughout the Middle East, Russia, Eastern Europe, and Africa. By the end of 2018, the firm has sent 1 billion trips with more than 700,000 drivers;

Local taxis: Taxi stands may be found in every large city, usually close to stations, terminals, airports, and hotels. Taxi services have the benefit of allowing for direct pricing negotiations with customers.