We all are aware of the term ‘uberization’ that has been gaining a lot of prominence in the digital business nowadays. As per the Cambridge Dictionary, Uberization is defined as the process of using technology, especially mobile technology, to change the market of a certain service or group of services by introducing a different approach in the buying or using of the same. The term Uberization was derived from the company named “Uber” which was designed to hire a cab.
Uber- The Prominent Name in the Sharing Economy
Uber Technologies Inc is an American multinational company specialized in providing transportation services such as ride-sharing, peer-to-peer carpooling, long-distance travel cab hiring and bicycle sharing system. They also have their food delivery chain services namely, Uber Eats. As per recent studies, it is accounted that Uber constitutes around 69 percent of market share in the United States passenger transport and has around 110 million users worldwide. As part of uberization as discussed above, many startups are coming up with the idea of on-demand businesses under the name tag “Uber for X” where ‘X’ defines the particular field of service.
The Story Behind “Uber”
Uber earlier known as UberCab was founded by Garret Camp in the year 2009. The concept of UberCab was inspired by the need to reduce the taxi costs and for the public to make use of carpooling or ride-sharing services to cut down travel expenses. Along with its co-founder and CEO, Travis Kalanick, Uber was finally officially launched in San Francisco in 2011 as UberCab and was later renamed to Uber.
Uber is among the many businesses that proved their business strategies online. The first employee of Uber and its current Chief Operating Officer (COO), Ryan Graves joined the job with his response to the tweet of Kalanick. July 5, 2010, marked the first Uber trip across San Francisco. Initially, the public was allowed to hire only black luxury cars through the mobile application at prices almost 1.5 times more than the regular taxi fares but was gradually decreased to affordable rates after the whole system began its full-fledged functioning.
In July 2012, Uber introduced UberX where people could hire non-luxury cars which were reasonable and a cheaper option for hiring. The cars and drivers were selected after proper documentation and background check to ensure the safety of the users. By 2013, UberX allowed drivers to use their vehicles for taxi purposes which greatly reduced the taxi fares making it a better option than UberBLACK and conventional taxi services. In the following year, 2014, Uber introduced the UberPOOL for carpooling services and ride-sharing as a part of reducing travel costs and conserving fuel use.
The Uber Business Model
The drivers of Uber can use their vehicles for rideshares and hires. The vehicle and drivers will have to pass through a series of legit documentation and background checks to ensure the safety of the passengers hiring the vehicles.
The drivers will be provided with an Uber phone or access to the driver’s platform that can be used on their smart devices through the mobile application.
The drivers will also have to pass the eligibility criterion based on age health, car conditions and documents and should have valid driver’s license with good driver history.
The vehicles of Uber will also have an Uber logo stuck on the vehicle for the passengers to easily recognize that the vehicle is enlisted under the Uber business. Few cities require the drivers to have an Uber license to use the service as a medium of income.
The “Real ID Check” mechanism is installed in the system for the drivers to pass the identification process at regular intervals through selfies or any other identification processes to ensure legitimate use of the application
Users that are registered on Uber with their email ID or Phone number can download and use the Uber services right away.
Based on the location settings, the app will prompt the passenger to add the pickup location manually or will automatically pin the location using the mobile’s GPS, and the destination URL.
Dynamic pricing: The pricing will depend upon the distance, supply, and demand of the Uber facility during the period. In cases of a normal ride, waiting charges are also added.
Passengers will be allowed to select from the array of options to ride with Uber, independent trips, ride-sharing with others (carpooling) or long-distance rides, and hiring the cab for a full day purpose which will allow multiple stops.
The passengers are allowed to provide the drivers with reviews and ratings which will add on to their payments as gratuity.
Passengers can select from a variety of options depending on their comfort and budget. From luxury sedans and SUVs to compact cars and carpools, Uber provides its customers with a range to choose from.
The Price Distribution Model of Uber
Uber sets the taxi fees with premium rates during peak hours and better rates of the peak time. Passengers can pay using their credit cards or debit cards, Internet banking and mobile wallets and also by cash.
The total amount is divided such that 80 percent is given to the driver and the remaining 20 percent is taken by Uber. The success rate of Uber is an indication that even after the soaring 20 percent commission acquired by Uber, the drivers are still capable of earning more compared to that of traditional taxi or cab services.
This business model is among the most accomplished online and offline business in this decade. Let us look into a few pros of this business model.
Uber is a user-friendly online application for both the passengers to book or hire a cab and for drivers to register and start earning an income.
Uber provides plenty of options for the passengers to choose as per their comfort and budget.
Online payment options have made Uber more popular than traditional taxi services.
Uber is its first-of-kind business idea and is widely used across the globe and hence face lower competition.
Just like any business, even the Uber business model suffers a few cons such as the legitimate issue such as insurance, ensuring the best customer experience and legal formalities in case of complaints are a few to point out.
Every business has its own set of pros and cons. Keeping your business transparent and abiding all the facilities and features as preached is the best way to up your business to the next level.
As on-demand businesses are soaring in demand and you are in the thought of starting an online on-demand business website, check out the available software packages to build the perfect on-demand business website and its compatible mobile versions.