An Analysis Of The Ride Sharing Trend For Uber Essay Samples
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Evolution of Ride Share
Booking a cab to airport or to the travel destination or to one’s office has changed drastically. Booking a cab was costly for a long period of time. However, with the concept of ride share, commuters now can have the luxury of going to their destinations in a pre-booked cab without worrying about paying too much money. Employee carpools or college mates sharing a ride back home from college are not new, but those traditional forms of sharing typically require advanced planning and involve people who know each other. However, with technological advancement, the nature of ride sharing has taken a completely new shape. With this new concept of ride share, a private individual rents his personal car to another driver or client for a few hours or days. There are different forms of rideshare. This memorandum will highlight the recent developments in the ride sharing process, how other players are offering functionalities not provided by Uber currently, and the changes Uber must bring in the future to outperform its competitors.
Uber’s current Ride Share Offering
In the most common form of ridesharing, the client posts his pickup location, pickup time and destination through a mobile application. Then ride share application companies like Uber matches that requirement with the drivers available in that area and at that time for picking up the client (Levendusky 2014). The list of available drivers is shown to the client, and the client based on the rating and other clients’ experience with the driver can select one of them and confirm the ride. In this case, Uber is acting as a broker between an idle taxi driver and a prospective client. In this process, on an average, customers save up to 10%-20% of the normal fare (Levendusky 2014). After the ride, clients can rate the ride and drivers. For future rides, clients can request specific drivers. However, as in this case, the persons providing the ride are actual drivers, the cost saving is not always high. However, the convenience of booking and getting a known driver is there.
Uber’s main service remains connecting licensed drivers with the clients via its application. Apart from that, Uber has also introduced other services on similar ride share concept called Uber X (normal cars as a low rate), Uber SUV ( high end ride share service), and Uber Taxi (e-hail dispatch service). Services offered under Uber Black (the core service) and Uber SUV typically are offered at a price premium (Levendusky 2014). However, Uber is still acting as a platform to join drivers and customers. Its competitors like Lyft and Sidecar are offering other types of ride share services not offered by Uber currently.
Recent Trends in Ride Share
Uber is missing out on a new trend of ride share, which has a larger potential. Companies like Lyft and Zimride are offering another form of ride share. In their application, any person willing to act as a driver can register as a driver. These people may be licensed drivers with licensed cars for transportation. However, they may be normal people like us without a commercial driving license, but they have time or empty space in their car that they are willing to sell (Chea 2013). In this application, clients can log in through Facebook and also can input their time of pickup and pickup location. The closest driver passing through that point is notified or the client has the option of choosing a specific driver. As the driver is willing to provide a ride to others, the payment is donation based (Chea 2013). The application suggests an amount, which should be paid as a donation amount, but the customer is under no obligation to pay. However, this application provides functionality to rate both clients as well as drivers. Suppose a person avails a ride and then pays nothing, then the driver will provide a negative rating to that person, and in the future, it will be extremely difficult for that person to get a ride through this Lyft or Sidecar application (Chea 2013). On the other hand, if a customer likes a driver and vice versa, they will give good rating to one another. This way it will be easier for the application to find drivers for clients befitting each other for future rides. This application is useful for within city commute or for office goers or airport pickup and drop.
Zimride has enhanced this application functionality little further. In Zimride’s application, the client can upload his route of travel and ask for a driver willing to rideshare with him (Chea 2013). In this case, once the route is uploaded, a willing driver needs to confirm. Once confirmed, payments are made through PayPal. Drivers are paid one day after the completion of the ride or after completion of the round trip (WhatstheFare 2014). This helps the company and college carpooling much easier. This application through route map upload feature provides visual planning options for the drivers. If a person is headed somewhere, he can earn extra bucks by registering as a driver in this application and then finding a customer who is also headed that way. This way, he probably will be able to cover his insurance cost, fuel cost and even some part of his trip cost as well. This feature works very well for long journeys as well as short trips (WhatstheFare 2014). Also, as the application is connected to the social network sites seamlessly, the customers can gather good amount of information about their drivers and vice versa before the trip.
Another ride share concept becoming popular is called Flight Car where a person going away to some other location for a long time parks his car in the long term parking of the airport. While he is away, his car is rented out to potential customers or is used as a rental car. He gets a daily rate for providing his car for this service. The owner also gets his car cleaned, washed and vacuumed.
The main question is why one will rideshare if it is not cost effective and convenient. Uber, Lyft, Zimride, Sidecar and many other companies have started their ride share business in major California cities like San Francisco, Los Angeles, and San Diego. Collectively, ride sharing services are always cheaper than taxi services. However, this is not the case if we see it individually. For example, Uber X, which is the cheapest option of Uber ride share services, is not always cheaper than traditional taxi services. In fact, Uber black is always costlier than taxi services (WhatstheFare 2014).
However, the ordinary driver and ride sharing services offered by Lyft, Zimride and Sidecar are invariably cheaper than Uber provided services and other taxi services.
Figure 1: Percent of Rides Cheaper than Taxi (WhatstheFare 2014)
It can be seen from the above graph that almost 80% of the time Sidecar provides a ride share cheaper than traditional taxi ride. Uber X and Lyft offer almost 75% of the time (WhatstheFare 2014).
Another pricing model used by all of these companies, especially Lyft and Sidecar, is called dynamic pricing. Lyft uses dynamic pricing for higher percentage of its rides than any other companies. It keeps the prices low at off pick hours and keeps the price high on rush hours as the demand is high and the supply of drivers is scarce (WhatstheFare 2014).
Also, after using this concept of connecting ordinary drivers with customers, the cost per ride for customers, who are using Lyft, has come down. In fact, as per the latest data available, Lyft has the cheapest ride share service in both New York and Los Angeles.
The concept of ride share is causing many policy and law related issues around the world. For example, all these application companies are operating in the transportation business and none of these companies have license to operate in a transportation business. They are licensed as technological companies (Lyons 2014). Uber, Lyft and Sidecar are facing charges in some states in the USA and also in other parts of the world. Besides, this concept of ride share is becoming a threat for the traditional taxi cab companies. Uber is connecting its application with these taxi service providers to broaden its network and take them into confidence. However, the ride share concept used by Lyft or Sidecar is highly disruptive. Lawmakers are concerned about the passenger safety as they feel taking a ride in a complete stranger’s car may not be safe, and it is almost impossible to track down the drivers if their only validation process is their social networking profiles (Lyons 2014). Insurance companies are concerned about coverage. While transporting a person from one place to another using a third person’s car, if an accident happens, then who will be responsible to cover the insurance charges? (Lyons 2014). Many other social groups are also concerned.
Recommendation for Uber
Currently, Uber is following only the traditional ride share model. However, the potential for the application used by Lyft and Zimbio is more than Uber’s application. Uber can improve its interface so that the clients can upload their route maps into the application. This will give the drivers clear visibility of all the available options. Secondly, Uber needs to connect its backend with the social networking sites where more detailed information about the drivers and clients are available. Uber also needs to introduce functionality to rate both the drivers and customers. These will not only help customers and drivers choose each other effectively, but will also help Uber suggest best matching options. Finally, Uber should target some specific groups like the employees of large corporations in metropolitan cities such as New York, San Francisco, Atlanta, Los Angeles, Seattle, and Chicago. It can also target students of large universities like Texas University, Ohio State University, and Michigan University. Right changes in the application along with marketing to the right groups through social media will help popularize the application.
Implementing the technical changes will not be a problem for Uber. However, registering drivers, validating their credentials and then slowly building a network of drivers and customers will take time. Uber should also take lawmakers and politicians into confidence before making its new move. It should not hurry as one bad step can ruin its reputation and brand image.
Levendusky, Jim. “What do Ride Sharing and Car Sharing mean”. Verisk Analytics. 2014. Web. 4 Feb 2015 <http://www.verisk.com/verisk/visualize/q4-2013/what-do-ride-sharing-and-car-sharing-mean-for-personal-auto-insurance.html>
Chea. Terence. “Ride-Sharing Apps Offer New Way to Get Around Town”. Huffington Post. 5 Apr 2013. Web. 4 Feb 2015 <http://www.huffingtonpost.com/2013/02/03/ride-sharing-apps_n_2612489.html>
WhatstheFare. “It pays to compare: Ride Sharing by Numbers”. 2014. Web. 4 Feb 2015 <http://blog.whatsthefare.com/2014/10/it-pays-to-compare.html>
Graves, Abby. “Ride Sharing to Car Sharing a Shift in Consumer and Brand Behavior” 2015. Web. 4 Feb 2015 <http://fleishmanhillard.com/2015/01/true/ride-sharing-car-sharing-shift-consumer-brand-behavior/>
Lyons, Kim. “Growing Opposition to Ride Share Companies goes Global”. Pittsburg Post Gazette. 12 Jun 2014. Web. 4 Feb 2015 <http://www.post-gazette.com/business/2014/06/13/Growing-opposition-to-ride-share-companies-goes-global/stories/201406120314>
McGarry, Caitlin. “Controversial Cab Ride Share Apps Reshape the face of Transportation”. 1 Apr 2013. Web. 4 Feb 2015 <http://www.techhive.com/article/2032571/controversial-cab-ride-share-apps-reshape-the-face-of-transportation.html>
Moreau, Elise. "6 Popular On-demand Taxi, Private Driver & Rideshare Apps". About.com. 2014. Web. 4 Feb 2015 <http://webtrends.about.com/od/Location-Apps/tp/6-Popular-On-demand-Taxi-Private-Driver-amp-Rideshare-Apps.htm>
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