The rise of share-riding: It is all about Uber now

All you need is just one click from your Uber app to get a driver to pick-up

The rise of share-riding: It is all about Uber now

 

Photo showing the Uber app interface

Image: Stock Catalog, Flickr, Some Rights Reserved

Uber, as the leading pioneer in the ride-sharing industry, has been capable of interconnecting and transforming the current experience socially, economically, and culturally. In this essay, it will be examined thoroughly by its unique business model and web technologies behind the scenes. Then a more in-depth analysis of Uber’s transformative effects will be discussed. This essay will be split into four sections, which the topics will be following the below sequence:

  • Overview of Uber,
  • Sharing economy,
  • Uber’s business model and use of Internet ecology,
  • Uber’s transformation.

Lastly, it would be concluded with the discussion of the unprecedented transformation that Uber brings to the industry and society. 

What is Uber?

Uber Technologies, Inc is a multinational transportation network company that is known for its peer-to-peer ride-sharing, ride-hailing, and food delivery services. Founded in 2009, Uber has soon become the leading brand of its field, as it enables individuals to be drivers by using personal cars or partnering with a third-party vehicle provider. Moreover, it aims to provide the public with a more convenient way to get on a ride by GPS instead of the traditional hailing service such as taxis. Notably, Uber is benefitting from the so-called sharing economy by sharing costly assets with individual drivers (Kavadias, Ladas & Loch, 2016).

How did it all start ?

As D’onfro’s Business Insider article noted, Uber all started with the founder’s dream of being a Baller in San Francisco, that is, to ride in style whenever you go. Funny as the incentive could be seemed, in Hartmans and Leskin’s article, Uber started as UberCab ten years ago in San Francisco, which initially focus on providing timeshare limo service that allows users to book cars through a mobile device or by SMS. Back in the UberCab era, though the fare is still relatively high, around 1.5 to 2 times as usual car booking services, the convenience of the one-click experience for a classy ride soon spread among the Bay Area. In 2010, Uber obtained its first $1.25 million seed funding from First Round Capital. Shortly after that, it rebranded as the current familiar term Uber in order to separate itself from the taxi business. As Uber gradually spreading worldwide, it also refined its business by expanding not only the type of ride-sharing services, such as UberX, Uber Pool, but also innovated UberEats, which is a combination of ride-sharing and food delivery. Despite Uber’s immense success, controversies over the tension between the taxi business, price surging, and regulatory issues have always been a debate since its launch.

 

Not only ridesharing, Uber Eats is an expanding service of food delivery.

Image: Andrew Marsh, Flickr, All Rights Reserved.

 

What is Uber’s business model?

The definition of a business model could be varied. However, it could be simply referred as the interactions of features that then create values and profits for one company.

While Uber is establishing its ‘Uberlization’ throughout the world, Smith (2016) noted that business model is critical to Uber in which it twins technology with personalized services. In other words, considering the current individual’s daily practice and the ubiquitous of the Internet, Uber is based on a click-and-mortar business model that focus on peer-to-peer engagement. As Uber is app-based, it uses GPS technology to link with both passengers and drivers, and this is a well-demonstrated scenario for a click-and-mortar business model. That is, when one business conducts part of itself as e-commerce while still carrying out their service or products in the physical world (Rainer, Cegielski, Splettstoesser-Hogeterp & Sanchez-Rodriguez, 2013). In light of Uber’s case, it accentuates the services through its mobile app, whereas the requesting for driver pick-ups and payments are done through its digital platform, and the ride-sharing services is then provided in the real essence of the physical world.

In Harvard Business Review, Kavadias et al (2016) pointed out that there are six keys toward successful business model:

  • More personalized products or service
  • A closed-loop process
  • Asset sharing
  • Usage-based pricing
  • More collaborative ecosystem
  • Agile and adaptive organization

Among all six points, Uber had itself mainly built on

  1. Personalization:

Providing private rides that are directly booked by individuals through personal accounts on the Uber app. As for drivers, through the app, they could autonomously decide their schedule and earn merits simultaneously.

  1. Agility and adaptivity:

Unlike traditional taxi services, Uber’s agility is making the usage-based pricing method feasible on its platform, which benefits both passengers and drivers. That is, users could choose from a whole range of different services, such as UberX or Uber Pool, then prepay the estimated price. Furthermore, for drivers, Uber will also calculate the routes based on real-time demands and show the best fare and area for them.

  1. Asset sharing:

Usually it is a two-side effect that occurs in two online marketplaces that unlock values (Kavadias et al 2016). This is the most significant cause for Uber’s success, which through sharing costly assets such as cars within the market.

  1. Collaborative ecosystem

In Uber, the collaborative relationship between the driver and passenger could be seen once logged in. As one could quickly request a driver to pick-up as long as they are connected through the Location Based Services (LBS) that partnered with Google maps, Uber is not only building up a collaboration between its users but also other technology companies.

 

interface

The user interface of Uber, showing a personalized riding experience.

Image: Dany Papineau, Flickr, All rights Reserved

In short, Uber’s primary business objective is to provide a real-time connection with passengers and drivers. Thus, it is a C2C (Consumer-to-Consumer) platform. In other words, individuals will present their resources as service or product through the platform, then in exchange for the monetary benefit from other individuals who are in need. Within this interaction, Uber is a digital marketplace that helps match drives and generate profits through the means of commission. This business model is also a product under the so-called sharing economy, which will be introduced in the following section.

 

Sharing Economy

When Travis Kalanick, one of the Uber founders, made his statement of “We just wanted to push a button and get a ride” (D’onfro, 2013), one should be mindful of the impact that Uber has based on the sharing economy. In light of Uber’s case, the concept of sharing economy behind the scene could be referred to as the software platforms that served as an intermediary to connect individuals with the purpose of sharing, selling, and buying the existing resource (Allen, 2015). Therefore, the rise of sharing economy is the momentum that pushes businesses like Uber to exist or even emerge. Moreover, it is profoundly transforming people’s perception of ownership by capitalizing on private assets, which will be discussed in the next section of this essay. Before the discussion of Uber’s transformative effects, one should take account of the reasons behind the change.

  • Ubiquitous computations:

Weiser once stated (1991, cited in Bell and Dourish, 2011, p.9) that ubiquitous computations “… weave themselves into the fabric of everyday life until they are indistinguishable from it.” This demonstrated the current situation of people considering using mobile device and technologies as a norm, which one is too used to it and not aware of its existence. By taking advantage of this social norm and also situating itself within the sharing economy market, Uber is transforming the traditional roadside hailing to a simple one-click-go ride-share habit through the popularity of smart devices and Internet.

  • Emerge of online community

The emergence of social network sites such as Facebook and Instagram is another factor that pushes Uber to transform individual uses and habits. Especially, for a business like Uber, who situates itself within the domain of sharing economy, the capability of wide spreading news, services, and products are consequential to increase its user’s recognition and reputation.

 

Uber’s Internet Ecology

In one of the articles published by Internet Society, it defined the Internet ecosystem/ecology as the interactions among a broad range of actors that involves in the collaborative process, which is developing and evolving the Internet. Besides, Looi (2001) contended that the ecology of the Internet is dependent on its participants, which signified that they are the actual players who set up the technologies and the environment. With the rise of the sharing economy, Uber is not the only standalone business within the field. Hence it is now facing multiple competitors in the market. These competitors could be split into two categories, ride-sharing companies, and traditional car services. The former one is new startups such as Lyft, DiDi, and Ola, and the latter one is taxi and car rental companies, such as Sliver Service and 13cabs. However, the significant threats will be the former type since it is offering consumers identical ride-sharing services. For Uber’s partners, it includes the LBS, such as Google map and online e-payment companies, such as Mastercard and Apple Pay.

Interestingly, both drivers and passengers are the main users of Uber, and the driver is the actual service provider. This seemingly absurd ecology is once again due to the nature of sharing economy, that is, providing a two-sided give-and-take. Lastly, the most controversial part within Uber’s online ecology is the regulators, and the ultimate question of who and how should it be regulated. Currently, in Australia, state governments and transportation authorities are believed to be the regulator under this sharing economy industry, especially for companies like Uber.  

 

Different Uber services could be selected by customer, including UberX and Uber Pool.

Image: guwahaticity, Flickr, All Rights Reserved.

 

Ecology Diagram

 

 

Is Uber innovative or disruptive?

Arguably, whether Uber is innovative or disruptive has been a debatable topic ever since its rise. In this section, it would be considered as a disruptive innovation, since it creates a new market which is severely impacting the preexisting taxi and car rental market. As Cannon and Summers (2014) noted that uprising sharing economy firms like Uber are valued $5.7 billion more than the long-established car rental company such as Hertz. This points out the disruptiveness within the existing car network market across the globe and also the transformative effects on people, primarily through a social aspect.

 

The six crucial key characteristics, as mentioned earlier, has defined Uber’s success. Agility and asset sharing have changed or in the sense of disrupted the traditional work infrastructure of the taxi and car rental network industry. Attributed to a low fixed-cost model in the sharing economy environment, Uber is disruptive not only because it is stealing shares from the existing incumbents but mostly due to its dramatic growth of a market for its services (Isaac & Davis, 2014). That is to say, Uber is forming a new market that allows easier access for driver entrants, which also simultaneously focusing on mobile users for rides.

 

For users: hailing cabs to ‘Ubering’

As we are familiar with the terms of xeroxing and googling, Uber is also turning into a verb that people use in daily life. This is not just a subtle change in grammar usage, but a sign of social transformation. As Uber introduced its two services, UberX and Uber Pool, it started to shake the long-existed taxi industry.

  • UberX

The basic service of the company, which aims to provide a better personal pick-up experience to users in a more affordable price. Specifically as Thomas Stelzer’s article noted, Uber had applied an upfront pricing model in 2018 in Australia, which is economically beneficial to users compared to the traditional taxi meter calculation.

  • Uber Pool

With the above new fare calculation model, Uber also introduced another game-changing service, Uber Pool. It is namely an experience of a sharing ride with other riders who are going the same direction. This is considered a novel commuting way as it is 50 percent cheaper than UberX, while unfavorably is more time-consuming and less personalized.

Albeit, ‘Ubering’ is now a norm; it is transforming the public unnoticeably during the past decade. Notably, in the era of sharing economy, as assets, time, and space are sharable, this then made Uber changing people’s perception of ownership and also the way we think of a ride. In particular, Uber has culturally transformed itself into behavior that people perform every day instead of just a simple ride-sharing service.

 

Uber as a Tech company ?

Transforming the public to get into the habit of its point-to-point transport services, technology plays a significant role in Uber’s business model. Mainly focusing on mobile users, Uber is exquisite since it is an app-based service. It leverages convenience and instantaneity through its cooperation with Google’s map service and GPS. According to Deloitte (2016), the average waiting time for an UberX service is 4.46 minutes, while the taxi is almost twice of the waiting time. The shorter waiting time that Uber enabled through its web technologies has improved the anxious experience for riders. Generally, Uber’s complete app-based services are tremendously social transformative. The platform itself has dispersed the market and enhances transparency for both drivers and users by eliminating issues such as fare evasion and time consumption. Moreover, classifying itself as a technology company, Uber could then be exempted from taxi’s complex regulation and licensing restriction (Isaac & Davis, 2014). However, the results of this classification and the social transformation of the public’s habit have triggered conflicts over the taxi industry and also raised legitimate safety concerns.

 

 

Video discussing the conflict between Uber and Taxis.

Source: CNN Business, Youtube

 

Final Verdict

Uber is genuinely one of the innovative internet transformations of the sharing economy era. Though disruptive in the taxi industry, Uber has reshaped society through its online interfaces. Furthermore, by utilizing the connectedness of the Internet’s nature to match rides, Uber has consequently provided a series of unique ride-sharing services to the mass, which influenced and transformed socially and economically.

 

 

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