We all have used the Uber taxi services at least once for riding or going from one place to our destination. Taxi service industry has seen significant growth in recent years due to a huge demand for taxis and ride facilities mainly in big cities where the salary class or student crowd is large. The industry in India has massive competition due to major participants in the industry providing the service. Ola, Uber, Rapido, Jugnoo are some of the top taxi service providers in India. Despite such heavy and tough competition Uber stands out to make a place in the top taxi service provider and still leading in the industry.
What makes Uber a successful taxi service provider?
This article will give you a deep insight about the journey Uber from inception to the news of IPO.
Company’s History
Uber known as Uber Technologies Inc is San Francisco based company established in 2009 by Garrett Camp and Travis Kalanick. The company is involved in offering ride services, food delivery services and transportation. The company operates in around 70 countries with almost 10000+ cities in the world.
Since the inception, the company has shown significant growth in terms of users, revenue and reach around the world. The company has brought many changes and advancement in the operations, services to provide the customers with the best experience and service.
The idea of Uber was clicked in 2008, when the founders ( after Uber launched) were returning from a tech press conference and were unable to get the cab in the city.
Founder’s Wall
Garrett Camp was born in Canada in 1978. He is an Entrepreneur and has worked in many companies to build them a successful one. He graduated from University of Calgary and completed his bachelors in Electrical Engineering. He completed his master in Software engineering after that.
Travis Kalanick is an American Businessman born in 1976 in America. He has completed his graduation from Granada Hills Charter High School. He was CEO of Uber from 2010 to 2017. Before Uber he has worked in Scour and served as co-founder of Red Swoosh.
Uber Business Model
Uber offers taxi services and food delivery services in many parts of the world. Uber works in a Multi Sided platform business model, as Uber behaves as an intermediary to connect the driver and the passenger to get the cheaper transportation services.
Uber has built an application to connect the passengers and taxi drivers. The app allows users to book a ride through the app, which is easy to use and has a friendly user interface. The passenger can select the category of the vehicle available in the app based on the purpose and requirement.
Uber offers the best convenience facilities to the users 24*7. Uber believes in offering a value to the customers, which can be obtained by charging affordable charges and providing a safe and hassle free ride to the passengers.
The app allows the driver to get the information about the passengers pick up and drop point. The fare is calculated automatically by the in-built system in the app, which eliminates the issues of high fare charges charged by the taxi driver.
Mission statement and Logo
With a mission statement “ We ignite opportunities by setting the world in motion” Uber operated to connect the two different segments of the service, Driver and the passengers.
Revenue Model
Revenue model is based on commission basis. Uber charges a certain percentage of the fare charged by the driver per ride. Along with the commission based revenue, Uber also generates revenue from promotional partnerships. The percentage is based on the distance of the ride.
Uber also started food delivering services when the taxi services were stopped in the Covid hit years. Uber Eats were launched where Uber provides food delivery service, connecting the customers with the restaurants through the mobile app.
Financials
Uber Technologies Inc is listed on the New York stock exchange NYSE.
The company has generated revenue of $8.6 billion the year ended 31st Dec 2022. Net income of the company was reported at $595 million in the same year. The revenue has seen a significant growth from the past years with an increase in EBITDA. Gross bookings have increased from 19% on a year on year basis to $30.7 billion.
Competitors In India
Ola: Ola taxi service provider is the major competitor of Uber. The company operates in many nations of the world offering taxi service to the passengers. In India, Ola secures the highest market share in the taxi service provider with around 50+% market share.
Lyft: Lyft is another competitor of Uber operating in the US as a second largest ride hailing company. Company has reported a revenue of $4.22 billion in Mar 2023.
Gett: Gett offers taxi/ cab provider service in the UK, USA and other European Nations and is a tough competitor of Uber. Company offers a facility to book a ride in advance for up to two weeks.
Go Catch
Gocatch is an Australian taxi service provider operating the largest fleet of metre operated taxis in Australia. The company offers a discount and other offers to the customer on payment through credit cards. Company has more than 30000 taxis and has a significant market share in the Australian Market.
Challenges
Though being a leader in the industry of taxi service, Uber has faced many challenges in the journey of taxi service providers since inception. During the expansion of the operations in different nations Uber faced a lot of obstacles with regulatory framework, regulations,drivers strike and others. Safety of the passengers is another challenge faced by Uber, as ensuring the safe ride and womens safety was a major concern.
Battle with local taxi drivers was another issue, as operating in the city as a taxi service provider required competing with local drivers as well.
Acquisition
So far Uber has made 15 acquisitions in different startups.
In 2022, Uber acquired Car Next Door which is the latest acquisition made by Uber.
2021
- Uber acquired HK Taxi for an undisclosed amount.
- Transplace was acquired in the same year for $2.25 billion.
2020
- Company has acquired Auto Cab, a mobility platform and dispatch software for the taxi.
2016
- Uber has acquired Otto (designing a modern transportation system, starting with self-driving trucks) for $680 million and Geometric Intelligence () for an undisclosed amount.
2015
- Cornershop was acquired for $450 million
2012
- Drizly was acquired for $ 1.1 billion.
Future Plans
Uber is looking for an opportunity to get involved in the electric segment. The recent acquisition of Uber of an electric bike share startup “Jump” indicates the future vision of the company.
“More and More, Uber is not just going to be just about taking a car, but it is about moving from point A to point B in the best way,” said the Chief Executive of Uber.
Uber plans to allow users to access the 12000 dockless, GPS enabled bikes from their recent acquisition of Jump.
Uber is looking for an eco-friendly option to involve in the business with E-bike alternatives.
Conclusion
Uber business model has shown a significant growth in the revenue as the company has a strong business and revenue model. Company looking to expand its business in more cities of the world. Company has given tough competition to the market leaders in the industry and today has stood out as a strong leader in the taxi provider service. The company also has made many acquisitions to increase the business reach in different segments and related businesses.
This was the complete insight into the Uber business model, competitor, revenue mode, financials, future plans and challenges faced.
