12/8/2016 by Katherine Memery
Since its launch in 2009, Uber has well and truly shaken up the traditional business model of taxi drivers across the world. The San Francisco-based company set out to “evolve the way the world moves” and, in many cities, proved to be a better value and more convenient alternative to public transport and taxis.
By using a smartphone app, customers can request a car, be picked up within minutes and pay a fraction of the price they are used to paying conventional taxi companies, for their journey.
Uber is worth more than $60bn and has been hailed as the world’s most valuable start-up. It currently operates in over 450 cities in 73 countries, including 20 cities in the UK. The ride-hailing app has done so well, that new businesses often say they’re trying to be the “Uber of their industry”.
The struggle for supremacy
However, the journey to global domination hasn’t been easy. Uber has become notoriously known for its aggressive expansion, entering into markets across the world regardless of whether its services were legal in particular cities.
In response to these tactics, the company has faced widespread objection from regulators and local governments. What’s more, demonstrations and protests have been held by taxi drivers who believe Uber have bullied their way into the market. They accuse the company of undercutting their business and avoiding the license fees they are subject to.
In London, Uber has been particularly controversial. At one point Transport for London proposed a series of rules to limit the company’s operation in the capital and alleviate Uber’s contribution to the city’s congestion. These included requiring operators to allow passengers to pre-book cars up to a week in advance and imposing a minimum wait time between ordering and beginning a ride. However, much to the dismay of black cab drivers, the restrictions did not garner enough support and were dropped following Uber’s opposing petition which achieved over 200,000 signatures.
Uber has always maintained that they are simply taking advantage of the ubiquity of smartphones and providing passengers with the convenience and value for money they have come to expect.
While they are now the market leaders in the US, there are parts of the world where Uber has struggled to dominate. In some countries, they have come up against established and well-funded competitors, such as Didi Chuxing in China and Ola in India. In China, Uber found it so difficult to lead the market that its CEO Travis Kalanick settled on a merger with their Chinese rivals, who count Apple and the country’s government among their main investors.
What’s next for Uber?
Kalanick recently announced that the company will be making massive investments into creating its own mapping system. In-house mapping will lead to greater precision, which is particularly needed in developing countries where Google Maps, which currently power Uber’s app, can sometimes be inaccurate. Eventually, the company will no longer rely on the internet heavyweight in order to operate.
Expanding into other markets
In the last year or two, Uber have diversified their services, unveiling sister apps UberPool, UberRush and UberEat. UberPool, which allows customers to share a ride with a stranger for a discount of 25%, was rolled out in London at the end of last year. On the other hand, UberRush provides an on-demand delivery service for online sellers and UberEat delivers meals instead of people in more than 12 US cities.
Perhaps the most telling of the Uber offerings, however, is UberEverything, a division that aims to identify further opportunities separate from Uber’s ride business.
So, what can businesses learn from Uber’s impressive journey?
At the heart of Uber’s success is a simple solution to a genuine problem. Uber was the first company to take advantage of the emergence of smartphones and mobile internet and offer a modern, convenient and more reliable way of hailing a ride.
Uber’s business model is relatively straightforward. But because they provided a unique service, they garnered a stronger brand presence and have enjoyed greater success than their competitors. Businesses that provide new services or products and improved solutions to consumer issues will ultimately perform better.
Because its drivers are technically self-employed, compared with traditional cab companies, Uber has minimal overhead expenses. This means that they have more freedom to adapt to change. It’s important that businesses look for ways to become more cost-efficient at all times.
Uber has done well to adapt to the different markets and cultures in which it operates. While ordinarily, its customers pay for their rides online using a credit or debit card, in parts of India and the Philippines, Uber allows passengers the option of paying with cash. To succeed globally, a company must tailor its service to meet the needs of people in different parts of the world.
Uber’s latest ventures have made it clear that it recognises the value of expanding into new markets. UberEverything has been set up purely to consider all possible avenues of expansion. There are many ways you can grow your business; Uber has shown the importance of not limiting yourself to a single product or service.
Lastly, it’s essential not to underestimate the power of word-of-mouth. Uber has grown to become an industry giant because satisfied customers have spread the word. They are the most powerful brand advocates; complimentary customer reviews and testimonials will do wonders for your reputation.
While few companies dominate the market on the same scale as Uber, there are definitely lessons small businesses can take away from its success. As Uber moves towards other avenues, including food delivery and couriering, business commentators and consumers will be watching. Will Uber continue the same kind of ruthless expansion it has become known for or will it face challenges from the established industries it is attempting to crack?