As a pioneer in ridesharing, Uber has enjoyed enormous success in almost every market it has launched in. The Uber business model for operating a ridesharing business has been copied by many other budding companies. The model seems to work as evidenced by the company’s growth over the years. Uber has proven to be a flexible source of income for drivers and Uber fleet owners. If you have a car registered on the Uber platform as a driver, you get to drive on your own schedule and be your own boss. It is safe to say that Uber has empowered people who are interested in partnering with the rideshare giant in various markets.

The Uber business model has remained the same since its official launch in 2010. The company takes a pretty aggressive stance when it launches in a new market. 

So how does this model work? Let’s take a quick look at how Uber has dominated new markets over the years.

 

The Uber Business Model

 

Aggressive Marketing

Uber enters into a new market with the intent to dominate almost immediately. The company adopts various marketing channels to get the word out. Users can download the app via various channels like Facebook, Google and other social media platforms. Also, people get rewarded for referrals. Marketing tactics take an “in your face” approach that leaves competitors rallying to compete fairly. Uber is valued at a whooping $69 billion and has enough funds to help get the word out.

 

Driver Recruitment

New drivers get huge sign-up bonuses. Existing drivers also get mouth-watering referral bonuses that encourage drivers to recruit others. Drivers who don’t have access to their own cars are linked to Uber partners who have cars registered on the platform but do not want to drive. Also, leasing programs are created to help drivers who don’t have their own vehicles have access to cars and potentially own these cars. In May of 2016, auto giant Toyota announced that it would be entering a partnership with Uber. Uber and Toyota would work on creating new leasing options that would allow Uber drivers lease vehicles with Toyota Financial Services providing financing to these drivers.

 

Dispute government policies

In Austin Texas, the issue of finger-printing drivers prompted Uber to halt its operations in Austin, Texas. Uber argued that requiring drivers to be fingerprinted as part of criminal background checks would hamper their seamless registration process. This is just one of the many instances where Uber has thumbed its nose on policies that it disagrees with in a new market.  Uber fights these city regulations as the Uber business model aims to make the sign-up process for new drivers as hassle-free as possible. However, the company has come under fire and faced lawsuits due to its perceived “relaxed” security policies when registering drivers on the Uber platform.

 

Dirt Cheap Prices 

To get more riders on the platform, the company’s brand management team goes into overdrive. The platform is painted as the greatest thing since slice bread. People from all age groups are targeted and the company slashes its prices. Since the company has enough funds to expend, it can afford to make prices dirt cheap while paying drivers the difference. This way, both riders and drivers are happy.

 

Once the company feels that it has become a city favorite, prices are raised again and some of the promos come to an end. However, when a new competition enters into the picture, the whole cycle repeats itself.

 

 

Conclusion

It seems the Uber business model is taking a shift for the better as the company has sold to competitors in major regions.  According to Uber’s new CEO Khosrowshahi, Uber’s business model and strategy will be focusing on systemic growth, “one of the potential dangers of our global strategy is that we take on too many battles across too many fronts and with too many competitors… going forward we will be focused on organic growth—growth that comes from building the best products, services and technology in the world, and re-building our brand into the mobility brand that riders, cities and drivers want to support and partner with” He said.

This statement was made to explain the company’s exit from Southeast Asia and merging with rideshare company, Grab. The company also merged with Yandex in July 2017 after investing $225 million into the venture. Uber also merged with China’s Didi chuxing.

Mergers are not necessarily a loss. When a company isn’t making any headway in a market, it’s important to know when to either cut your losses or form strategic partnerships. It seems Uber is doing the latter.

 

 

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