The Uber Business Model – Breaking Traditional Barriers to Entry

The market has certainly decided that Uber is adding efficiency to our society. An article from Forbes, earlier this year, indicates that Uber is producing growth rates in its revenue by about 40% each consecutive quarter and further that Uber may likely produce total revenues in excess of $7 billion in 2015.(1) Uber’s success is credited mostly to the convenience that it has added to the business of hailing a taxi and grabbing a safe ride home or elsewhere. This convenience starts with an app that is installed on your personal smart-phone so that a customer can visualize the availability of service. The taxi experience is maximized when both the driver and the passenger satisfy mutual needs for safety, courtesy, and payment processing. Uber plays an important role in the management of available drivers and cars, safety checks on vehicles, background checks on drivers and passengers, payment processing and more. The Forbes article indicates that Uber is extremely successful in building this convenient experience at an incredible cost. While Uber will now generate annual revenues in excess of $7 billion, they are also producing operational losses of nearly $1 billion. It is further noted that Uber can afford this level of loss for the forseeable future as they have been highly successful in raising an abundance of venture capital to the tune of $9 billion. Uber is likely here to stay for quite some time and will remain committed to generating new means of benefit to both passengers and drivers.

Can this Uber model apply to the trucking industry? A quick answer might be “Nah, it’s impossible! Too many regulations and training requirements on drivers and vehicles.” Well wasn’t this also a true limitation and barrier to entry into the taxi business? Who says that you can’t build a network of independent freight drivers, each with the proper skills and adequate vehicles necessary for freight transportation, and add an increased layer of convenience to this antiquated industry? Imagine Amazon jumping on board, using this Uber model, and building a package delivery business that rivals UPS and FedEx. Imagine the day that Amazon releases a new Amazon Prime app and you know in real time, complete with visualization, where your order stands with factory processing and then complete through the delivery supply chain. Whether your online order comes from China, Europe, or the US, you will someday visualize and understand the entire delivery process and/or be highly informed regarding delivery exceptions.

What other industries might benefit from becoming more knowledgeable about this Uber service model? Well, it seems to me that Uber has found a method of bringing suppliers of a service together with consumers of this service in a manner that adds convenience and confidence to the consumer. Convenience is the important factor here. Uber has been successful in breaking down long-standing barriers to entry in the taxi industry and then modernizing an antiquated business model. I would personally love to see this type of model added to the home contracting industry. I would love to advocate to Home Depot or Lowes that they should enhance the contracting service business by making the availability of a local contractor more visual to a wanting consumer. We have all been dissatisfied with this industry for a long, long time. We can’t seem to obtain or to trust service contractors for our home remodeling or maintenance projects. When we do find someone for emergency service (or any service at all), we often feel like we had been taken advantage of financially, and in most cases … we were! So let’s introduce this Uber model to the home service industry; and we will forever know who the available contractors are in our area, their schedule availability, project management status during the executed service, and then some assurance that the payment for services rendered is fair and reasonable.

Bibliography:

1. Solomon, Brian. (January 12, 2016). Leaked: Uber’s Financials Show Huge Growth, Even Bigger Losses. Forbes.com. Retrieved September 12, 2016 from http://www.forbes.com/sites/briansolomon/2016/01/12/leaked-ubers-financials-show-huge-growth-even-bigger-losses/#174e4845c995.

Jack Welch, MBA
Sr. Web Developer, Data Engineer, Data Scientist, IoT Engineer, and Impassioned Digital Marketing Consultant!
Life-long learner, team leader, and highly motivated professional who drives data-driven decisions at all levels of business management. I am an accomplished web developer, data strategist, and IoT engineer with several years of experience working with digital media, remote data resources, web API’s, ETL, database management, SQL queries, data visualization, and more.

Exceptional ability to lead complete digital initiatives and campaigns, and to communicate amongst all levels of management from stakeholders to the technical staff responsible to produce results on-time and on-budget.