How Uber-like On-demand Services are Disrupting Traditional Businesses?

Uber-like On-demand Services

On-demand services with its speed and convenience is definitely accelerating trade, and increasing profitability for businesses. It has totally overhauled the traditional business methods and techniques, with its immediate resolution to every problem that you may probably face.

The on-demand economy has created an entirely new section of labor that is somewhere between self-employment and working for a specific company. This section was born out of the inefficiency and highly expensive markets that existed because of the gaps between the services desired and the resources available. The on-demand economy proves to be quite resourceful and affordable, thus making it easy to adopt and highly efficient.

Uber can be called the pioneer of this economy, and it has indeed disrupted the cab industry by offering a simple on-boarding and independent resource cost differentiation that proved to be advantageous to both the skilled resources and the end consumers.

The drivers got the opportunity towards self-employment, allowing them to pick their hours of work, and the passengers could hail a cab at anytime from anywhere using their smartphone. A lot of other strategies are in place that has helped Uber stay and grow in the long run. Before understanding how Uber like app has disrupted businesses, let’s see how Uber saw this massive growth.

Uber started out in 2009 as a luxury cab service in San Francisco, and is valued at $3.76 Bn today. The month on month revenue is increasing by 18%, and the total employees working with this startup are growing each year. While eBay has been here for a longer time than Uber, the growth that Uber has seen is massive.

Here’s the chart of Uber’s growth over time.

We captured it from Google Trends.

Uber Growth Over time

So, how did Uber really achieve this growth? Let’s look at why Uber was needed in the first place.

The Gap that Uber Filled

Wind, storm, or snow, when you needed a cab you had to withstand them all. Many times you would be refused many times, before you actually got the cab. The wait seems long when you are failed by the weather conditions around you. The next part of hassle comes when you need to pay for the cab. If you don’t have the cash, and the cab’s credit card system is now working, then you are in a fix. Getting the exact amount in cash can prove to be difficult. What’s worse is when the meter has not even been started you will never know the exact amount that you need to pay.

This is exactly the cab that Uber jumped in to fill. This on-demand service started off to break the monopoly created by cab drivers. This company chose to invest in offering convenience by allowing users to call cabs when they needed one. They integrated their app with Google maps, allowing geolocation tagging, which allows passengers to see the cabs available in their vicinity. You get all the details of the driver on your smartphone. The driver knows you by your name, and greets you when they arrive at your location. Starting a meter is not an issue with the smartphone app service Uber offers. Payment is possible via the different wallet services, cards, or cash. Different types of cars are available at different rates, making the cab service available for all.

The drivers are either full-time or contract based, and earn more with Uber than they would with the earlier cab services. With the win-win situation created in this marketplace, Uber has definitely hinted at the reason for its growth.

Check this infographic by Uber. It depicts the benefits to the drivers.

uber Partner Economics Infographic

It acts a real-life problem solver for the passengers and the drivers.

What Led to the Growth?

Uber had clearly defined its proposition with “One-size doesn’t fit all.” They understood they need to devise different growth strategies for the different countries they are planning to expand in. They launched unique plans for the different markets, depending on their political, regulations and interests.

Again the product in question here is a cab, and the timeliness of a cab matters. The company invested in their product as well as their marketing efforts. The wow features, location specific functions, word of mouth and free-rides have truly led to the growth of this company.

There can’t be another Uber in the on-demand industry. The high-frequency of purchase helps you grow, which is one of the major reasons why Uber grew to this extent. The taxis come to aid when you are a weekly or daily commuter. Time factor as well as the high frequency in purchase may not be the case for other industries such as yard cleanup or some labor for house work. Uber has a created a simple marketplace that allows you to complete all the relevant transactions with a few taps. This is not the case for other non-commoditized marketplaces, where the transactions are not frequent, and the complexity is high. In some cases, where the complexity is very high, the services need to be productized with pre-defined scope, pricing and duration.

Why On-demand Services Work?

Uber has definitely disrupted the industry completely, and the question still remains why. When you talk about marketplaces online, you need to offer the apt user experience. This is one of the major reasons why Uber was able to displace the traditional businesses. It offered unique user experience, which allowed for engagement and led to customer satisfaction. From front-end experience to the final delivery of the product/service, it is important to have a flawless execution, which has also led to popularity of Uber’s on-demand services.

The on-demand services aim at solving a problem that the customer is facing. Like Uber decided to solve the inefficiency and overpricing issues that people faced with regular cabs.

The on-demand marketplaces are being designed to solve a major issue, while delivering continuous interaction, and allowing customer engagement.

Uber has opened spaces for on-demand services, and is now evolving into newer spaces, offering the same disruption in the other industries as well. There are other players in the different industries that are striving hard to achieve Uber-like growth.

Check this comparision between Uber and Lyft populartiy over time.

Source: Google Trends

Uber-Growth-Case-Study

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This page was last edited on June 2nd, 2018, at 3:25.
 
 

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