One of the most surprising things that has happened in transportation in the past 10 years, in my opinion, is Uber.
Having seen many attempts at ridesharing applications and some really good tries at making ridesharing popular, who would’ve thought that Silicon Valley would’ve come up with an approach to ride sharing that would turn into a compelling multibillion-dollar business? It is also hard to comprehend that a company that can be considered as the largest taxi service operator in the world, does not own any vehicles. Thinking about it a little bit more, I realize that I shouldn’t be surprised. After all the largest retailer in the world (Amazon) doesn’t own any stores.
So why is Uber such a surprising success? I guess to the guys that founded and funded it, it really wasn’t much of a surprise. Uber fairly and squarely addresses the consumer. The interface for those wishing to request a ride is simple. Once you have downloaded the app, Uber determine your current location and gives you an estimate of how long it will take for an Uber driver to come and pick you up. You can also request an estimate of the fare by entering your destination on a Google maps type interface. You can then track the progress of the Uber driver as he or she makes progress towards your location.
Uber supplies information regarding the driver and vehicle, making it simple for you to rendezvous with the right person and the right vehicle. Once on the trip you can send your status information to friends or business colleagues, letting them know that you’re on the way. It gives you the feeling that your business is really appreciated and that someone has thought through the whole process of getting from point A to point B. In discussions with various Uber drivers over the course of my Uber experience, I have noted that most drivers really like Uber because of the flexible working hours. This is particularly important for single parents and also offers a revenue-generating opportunity for those employed, in the off hours.
On a trip to Boston, I also became aware of one of Uber’s driver management tactics. This is known as surge pricing. Due to the fact that demand for Uber rides was particularly heavy and not very well matched to the number of Uber drivers in the network, Uber displayed a message to me saying that surge pricing was now in effect and that my fare would be 1.9 times the normal fare until surge pricing ended. This gave me the choice of putting a priority on traveling right then and paying the higher fare, or delaying my departure until surge pricing was over. Sounds a lot like value pricing? So here is a private sector company who didn’t need to conduct a lot of research studies to implement value pricing. I would imagine given the popularity of Uber services that they are also collecting a considerable body of knowledge regarding origins, destinations and traveler’s reaction to value pricing.
You may have already determined that I become an Uber fan. In addition to the convenience, the employment opportunities offered to drivers influence me to choose Uber rather than rent a car or even park at the airport. I also get the feeling that the current Uber range of services is a model for next-generation transportation. It wouldn’t be a big stretch of the imagination to see a future where Uber would introduce automated vehicles. It looks like they are already extending services to include car pool and rush delivery services. I have also heard rumors that they are investigating fixed route point-to-point services similar to transit.
So are there any lessons to be gleaned by the transportation profession as a result of the Uber surprise?
Well, first of all, we are reminded that transportation customers are not dedicated to transportation agencies and public transportation. They use a lot of services and acquired a lot of products from other companies who are setting their expectations in terms of customer service and user experience. I think that the second insight relates to both Uber and Amazon - you don’t have to own the infrastructure to operate the business.
To me Uber was a complete surprise that has provided me with a new high-quality set of options with regard to transportation. I wonder what new things will appear in the transportation realm over the next 10 years? Perhaps being “Uberwhelmed” is just the start?