The Uber Model and Its Application to Other Industries

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Mobile applications have revolutionized the way people use services; they have facilitated this process by making certain products more accessible for those segments of the public who could not afford them earlier. The taxi industry has not been an exception, currently, there are several competing companies in this sphere, but the most important and the oldest of all is Uber. For several years, this company has managed to achieve results that may seem impossible to attain for the majority of startup businesses. In 2019, it reached 3 billion dollars in revenue, which was a 27% increase compared to the previous year (Conger, 2020).

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In France, local taxi unions had to protest against Uber drivers since the latter did not own a required license, which substantially reduced prices for their services (Slater-Robins & Tasch, 2016). Yet, apart from charging its customers less money, Uber has other advantages which ensure its steady growth and make it efficient. These are its digital technology, a large number of drivers, a greater level of flexibility of pricing, and drivers’ availability, moreover, its model can be applied in other spheres, including trucking, delivery, and cleaning.

The most apparent benefit of using Uber is its mobile technology, which is based on providing as much efficiency as possible for both passengers and drivers. The former can request a ride by simply using the app on their device, which will conveniently ask the user for the route and display the price for the service. Conventional taxi companies require their clients to call the helpline and, sometimes, wait for several minutes for the operator to answer, who in their turn has to convey the message over the radio to the driver (Kumar, n.d.). Compared to Uber, the traditional model does not value customers’ time and uses technologies that are outdated by modern standards.

For drivers, the mobile app provides freedom and an opportunity to plan their schedules and work. The app shows drivers areas with an increased demand, which allows them to go there and collect passengers, which again significantly contributes to the efficiency of the Uber solution. Clients who use Uber also do not have to stand on the street and signal to passing taxi cabs about their intention to use their services, instead, everything is done with their smartphones.

Additionally, Uber offers its customers a larger number of drivers who are also able to respond to their request, which is not always the case with traditional taxi companies. Since becoming an Uber driver often does not require receiving any license and passing tests about city roads because maps are already integrated into a driver’s smartphone, the company has a considerable pool of partners.

The app displays how many clients there are now waiting for a car, and if there are only a small number of them, then the majority of drivers will not work, ensuring the balance of supply and demand. Some drivers may even work only during busy hours and in the areas, which have been consistently having a greater amount of prospective passengers over some period of time. This helps the company be constantly present in the places where there are many people willing to get a ride and still manage to satisfy their needs in a fast manner.

Moreover, Uber allows its clients to book scheduled rides in advance, which is rarely an option at usual taxi companies (John, 2019). Another major factor which increases efficiency is the company’s UberPool feature, which allows a person to save money by sharing their trip with other people along their route. Apart from giving a discount to customers, it is a way to reduce fuel consumption since the car space will be utilized to its maximum capacity by carrying several people to their destinations.

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According to Cramer & Krueger (2016), Uber drivers’ capacity utilization rate, based on how much time their car has a passenger, is 30% higher than that of usual taxi drivers. One of the factors contributing to this phenomenon is the pricing flexibility, which correctly reflects the current demand trends by increasing prices during busy hours and decreasing them when there are not so many clients.

Using the same principles but adding certain changes, the Uber model can also be applied to the trucking industry. The primary difference between Uber and Uber for trucks lies in the fact that in the case of the latter, the role of passengers will be played by cargo. One system will be able to provide both individual truckers and small trucking companies with available offers and allow them to be paid instantly for their services. For example, a truck which has some spare space can collect additional cargo along its main route and thus earn extra money and, at the same time, increase its efficiency. Although, the major change which will have to be introduced to the Uber model is the necessity to have cargo insurance, which is an essential element of the freight transport industry.

Moreover, there are companies which are involved in the Uber for trucks business and rely on this technology. According to some estimates, by 2025, the market of digital freight brokerage is expected to grow to $54 billion, which makes it an extremely promising industry (Cosgrove, 2019). One of the most promising companies in the business is Transfix, which offers carriers an opportunity to get cargo which would be most convenient for them to collect, based on time, destination, and price (Feldman, 2019).

This type of freight brokerage ensures better transparency between carriers and clients and significantly increases the utilization capacity rate since trucks spend less time not using their entire available space. Additionally, the app developed by Transfix lets the users store all of their information and paperwork there, which eradicates the need to physically fill in forms at the pints of pickup and delivery. Thus, the Uber model can successfully work in the trucking industry, as evidenced by the growing market in this sphere.

The Uber model can be further extended to other industries, for example, delivery, which is perfect, or utilizing the similar technologies of tracking location, cloud processing, and electronic payments. For example, Postmates has developed an app which allows users to order delivery from their local shop with the help of a network of couriers. It also has features which are similar to Uber’s, such as increased prices for delivery during busy hours, which motivates more couriers to deliver goods. Yet, apart from products from stores, Postmates supports the delivery of food from restaurants, which is another advantage of this service. Delivery is a market which will only grow in the coming years, especially under the current circumstances of a global pandemic, and the Uber-like model of Postmates will keep it a profitable company in the future.

Another sphere which can benefit from the implementation of the Uber model is cleaning and handyman services. One such application is Handy, which provides an opportunity for any person with prior experience in the industry to easily get jobs and earn some money by doing work around the house of clients. Booking services using this app implies selecting the type of work that needs to be done, then choose the most convenient time for the worker to arrive, and making a payment. The system will then offer this work to those professionals who are ready to do it and will provide them with the address and instructions. The strategy used by Handy is similar to Uber’s one since it allows practically anyone who has some experience in cleaning to receive work without any paperwork simply using their smartphone.

To sum up, Uber has achieved success in increasing efficiency due to its easy-to-navigate mobile application, pricing flexibility, and a large number of drivers, and its model is successfully applied in other industries, including trucking, delivery, and cleaning. Uber’s application allows its clients to spend less time ordering and waiting for a ride since its location-tracking system quickly finds drivers in the client’s vicinity. It also increases drivers’ capacity utilization because they manage to have more customers and more often than usual taxi drivers.

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The Uber model has been adopted by the trucking industry companies, for example, Transfix, which offers carriers an opportunity to always have cargo and thus maximize profits. The goods and food delivery industry has also benefited from employing the Uber model; Postmates is an application which enables customers to receive their products using the service of couriers. Cleaning services can be provided based on the Uber model, too, for instance, Handy gives former cleaners an opportunity to get work on their platform. Thus, Uber has managed to produce a model which can contribute to efficiency in different spheres and areas.

References

Conger, K. (2020). Uber posts faster growth, but loses $1.1 billion. The New York Times. Web.

Cosgrove, E. (2019). Digital freight brokerage: a crowded field that could have many winners. Web.

Feldman, A. (2019). 18-wheelers at app speed: An $800m startup is trying to pull an Uber on the trucking business. Forbes. Web.

John, S. (2019). How to schedule an Uber ride days or weeks in advance, or cancel a scheduled ride if you no longer need it. Business Insider. Web.

Kumar, A. (n.d.). What is Radio Taxi and How does it work? Web.

Slater-Robins, M., & Tasch, B. (2016). French taxi drivers shut down Paris as protests over Uber turn violent. Business Insider. Web.

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BusinessEssay. "The Uber Model and Its Application to Other Industries." May 12, 2022. https://business-essay.com/the-uber-model-and-its-application-to-other-industries/.