Ride-sharing - race to the bottom?
I have used both Uber and Lyft in the last couple of years. I switch back and forth depending on price and ETA. I find that both services are suffice for my needs - pick me up, drop me off. I don't even remember which service I used afterwards. And prices are similar. (During surge time - Uber is usually more expensive) How will they maintain market share and margins when there is no difference in service? It's like using Yellow Taxi vs Green Taxi. They can only compete on price if everything else is equal. This is a low margin business. Therefore, a race to the bottom. Can anyone argue otherwise? They have pending IPOs, so would like to know why, for instance, Uber could have a 120B market cap. #uber #lyft
The same way that you can have three major airlines in the United States and have them all be fairly financially successful even with low margins? Ridesharing isn’t a marketplace that requires any unique elements other than a baseline of service and competitive pricing. The total addressable market of point to point transportation is massive (billions of dollars) and both companies have barely touched the surface (micromobility, public transportation, etc)
Your second point is what I share. Baseline of service and competitive pricing. Huge market but with razor thin margins Airlines are a complicated business of services. Lots of areas where you can differentiate your airline from others - frequency of routes, boarding process, flight service, airplanes, WiFi, etc. Ride-sharing is quick - get in, get out.
Those are all levers that airlines can push, but generally, flying in economy on one airline vs another is virtually indistinguishable. It’s definitely a commodity and for leisure travel, it’s basically all based on lowest price. That’s why even the upstart low cost carriers are killin it now like Spirit and forced airlines to create Basic Economy classes to match on price. Otherwise, they would die by the way of the travel aggregator. I think that ridesharing also has differentiation like type of vehicle, quality thresholds, etc. None of those matter tho
Uber has such a dominant market share because people are lazy and hate to check other apps. Only surges will drive them elsewhere. - t. Lazy people
Only true to some degree. But they still have to keep prices down or lose market share to Lyft.
First one to drop drivers wins.
Eventually, shareholders will pay for all the discounted taxi fares offered over so many years.
This is why Uber is rolling out a rewards program. But I’m not sure it will be enough. Airlines have rewards and I still ultimately choose my airline based on who can take me where I need to go when I need to go with the lowest cost.
For ride sharing? Yeah probably race to bottom, though Uber’s tech is pretty great and you’re likely not seeing the differences in latency and maybe just slightly-better routing or pick-up times. On a big scale, those seemingly innocuous differences are monumental. Also, Uber gets into transportation on a much deeper level. Like with Freight and food delivery—both of which are exceedingly complex. Uber gets more data and uses it more imaginatively. But hey, Lyft talks about community and has politically-correct illustrations and is super good at appealing to markets that have already bought into them. I’m sure Lyft has exceptional engineers, but their business and product strategy is laughable compared to Uber’s.
For one the backend software. Some services go down more than others or are more expensive to operate, these both effect the price end users see. Services have different latencies, scale differently, have bugs. For a single user they may not notice this, but over millions of trips these things add up there is a reason other than brand Uber is a global company and lyft is struggling to gain marketshare in US. Also is driver loyalty from various incentives customers do not see, but means better drivers, better cars; customers don't always want the cheapest price. Lyft has done a good job at painting themselves as the nice guys, but that’s about all they’ve done a good job doing. Lyft has sits back and lets uber do the dirty work of the politics and city regulators, then swoops in to pick up the leftovers and scraps. In their 10 years they never gained the ability to do this on their own and it really shows. They’ve enacted a strategy of always being second and always operating on clean terrain which is why they will never be able to beat uber.
Well I wouldn't look down on a competitor so badly, especially the one that has around 35% market share.
Better infrastructure, cars, drivers...I don't think the difference is so vast that users notice. Mind share, as a first mover, yes. But if Uber rides are more expensive than Lyft, then you will lose market share to Lyft.