How is Uber Changing the Taxi Industry?

If you are in a hurry to a place and all the taxis on the road are occupied, no worry, Uber can help you solve the problem. All you need to is open Uber App on your smartphone and submit an order, a car will soon drive by and take you to your destination. However, the prevalence of Uber squeezes the market shares of taxi, making them lose a large part of income. And the company now are involved in a lawsuit filed by the governments in several countries. Though facing with lawsuits, Uber continues to serve consumers and the lawsuits do not influence users’ favor to Uber.

A report from Bloomberg predicts that the revenue of Uber keeps growing every year, and it can reach 3.5 billion dollars in 2023, which exceeds the market value of about half of the companies in Standard & Poor index. 

The graph from Forbes shows that the market share of Uber surges from 9% in 2014 to 29% in 2015. At the same time, the revenue of taxi drivers is eroded seriously, with the decrease of 17% market share and rental cars are also influenced.

Uber is changing the way of transportation for people and leading the taxi industry to a new direction. The author will utilize Business Model Canvas to analyze how Uber creates, delivers as well as captures values and changes the taxi industry.

What makes Uber most special is that for the company both passengers and drivers are their customers and their roles can exchange as demand sometimes. The company is targeting at people who do not own a car and they usually need to travel to another place in rush hour. With the help with mobile app, the order can be picked up by the drivers nearby so that it saves time for passengers. And users can track how long will drivers take to pick them up on the electronic map. Compared to the charge of taxi, the cost of each ride on Uber is lower, so the price advantage attracts more users to join in Uber community. For drivers, people who have a cars are willing to earn extra income by driving are the main source. There are also people who want to get new experience and meet more strangers. Both of passengers and drivers are the target market of Uber. For passengers, Uber offers them with on-demand service, which is overthrow of traditional taxi industry. When consumers require the service, the service will arrive at agreed time after the manipulation on smartphones. It not only provides convenience to passengers, but also invests drivers with more opportunities. Drivers are able to regard this job as part-time job, since it is flexible and does not influence their daily life.

At first, when the company was launched, in order to gain favor of innovators, the company offers allowance to new users and coupon to those who invite their friends to the usage of the App. It is hard to earn profit at first, but later, more and more users in many countries endow the company with great profit. Since the company do not have to hire full time drivers and buy rental cars, it saves a large amount of cost. Uber gets revenue from the car rides based on the distance and different types of cars are charged differently. Recently, the company apply a new policy, surge pricing, meaning that if the demand of service is increasing, meanwhile, the number of available drivers is limited, passengers will be charged at a higher price per mile than usual.

What’s more, the payment way is quite different from the traditional taxi. Paper money is not accepted, so passengers need to connect their credit cards or other online payment to the App and drivers gain income online. It is the reflection of the development of technology and offer users with convenience.

Uber is a big challenge to traditional taxi industry since it changes the role of target consumers, creates new value of on-demand service, provides more convenient way of payment. It does change people’s travelling way and people’s attitude towards demand of service. The new business model which it establishes, makes not only the industry but the world more efficient.