If you are interested in investing in Uber cabs, you might be wondering what the benefits are. The first benefit is that you can make money by providing rides. However, there are some drawbacks to this business model. These are the challenges and competition in the Indian market. Also, there are rising costs of diesel and petrol.
Surge pricing helps Uber meet fluctuating levels
Surge pricing is a feature offered by ridesharing services like Uber. It helps the company to manage demand while also helping its drivers make some money. In a nutshell, the service raises your service fee by a few dollars if there are a lot of people requesting rides. The reason behind this is simple: Uber wants to ensure that its riders always have access to a driver.
However, there are a number of complaints about this feature. Some claim that it is a shady business model. Others are unhappy about the price changes they experience when they request an Uber. Fortunately, there are ways to avoid being stung by the surge.
One of the best ways to avoid being stung by the Uber surge is to schedule your ride in advance. You can do this by checking out the available cars in your area. This will let you know when the rates are going to drop, and when you’ll have to pay the higher fares.
Growth of uber cabs means faster pickups, more drivers, and potentially
Uber is a new technology that has changed the way consumers hail a cab. The service offers pick-up times under five minutes in 412 cities in 55 countries. It has also impacted marketing strategies at car dealerships.
The law of supply and demand is a basic tenet of capitalist society. This is a concept that determines how much people pay for a service when the demand increases. In the case of ride-sharing services, the price is driven by the number of drivers and customers available to deliver the service.
When Uber started out, there were only a few hundred cities in the world where it was available. However, in the last two years, it has expanded to more than 397 cities worldwide. A study by Frost & Sullivan estimates that by the end of 2016, there will be over 8 million users.
The ride-sharing industry is in constant flux. As more and more companies enter the market, the number of vehicles available may be less. But, ride-sharing still represents a convenient option for many. And, it’s cheaper than owning a car.
Uber’s surge pricing feature helps to improve driver income and satisfaction during busy hours. Drivers can earn three or four times the normal rate when demand is high. Depending on the city, this means higher fares for riders.
Although surge pricing is a nice perk for passengers, it’s also something that some drivers hate. They may be thankful that they are earning more money during peak times, but they’re not happy with the higher fares.
Challenges in the Indian market
The market for online ride hailing cabs in India is growing rapidly. These ‘aggregators’ connect drivers with commuters using smartphones. Online cab services are using real time algorithms and superior data analytics.
However, challenges have arisen in the Indian market for Uber cabs. Here are some of the most common issues.
- Pricing: One of the biggest issues for a cab aggregator is the pricing model. A high price ceiling reduces the profitability of a company. This leads to deadweight loss, which is the misallocation of resources.
- Service quality: Another major challenge is the quality of services being offered by cab facility providers. There are numerous complaints about lack of quality services.
- Regulatory: Despite the growth, the regulatory framework for online cab aggregators in India is not perfect. Some states have banned surge pricing and some have required a physical GPS device.
Customer support: 81% of customers rated customer support as poor. Many complained of canceled rides, late arrival of the driver and other customer-related issues.
Providing local features: Ola Cabs has been successful in capturing both sides of the Indian market. It offers rickshaw transportation, auto rickshaw and inter-city cabs. While Uber has expanded to several cities in India, it has lagged behind Ola in providing local features.
Losses are the stuff of Silicon Valley legend
Losses are the stuff of legend and Uber is no exception. The company has lost more than its share of top talent in a matter of months. Despite this setback, the company continues to push the bounds of innovation. Some examples include a new food delivery service and the upcoming autonomous car technology. If they can keep it up, they’re on their way to becoming a telecommunications powerhouse.
Of course, that’s the point of the company. With a little help from the benevolent angel, they’ll be able to expand into other spheres of business. This has the aptly named Silicon Valley as an incubator of sorts. Hopefully the lessons learned will translate to more revenue and less stress in the coming months and years. In the meantime, ridesharing remains the sexiest of all professions.
As of this writing, the company is operating in roughly half a dozen cities around the world. Its headquarters in San Francisco remain a relative ghost town, but the surrounding environs are thriving. Many companies have relocated here in order to take advantage of the high-tech climate. Considering the cost of rent in the Bay Area, they are paying a pretty penny to boot. Considering the competition, they’re going to have to do their homework if they want to make it out of the gate.
Increasing cost of petrol and diesel
Uber and other rideshare services have been facing a backlash from drivers since gas prices skyrocketed. With no relief in sight, the companies decided to make some changes.
Uber is now adding a fuel surcharge to its rides. This is the company’s attempt to boost the income of its drivers. It will range from 35 to 55 cents per trip and will last for at least two months.
The surcharge is designed to help offset the rising cost of fuel. According to the company, its most important purpose is to help its drivers earn more money while still providing a great service to its riders. In addition, it will allow riders to enjoy the benefits of a service that is free from surge pricing.
There are other features that will be introduced as part of the plan, such as flexibility on payment options and quality service essentials for riders. However, many rideshare drivers say the company is not doing enough.
The company has been criticized for its lack of transparency in how it pays its drivers. A driver can earn up to $4,000 more a year for switching to Uber. Currently, drivers are treated as independent contractors.
Earlier, cab drivers protested against the high cost of fuel in Delhi. Unions like the Sarvodaya Driver Welfare Association and the Delhi Taxi were among those supporting the cause. Several other transport unions have indicated they are ready to go on strike if demands are not met.
Competition from other cab aggregators
The Competition Commission of India (CCI) has advised cab aggregators to adopt self-regulatory measures to keep the market competitive. It has called for more transparency and a clear cancellation policy for drivers. A study by the CCI has recommended that cab aggregators should provide riders with detailed information about fares and total fare. They should also explain surge pricing and share the surge component in the invoice.
Cab aggregators operate in a digital space. While they do not engage in “personalised pricing”, they do exhibit certain peculiar characteristics. Among other things, they are able to scale users and providers and allocate rides more quickly.
The success of a cab aggregator is directly related to the number of drivers who join their platform. Moreover, a larger network of cab aggregators allows them to allocate more rides at lower prices.
In the case of Uber and Ola, the Competition Commission of India has recognized network effects and has taken a progressive approach in evaluating the market. However, it has not agreed with Meru’s argument that Uber is dominant.
CCI has consistently recognized the double-sided nature of cab aggregators, which can help boost competition in the market. For example, surge pricing, which is charged when a driver has a large number of passengers waiting, can be a positive incentive to boost supply.