business canvas model of uber

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I HELP BOLD LEADERS TRANSFORM THEIR BUSINESSES AND THE INDUSTRIES THEY COMPETE IN

January 27, 2016 By Denis Oakley

The Uber Business Model Canvas

Today we’re talking about Uber, the ridesharing company and putting its business model on to the business model canvas . So, there is the Uber business model canvas, a short video presentation, and an analysis of the Uber business model based on the 9 segments of Alexander Osterwalder’s business model canvas.

Introduction

Uber’s a ride-sharing company. It has disrupted the taxi industry by using technology to allow people with cars and spare times to drive people who don’t want to drive but who have money.

Basically every city had two or three taxi companies, but because of the way they operated they could not scale beyond a limited geographical area. Uber changed all that and that’s what we are going to look at now.

Click here to go straight to the Uber Business model canvas and skip the analysis

Customer Segments

The Uber business model has 2 groups of customers . It has passengers and it has drivers. In a traditional taxi business model canvas, the customer segment is purely passengers and drivers are part of the company.

What distinguishes Uber’s passengers from traditional taxi passengers most is they need a smartphone and a credit or debit card. Without these, they can’t use the platform.

Uber’s other customer segment are drivers. Instead of employing drivers and having an asset-heavy company, Uber uses freelance drivers – which brings many legal battles worldwide.

Here Uber has reached well beyond the traditional source of recruits for taxi drivers. They made driving accessible to anyone with a smartphone, a smart car and a smart appearance. As well as anyone who’d like to earn some cash whenever they want to.

Value Proposition

Next on the Uber business model, we have the value proposition . At the heart of the business is the value proposition that says

We will always give you a ride when you need it

and for drivers

We will always give you passengers when you want them

In a traditional taxi business, the number of taxis is determined by the rides that are available over time to support that number of taxis and drivers. If demand surges there is no excess capacity. And if there’s low demand for a period? Drivers are slow to leave the market and payments for all drivers suffer due to excess supply.

Uber’s value proposition is thus like a market but if it were that simple it would not have the same disruptive effect. What enables it to deliver on the promise above is that it is able to match supply to demand.

How do they match Supply to Demand?

By using real-time metrics it is able to see what demand is like and then as demand starts to exceed available capacity to reduce demand by introducing surge pricing (but taxi fares are partially price inelastic so this is a lesser effect) which increases prices where demand is highest. At the same time, increased fares encourage more drivers to work and thus increases supply.

Uber is able to do this because the drivers are owner-operators. It doesn’t own the assets and thus it can flex capacity within minutes, whereas a traditional taxi company takes months or years to achieve the same results (in the case of New York taxi medallions almost never).

The technology enables this value proposition and at the same time, it also enables traditional pain points to be addressed at minimal additional cost. If you have no cash it’s not a problem. Uber charges your card. In fact, the whole system is cashless making it safer for both drivers and passengers.

It also brings transparency by identifying both driver and passenger and their positions to each other – and by showing exactly where the taxi is at all times. Uncertainty – and thus anxiety – is reduced for both

These are issues that were difficult to resolve in a traditional taxi business model.

Customer Relationships

The only time I’ve spoken to anyone at Uber was when I bumped into the local Uber country manager at a startup event. For everyone else, it’s a totally automated process as far as the passenger is concerned. The old dispatchers are removed and the passenger’s phone automatically identifies the pickup point.

Uber’s customer relationships are almost entirely automated

For the driver’s there is a more hands-on role, principally around quality assurance and making sure that the drivers meet the minimum quality standards that Uber expects. And ideally, they  don’t pull guns on their passengers

Let’s take a look into the Uber marketing strategy and channels it used in its early days. Uber started to use many different channels as it grew, but early on the focus was in moving from city to city to get enough drivers and users signed up. They also wanted to get them using the app so there was a strong enough market to make it work.

Increasingly with a market in each city, the channels are through the mobile app. As for the Uber marketing strategy, it was purely through email and word of mouth ! This was incredibly important in overcoming adoption fear and crossing the chasm from early adopters – and PR.

One of Uber’s huge strengths has been the amount of money that it has raised which has given it a huge amount of earned media which in turn has driven passenger and driver growth.

Revenue in Uber’s business model is pretty simple. Uber moves the traditional taxi meter from the car to its servers – tracking via GPS technology on the phone – and then charges the passenger based on the miles travelled and whatever surge multiplier is in effect. If the passenger uses a different Uber brand the same process applies but with different pricing.

Key Resources

Uber has three key resources without which the whole thing falls apart. First, it has a platform. This connects Uber to drivers and passengers and both to each other.

That’s a necessary but not a sufficient requirement. Then it has the algorithms that do the heavy lyfting (sorry couldn’t resist that). These are the pricing and routing algorithms.

Pricing algorithms are used to balance supply and demand in the market. It also helps ensure that there is always enough capacity available to meet demand – fulfilling its core value proposition.

The Routing algorithm focuses on ensuring that the customer wait time is as short as possible. By implication, it reduces the deadhead time for drivers as they’re either waiting for or driving to a new job.

Key Activities

A key part of the Uber business model is then developing the platform. Its key activities are as follows:

It is continually adding value to ensure user adoption and retention as well as optimizing its algorithms.

It also has to do significant marketing on a global and a local level to driver/passenger adoption and ensure an adequate supply of drivers. Churn apparently is a problem .

Uber still has the same problem as traditional taxi companies. It serves lots on unconnected geographical markets. Singapore, London, Frankfurt. Each has specific attributes and requirements. So marketing to users in each city, and ensuring that there’s the right level of driver support for user growth is critical for meeting its value proposition.

Key Partners

The main key partner is the drivers who own all their cars. That saves Uber from having a contract with a leasing company for hundreds of thousands of cars. It has the payment processors and the map data providers.

Often missed are the local authorities. In many cities, there are legal actions against Uber. Taxi companies are fighting to protect their businesses and persuade the ‘authorities’ to erect barriers to entry against Uber. This is often characterized as adversarial. But in the long run, regulation is seen as important and Uber will need to resolve these issues. So they are long term partners, even if they are not right now

Cost Structure in the Uber Business Model

There are huge costs for platform development, hosting etc.

There are salaries for the software engineers, the sales, and marketing teams and the country and city managers.

And then there are the driver payments. Uber gets paid upfront, keeping the money before paying drivers each week to ensure that the payments are valid.

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Uber business model explained: from start to finish.

By  Nitin Lahoti   In  Blog   Posted  January 2, 2019

What Is Uber’s Business Model? How Uber Works? How Does Uber Make Money? What Is Uber’s Business Strategy? Why Is Uber so Successful?

These are some of the major questions any budding entrepreneur in the on-demand startup space would be curious about, before working on his/her own “Uber for X” business model.

And, rightly so.

Uber’s business model has turned out to be so successful and popular that it has fuelled a new startup economy, the “on-demand economy”.

Having a deeper understanding of Uber’s on-demand business model can play a pivotal role in modeling your own on-demand startup business idea.

As a leading on-demand startup technology development partner, we want to share this knowledge with you through this comprehensive blog post.

Uber Basics – Facts, Figures, Founders & Fundings

Before drilling down into “Uber’s business model” or “How Uber makes money?”, let us gain knowledge about some basics and interesting facts about Uber – from inception to being a multi-billion dollar startup.

Some Trivia

Did you know that Uber was initially called as UberCab?

Originally, the app only had the option to hail a black luxury car.

Founders – Garrett Camp, Oscar Salazar, Travis Kalanick

Founding Year – March 2009

Headquarters – San Francisco Bay Area, U.S.A

Legal Name – Uber Technologies Inc. (Crunchbase)

Total Funding – $24.2B (In 22 funding rounds as of Oct 2018, Crunchbase )

Major Investors – SoftBank Vision Fund, Tencent Holdings, Toyota Motor Corporation, and others.

Current Valuation – $120B (Source – Bloomberg )

Uber’s Business Model – How Uber Works?

Uber is no longer just the on-demand cab hailing service we used to know. It has dipped its toes into other territories as well – from Uber Eats (on-demand food delivery) to Uber Freight (on-demand trucking).

For the matter of simplicity, in this blog, we will focus on Uber’s core business of ridesharing – its business model and how it makes money?

To put it in simple words,

Uber works as a digital aggregator app platform, connecting passengers who need a ride from point A to point B with drivers that are willing to serve them.

“ Passengers ” generate the demand, “ Drivers ” supply the demand and “ Uber ” acts as the marketplace/facilitator to make this all happen seamlessly on a mobile platform.

Kool, right?

Through its model, Uber has been able to generate strong value propositions for both passengers and drivers to get onboard on its platform and create disruption in the taxi/cab industry.

Uber’s Value Proposition for Passengers

• On-demand cab bookings (Convenient)
• Real-time tracking
• Accurate ETAs
• Cashless rides
• Lower wait time for a ride
• Upfront pricing
• Multiple ride options

Uber’s Value Propositions for Drivers

• Flexibility to drive on their own terms
• Better income
• Lower idle time to get new rides
• Training sessions
• Assistance in getting vehicle loans
• Better trip allocation

Uber’s Business Model Canvas – A Visual Snapshot

Click to Enlarge Image

Digging Deep Into Uber’s Revenue Sources – How Uber Makes Money?

At a high level, Uber makes money by taking a cut on each ride (shared or individual) from the drivers. However, as we do a detailed analysis we will found that Uber’s revenue model is more complex than just trip commissions.

Trip Commissions

Uber provides the drivers on its platform (also called as partners) with a robust supply of ride requests to accept, fulfill, and make income. While making a booking, the passenger pays Uber for the ride through the app. Uber then transfers the payment to the partner’s account after taking some amount of commission for doing the job of a broker (digital broker if you want to say so).

The commission rates may vary from 15-30 % depending on the market.

Surge Pricing

Dynamic pricing/ surge pricing is a novel concept that has been popularized by Uber and being adopted in other verticals as well, such as food delivery.

Whenever there is a higher demand for cabs than what can be served at that moment (for example, at the airport after a flight lands), the fare goes up based on a surge price calculation algorithm.

Some drivers move to the surge region to earn extra (increases supply) and some passengers opt to wait to get a ride (reduces demand). This way Uber is able to manage the demand-supply mismatch situation better.

Drivers make more money, Uber makes more money and customers spend more money (but get urgent rides).

Premium Rides

Uber offers multiple ride options, from affordable hatchbacks to luxury sedans and SUVs. The profit margin for premium rides are much higher and helps Uber mint more money.

Cancellation Fee

If a passenger cancels a ride after a certain time-frame, say five minutes, he/she is charged a cancellation fee.

Leasing to Drivers

Uber runs a vehicle leasing program in many of its target countries to help new drivers get onboard faster. Drivers have to pay an upfront security deposit for the vehicle and payments are automatically deducted on a weekly basis from the driver’s earnings.

Brand Partnerships/Advertising

Uber is a very popular app with millions of active users. This makes it a good option for brands to do promotions. Its current app interface pushes a feed style layout for intuitive content consumption. Over the period, it may go on to become a strong revenue source by becoming a channel for sponsored content.

Expanding Rapidly With New Business Verticals

As mentioned earlier above, Uber is now much more than just a ridesharing company. It is leveraging it’s underlying technology for cab bookings, like, optimal driver allocation, to new use cases as well.

These new businesses that Uber is building side-by-side have tremendous potential to generate revenue and fuel Uber’s grand ambitions.

Uber is betting big on on-demand food delivery and why not. It’s a logical step for Uber to tap into this enormous market as it aligns with its ridesharing business and helps it utilize its large fleet of drivers. Uber Eats was launched as a separate app in 2016 and is growing in popularity at a rapid rate.

Uber Freight

Uber Freight is basically Uber for trucks. Uber launched its own on-demand trucking app in 2017 with the core idea of seamlessly matching shippers with carriers. If Uber can execute on its strategy to become the freight matching platform of choice, the revenue opportunities are also big.

Key Takeaways for Budding Entrepreneurs From Uber’s Business Model Analysis

Uber got a lot right in its journey towards becoming a pioneer in the on-demand industry today. It has seen its fair share of challenges over the period and been able to maneuver through most of them successfully.

It is a great testament of a tech startup that achieved success with a novel business model and smart execution.

Interesting Read: How to Build an App Like Uber?

Tech entrepreneurs and startups can learn a lot from studying Uber’s business case study. We have tried to make the job easy by putting down a list of key takeaways/ tips from analyzing Uber’s massive success.

Let’s check them out below.

Build Solutions for Real-world Problems

This is somewhat obvious but still needs to be mentioned first. You as an entrepreneur should identify real problems and figure out how technology can be leveraged to solve it, just like Uber used mobile technology to transform on-demand transportation.

Keep Innovating

Uber doesn’t rest on its laurels of being the first prominent rideshare app. Its founders understood really well that the competition will grow over time and they can only stay ahead through continuous product iterations. They keep adding new features to their passenger and driver apps, invest in new technologies and more.

Shoot for Scalability

Building a scalable business model is critical if you are to sustain your startup in the long run. Uber has built its platform in such a way that it is easy for it to expand to new markets and serve multiple users simultaneously with confidence.

Keep Overhead Costs Low

Run a lean business model that doesn’t require large infrastructural investments. Also, for building a tech startup, a skilled workforce is very crucial. This also adds up to your cost overheads in terms of high salary payments. One effective way to stay lean during the initial stages of your product development is by partnering with a third-party technology development company to build the MVP and overtime do in-house hiring.

Wrapping Up!!

The proliferation of the on-demand industry owes a lot to Uber and rightfully so. Uber’s success in many ways started a chain reaction with hundreds of on-demand/ Uber for “X” startups been launched after that and hopefully many more to come.

Specifically, in the on-demand transportation and logistics industry, the effect has been profound. We hope that our analysis of Uber’s business model will become a useful resource for upcoming on-demand startups.

Disclaimer : The information mentioned in this blog is based on the author’s own understanding of Uber’s business model. The facts and figures have been obtained from online research with appropriate credits given wherever required. Please use the information at your own discretion with no liability on the author or the firm.

Author's Bio

Nitin Lahoti is the Co-Founder and Director at Mobisoft Infotech . He has 15 years of experience in Design, Business Development and Startups. His expertise is in Product Ideation, UX/UI design, Startup consulting and mentoring. He prefers business readings and loves traveling.

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Uber Business model: A Deep Dive into the Strategy and Innovation of Uber

Anamika Mahapatra

Did you know 17% of small businesses fail because they lack a business model? Entrepreneurs now are the time to learn about this amazing business model canvas, which will make that stress go away. Here, I have taken the real-life example of Uber for this business model canvas.

About Uber Uber statistics in 2021 Uber’s Business model canvas FAQ

Brief introduction of Business model canvas

A lean canvas and a value proposition are two sorts of business models. These are tools for validating company concepts geared for startups. Both originate from Alexander Osterwalder's 'business model canvas,' which we'll explore today.

The primary distinction between the business model canvas and the lean canvas is that the business model canvas was developed for well-established businesses to track their efficiency and evolution through time. Startups are the most common users of lean Canvas for product launches .

The business model canvas is popular among entrepreneurs. It's a risk-detection tool that's adaptable, intuitive, and value-driven. That's why it's commonly referred to as a one-page business plan . The canvas is divided into nine areas, each of which must be filled with specific company information.

In the business realm, Uber is a well-known name. Millions of business owners and entrepreneurs have been motivated by extraordinary success, and the trend is expected to continue. This California-based ride-hailing service, which was founded in 2009, has ushered in a huge change by igniting the on-demand economy.

From its humble beginnings, it has come a long way from a basic idea of allowing customers to hail a cab with a single tap to being the world's largest ride-sharing firm. Uber currently controls over 68% of the total ridesharing market in the United States.

Uber statistics in 2021

According to statistics, Uber undertakes around 1.44 billion rides each quarter. Uber has raised $25.2 billion in fundraising , has over 100 million active customers, 4 million Uber drivers, and a net worth of $95.67 billion. So far, Uber's success has inspired millions of business owners and entrepreneurs.

Uber’s Business model canvas

The aggregator business model was first introduced to the world by Uber. It operates on a multi-sided platform business strategy that serves as a link between riders and drivers. Simply put, Uber has a two-pronged business model . While it enables clients to hire a taxi with a simple click, it also enables cab drivers to complete their rides on time and safely.

Customer segments

You must determine your most significant customer to whom you are providing value . The persona method aids in the creation of an imaginative portrayal of user categories. There are two types of Uber users: drivers and riders. Each one caters to a specific group of people that are interested in what Uber has to offer.

The first group i.e. drivers are:

• Full-time job seekers
• Generate extra income
• Love to drive
• Looking for a flexible work environment

The second group i.e. Users are:

• Don’t own cars
• Don’t know how to drive
• Looking for comfort & luxury
• Looking for cost-effective transportation services
• Taxi haters
• Travelers in a foreign place

Value proposition

Each persona has unique challenges or prerequisites that your product or service can address, and you must specify these in the value proposition section. List as many jobs as feasible that correspond to the needs of your target customer segments.

For drivers, it's the ability to work flexible hours and earn more money , while for passengers, it's the ability to pay with credit cards and cheaper prices. Decompose this part into specific chores to be done, customer pains and gains, and relate them to your product value using the value proposition canvas.

Value proposition or benefits Uber offers are:

To drivers:

• Ease in getting started
• Opportunity to earn
• Ease in accessing more passengers
• Flexible working schedules
• Get paid online

To customers:

• Minimum waiting time
• Reduced transportation costs
• Cashless rides
• Safety & security
• Upfront pricing

The communication unit that entrepreneurs use to contact customer segments is referred to as a channel. If you offer your products through a website , that is one of your business model canvas channels. Search engines, social media, and even word-of-mouth marketing are examples of this.

Uber's channels include:

• Smartphone app (android & IOS)
• Social media
• Google Adwords
• Media coverage
• Word of mouth

Relationship with customers

The way you interact with customers is defined in this section. Customer interactions included follow-up and feedback after the sale. If you connect with users through a call center or a Chabot , specify it here.

Uber maintains its customer relationship through:

• Customer support
• Rating, reviews & feedback system

Revenue streams

You must define the methods by which your company obtains funds in the revenue streams section. They're usually derived from customer segmentation and value proposition mapping. Uber passengers, for example, use their credit cards to pay for their rides. Uber makes money by charging a commission for each ride. Other revenue streams could include billable add-ons, subscriptions, premium accounts, and so on.

Uber’s revenue streams are:

• Car rides per km/mile basis
• Surge pricing
• Brands like Uber X, SUV, etc.
• Divisions like Uber Eats, etc.
• Advertising & marketing

Key activities

Now comes the difficult part, key activities cover everything you need to do to make your company work with digital products. This entails continuous product development and marketing . Recruiting, advertising and other such activities are part of these operations.

If you provide certain services, this may include information that can help you improve your capabilities. When filling the key activities portion of the business model canvas, keep in mind the other sections you've already completed.

Uber’s key activities are:

• Platform development & enhancement
• Marketing & customer acquisition
• Sales promotion
• Hiring drivers
• Manage driver payouts
• Communicate with customers, drivers

Key resources

The assets you require to run your organization at max potential are known as key sources. Uber is based on a sophisticated technological platform. It also needs drivers to support its value proposition. Staff and expertise are heavily relied upon by service-oriented businesses.

Uber’s key resources include:

• Network of drivers & riders
• Digital platform (website & apps)
• Technology talent
• Advanced Algorithms & Data Analysis
• Brand image

Key partners

You must define any external stakeholders who can contribute to your business in the key partner section. The development of tech platforms can be driven by Uber investors. Drivers can be hired with the help of recruiting partners .

Uber’s key partners are:

• Investors & venture capitalists
• Technology partners
• Commercial partners
• Payment processors
• Map API providers

Cost structures

You should be able to tell what you spend your money on based on your cost structures. If your enterprise grows, you must also mention future costs. This area includes expenses such as hardware procurement, software development, and rental services .

Attributes that make the cost structure of Uber are:

• Customer acquisition costs
• Legal & settlement costs
• Insurance costs
• Research & development
• Lobbying & compliance
• Platform maintenance
• Infrastructure cost

After you've created your business model canvas, the next step is to analyze it. You have a comprehensive view of what's going on in your company and can spot bottlenecks. Make sure to share it with stakeholders so that the content may be improved. Also, don’t cling to the canvas's original version as it is a flexible document.

Final thoughts

Uber, like other successful startups, did not become well-known overnight. Their success may be traced back to greater business model innovation, which provides clients with better services at reduced prices. Almost everyone appreciates the services they provide. Uber has transformed mobility for billions of people across the world by arriving on time, conveniently, and safely.

Who is the founder of Uber?

Travis Kalanick and Garrett Camp founded Uber in 2009.

Who is the CEO of Uber?

Dara Khosrowshahi is the current CEO of Uber

What is the revenue of Uber?

The revenue of Uber was 1,113.9 crores USD in 2020.

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Business Model Canvas – Uber

• by Joel Finningley
• Business Model Canvas , Grocery-Delivery

It’s a bird, it’s a plane, it’s an Uber. Is this the future?

On the back of Uber’s autonomous vehicle tech, the current Business Model split between ridesharing and food delivery paves the way for a company that recreates how we think about movement of goods and services. This is the Uber Business Model Canvas.

Uber Business Model

How does uber make money, community-centric or commercial partner strategy, fundraising and valuation, uber + uber eats value proposition, uber customer analytics, more uber related posts.

Uber’s rise to notoriety was on the back of their ridesharing ( Mobility ) business. The Mobility business makes money by connecting consumers with local drivers, effectively intermediating the taxi business model and charging drivers a % of their fare earned.

They earn ~20% Margin from their Mobility business (ie. on $100 rideshare Booking, Uber would take back ~$20 net of the fare paid to the driver).

Subject to an array of factors, Uber’s advertised Take Rate of 25% ( Uber’s net revenue from Bookings minus Driver fees) for Drivers ends up becoming closer to ~35% in aggregate, factoring in short rides against the backdrop of ‘booking fees.’

The Unit Economics of a short drive with a small fee, combined with the fact that many more consumers use Uber for short trips, means drivers see less than 75% of the revenue per booking, hence an ‘Effective Take Rate’ of closer to 35% or more based on 3rd party research. Whatever the Take Rate ends up being, the Net Margin for Uber is ~20% on Gross Bookings.

We have to remember that a few years ago, Uber’s Mobility business was losing money at a ridiculous rate. While their ridesharing business was growing, the narrative surrounding ‘autonomous vehicles’ was seeded to help paint the picture of a more profitable future for investors. When it IPO’d in Q2 2019 at a valuation of ~$80 Billion, the bet was that this company was effectively an automotive company!

At that moment in time, their business model was basically all ridesharing and their future as a profitable company essentially hinged on autonomous vehicles driving their cost structure down in order to make the ridesharing business profitable. Looking back at their Q2 2019 Earnings for context, we can see the beginning of a shift:

• the company announced a staggering loss of $5.2B in the Quarter
• the lone bright spot was Uber Eats ( Delivery ), which had grown 53% YoY (Year over Year) to revenue of $373 Million. This represented approximately 12% of Uber’s revenue

Fast forward to their Q4 2020 Earnings report – following a year of upheaval and transformation resulting from the pandemic – and we can see that their revenue from Delivery was nearly equal to their Mobility revenue.

We can see Delivery revenue increasing from $418M in the 4th Q of 2019 to $1,356B in the 4th Q of 2020, a 224% increase ! Mobility revenue on the other hand decreased 52% over the same time period from $3.05B to $1.471B.

We can see that Delivery was NOT profitable, while Mobility was (based on segment EBITDA breakdown); but the change in trend nevertheless is still staggering.

The trend is in motion for Uber to run the world of transportation for both people and groceries in cities in the future. The Delivery business remains the subject of much debate in terms of expected profitability, which we discussed in our Business Model Canvas on Food Delivery.

Whether they use human drivers, autonomous vehicles, helicopters, or flying cars to drive Mobility and Delivery, it will only affect the margins in the end. The core Business Model for Uber is derived from a decade of technological development of their transportation platform (software) where they run the logistics of local delivery and urban transport in major cities worldwide.

Historically, Uber’s ridesharing business was all about creating a product that completely wowed consumers. As a company, under the leadership of founder and CEO Travis Kalanick, the company effectively deployed the world-domination strategy that put them at odds with governments and regulators worldwide. In that sense, Uber was sort of a community in its early days.

They were by far the dominant player in the ridesharing market in the mid 2010s, and they continue to maintain that dominance today, despite the cliff-drop in demand amid the pandemic.

They objectively* throttled market share away from competition in both the Taxi and Rental Car segments and forever altered the landscape of inner-city transportation.

*the ethical debate around Uber and their business practice s is not part of this analysis. This is strictly focused on the Business Model and strategy applied to become dominant, not the Ethics of it .

Part of what made Uber into what it was is that people in cities loved the convenience. Coupled with the rise of Airbnb, this new ‘sharing economy’ gave people the ability to travel and experience cities in ways that had never done before.

Airbnb created Hosts as a new profession, while Uber helped create Drivers who rolled in Teslas and Black luxury vehicles rather than beat-up, yellow taxi cabs.

The rise of the ‘ private driver for everyone ‘ vibe helped propel Uber into a company that felt community-centric , even though the reality was somewhat harsher than that.

Uber Eats rise, however, was under the leadership of Dara Khosrowshahi who came over from Expedia Group and succeeded the founder Kalanick as CEO in August 2017.

The focus at that point was about reinventing Uber’s brazen image and moving beyond the slew of controversies of that era in preparation for its eventual IPO. At this point, Uber became more corporate and focused more on a commercial-partnership strategy.

Uber Eats was officially launched as a standalone product in Q2 2016 . It had started out as ‘UberFresh’ and was used to experiment with delivery of groceries, convenience store items, etc. But the rapid growth of Food Delivery Apps in 2016/17 (Grubhub in the US and Deliveroo/Just Eat/etc in the UK) pushed the focus to food delivery.

By 2018, with the new CEO settled in and the narrative developing in preparation for the IPO, the company’s strategy shifted. Kalanick sold all of his stock, and with that, the company lost a lot of the charisma that made it dominant worldwide. If you take Uber’s market cap from its IPO to today (~$80B to ~$100B today), it is by no means spectacular, nor is it abysmal.

A more traditional corporate strategy – and shift away from helicopters and flying cars – may have, however, helped propel Uber Eats into its current position. Delivery has become a fortunate ‘hedge’ against the losses from the Mobility business, at least in terms of growth. How the Delivery business performs from here is the subject of much debate , but it has become a huge part of Uber’s strategy going forward given the events of the last year.

Uber has two key line items on its Financials:

• ’ ATG and Other Technology Programs ‘ ( A dvanced T echnology G roup)
• ’ Platform R&D ‘ ( contained within ‘Corporate G&A and Platform R&D’)

The company sold-off its self-driving car business in Q4 2020 to Aurora, but Uber maintains an equity stake and board seat.

“Uber ATG lost $303 million between January and September of this year, according to financial filings, and the company has spent more than $1 billion in its five years of existence.” Wired

We can see that the declining losses from ‘ATG’ on a quarterly basis, combined with the sale of its self-driving car business and rumoured sale of the air-taxi business, show the continuation of a long-term strategy focused on profitability by cutting non-core cost items.

Corporate G&A also includes certain shared costs such as finance, accounting, tax, human resources, information technology and legal costs. Platform R&D also includes mapping and payment technologies and support and development of the internal technology infrastructure. Uber Q4 2020

Assuming that ATG is representative of more ‘moonshot’ technologies and Platform R&D is more representative in platform investments around logistics, delivery, and probably AI, we can see how this shift in the business model is being set in motion for 2021 and beyond.

The narrative of a business only becoming profitable because of ‘autonomous vehicles and self-driving cars’ shifts to a more sophisticated software business that can potentially dominate two huge markets: Mobility and Delivery ( Freight growth is TBD).

Today’s stock market is rewarding Growth-at-all-Costs and seems to care little about profitability . But that could all change.

Uber has shifted its business model from ridesharing, autonomous vehicles & self-driving cars, to logistics, delivery, and urban mobility. How this plays out in the long run all TBD (to be determined) at this point, as the company continues to lose A LOT of money each quarter.

UBER raised $8.1B in its 2019 IPO. As of Q4 2020, the company had about $6.8B in cash/equivalents and another $9.8B in equity stakes in companies such as China-based Didi (valued at $6.8B), which it received when it exited the market in 2016.

As we have seen above, the company still loses in the neighborhood of at least $1 Billion every quarter. In 2019, they lost $8.51 Billion, while in 2020 they lost $6.77 Billion net.

Nonetheless, they continue to make acquisitions. The $2.65 Billion Postmates deal in 2020 was an all-stock deal. Their most recent acquisition of alcohol delivery service Drizly for $1.1 Billion was a mix of cash and stock.

Uber Business Model Canvas

A business model is defined as:

“the rationale of how an organization creates, delivers and captures value.”

Alex Osterwalder et al invented the Business Model Canvas to help individuals and organizations conceptualize how to analyze, create, and develop business models.

On-demand urban mobility (ridesharing) and delivery platform for consumers

• Ridesharing – Quick pick-up, transparent pricing, multiple options for different consumer segments
• Food and Grocery Delivery from local restaurants and merchants delivered door-to-door

View FULL PDF

We covered some of the Business Model Analytics that could be used to assess Uber Eats success/shortcomings in our Canvas on Food Delivery.

As Uber Eats was losing $3.36 per order in mid 2020, we talked about assessing metrics around:

• Average Order Value (AOV), Customer Loyalty, and Average Spend per Year per Customer (~$220 in 2018)

Uber highlights its Subscription/Membership model in its most recent Investor Presentation.

Uber’s strategic advantage here is the ability to bundle the Mobility and Delivery product seamlessly. Lyft has a competitive product via partnership with Grubhub (via LyftPink), but Uber obviously has a lot more control. For now, they break it into separate products:

• Uber Pass ($24.99 per month): includes Mobility and Delivery
• Uber Eats Pass ($9.99 per month): Delivery only

We have discussed almost all major components of their business model throughout the post:

• margins on Delivery and Mobility
• segment EBITDA
• ATG (Advanced Technologies Group) expense profile, Platform R&D, Acquisitions, etc

The bottom line is that there is only so much further they can maneuver each segment of the business. Membership/Subscription seems to the main metric driving the profitability narrative at this point.

The question is, can an increase in loyalty – combined with shifts in consumer behavior away from pay-per-use towards subscription-based models in the on-demand economy – lead towards profitability in the future?

Even though the number of users on Uber’s platform dropped by 16% in Q4 2020 from the previous-year quarter, it’s making more money from each of them, and Khosrowshahi repeatedly touted Uber’s membership growth to five million members worldwide.

There are times when technological innovation is optimal, and times when business model innovation is optimal. Given the blistering pace of technological innovation worldwide over the last decade, we may be entering an era where business model innovation becomes paramount.

Uber will be a good case study in this regard given the shift in their business model to focus on profitability.

Business Model Innovation – eGrocery

Business Model Canvas – Food Delivery

Strategy in the Digital Economy – Uber Ridesharing Example

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Uber Business Model (2023) | How Does Uber Make Money

5 minutes read

Despite the rise of newer ride-sharing apps today, Uber still manages to be one of the most popular service providers in the industry. It makes you wonder how the company has sustained its position and reputation.

As with any successful company, you can expect Uber to use various strategic planning techniques to maintain its status in the industry. This is why it might be fitting to visit the Uber business model canvas for inspiration as you develop your business model diagram. Continue reading to learn more.

A Brief History of Uber

Uber was established in 2009 in San Francisco. It started as a transportation company that hired licensed and experienced drivers to provide Uber services. As years passed, the company grew and evolved into a ride-sharing service provider and adopted the latest advertisement procedures. While Uber might have faced controversies, the business has been doing great since its ride-sharing app service was introduced.

The concept of connecting potential customers and passengers using a mobile application has been one of the reasons why Uber stands out from its competitors. The excellent thing about Uber is that it lets drivers drive their passengers in luxury cars like Escalades, Mercedes-Benz, and BMW 7 Series.

The only thing passengers would do is open the Uber application, and they're good to go. While using the app, they can also track the vehicle's location while approaching the destination. Truly, the company has revolutionized the conventional transportation system.

Uber Business Model Canvas

The Uber business model adapts a multi-sided platform. This means it connects drivers and passengers to offer cost-effective transportation and an added source of income. While Uber might account for below 1% of miles driven globally, its CEO, Dara Khosrowshahi, believed that most of the passengers where the ride-sharing app is available have installed its app on their smartphones. As a result, Uber will surely be used in cities and regions globally.

Look closely at the following elements below as they compose the Uber business model.

Value Propositions of Uber

Uber's value proposition covers two main aspects. The most significant value proposition for customers is the convenience of not having to search for taxis since the car generally comes to the passengers. Uber cars are usually available 24/7, and customers can track their route and current location. The fares are also favorable to passengers as they're cheaper than taxis.

The second component of Uber's value proposition is an additional source of income for drivers. It's a job that requires little experience and flexible working schedules. As you know, the Uber app lets passengers choose their destination before they book the ride. This takes away the possibility of misunderstandings. Along the way, passengers and drivers will have an excellent experience using the app and the service.

Customer Segments of Uber

The Uber app caters to both passengers and drivers. Passengers generally are directed through UberX, UberPOOL, UberSUV, and UBERBLACK. They're those who don't have cars, need to travel outside the city of residence, or don't want to during certain times. On the other hand, drivers are also Uber's customers. They need income and want to start a new job by driving and using Uber.

Key Partners of Uber

There are four partners in Uber, allowing the company to run its processes and services flawlessly.

• The unique thing about these drivers is that they own cars, which means these cars will be used to bring customers from one destination to another. They acquire customers and drive them to their value propositions. Uber drivers are independent contractors instead of calling them employees. They can also be co-owners as they control how Uber works.
• Local authorities. They're crucial in the early years of Uber, especially during those times when the company must convince several people to classify Uber drivers as independent contractors instead of employees.
• Other partners. They include mapping data providers and payment processors.

Key Activities of Uber

The first main activity of Uber is to develop and maintain its app. The processes will only run smoothly with a well-structured platform. There must always be app enhancements as technologies evolve. Despite Uber's popularity, the company still needs to market its services. This is part of the second key activity of Uber. At the same time, they must also conduct driver onboarding for those new drivers who want to use Uber services.

Customer Relationships of Uber

The Uber business model canvas under customer relationships utilizes reviews, ratings, and feedback systems. If you have used Uber, you'd know this is an essential aspect of its app, as the company can collect organic feedback from passengers. Since Uber can quickly see how customers experience the service, they can immediately improve on the potential poor feedback or sustain the good reviews. Along the way, Uber can better serve its customers.

Customer support is an essential component that ensures riders can reach Uber if they have issues with the app, payment methods, or the riding experience.

Key Resources of Uber

Uber relies heavily on its digital platform, the Uber app, as a critical resource. This app serves as the central nervous system of Uber's operations, facilitating the booking and acceptance of ride requests by both passengers and drivers. Moreover, Uber places significant emphasis on the development and refinement of its data analysis and algorithms. These analytical tools are primarily geared towards optimizing and expanding the reach of Uber's transportation network, ensuring efficient and effective operations.

Channels of Uber

Indeed, word of mouth remains a potent channel for customer acquisition, but Uber recognizes the importance of its digital platforms in this age. The Uber app and website provide riders with easy access to firsthand reviews and feedback, enhancing their confidence in the service. Furthermore, Uber leverages social media as a prominent visibility channel, acknowledging the ubiquity of social media in today's world, ensuring they remain in the public eye and continue attracting new customers.

Cost Structure of Uber

There are five areas where Uber spends the most budget to ensure its services can run flawlessly and be in step with other competitors in the industry.

• Revenue costs include insurance, mobile and service, and credit card process fees.
• Sales and marketing
• Research and development
• General and admin
• Amortization and depreciation
• Interest expense

Revenue Streams of Uber

Uber receives a percentage for every ride their drivers complete. There's about a 25% service fee for all Uber rides.

How Does Uber Make Money?

Undoubtedly, the Uber ride service remains the linchpin of the company's revenue generation. However, Uber has strategically diversified its services to expand its revenue streams. Uber Eats, for instance, has become a significant player in the food delivery industry, offering users convenient access to a wide range of culinary delights. Additionally, Uber has ventured into corporate services, allowing businesses to manage employee transportation efficiently. This entails reserving rides in advance and facilitating seamless multiple bookings for employees and clients. Furthermore, Uber Freight has emerged as a pivotal service for the logistics sector, streamlining the transportation of goods. These expansions highlight the dynamic nature of Uber's business model, encompassing various revenue sources.

Key Takeaways

The Uber business model canvas is a straightforward and relevant illustration of how it utilizes growth opportunities. It's appropriate given the transportation landscape today as more people travel from one town or city to another. The company has been strongly affected by the pandemic, but Uber was also clever in innovating its services and expanding to other services that still revolve around transportation. Surely, the competition is more challenging as more ride-sharing app providers are constantly available.

If you're about to develop your business model, you can get some inspiration from Uber. Looking at its diagram, there are not many long phrases or sentences; instead, it uses specific words and keywords, allowing stakeholders to better understand Uber's business model.

Most importantly, using diagramming software can be an excellent option for efficient collaboration. Boardmix lets you use its customizable Business model canvas template so you can make it your own. You can tweak some areas on the diagram, adjust the colors, and insert stickers or images. Visit this link to get started with your business model canvas.

References:

https://bstrategyhub.com/uber-business-model-how-does-uber-make-money/#How_does_Uber_make_money

https://businessmodelanalyst.com/uber-business-model/#Uber%E2%80%99s_Value_Propositions

https://www.digitalbizmodels.com/blog/business-model-canvas-uber#revenue

Join Boardmix to collaborate with your team.

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The Uber Business Model: Explained and Revenue Streams Unveiled

Discover the inner workings of the Uber business model and uncover its diverse revenue streams in this comprehensive article.

Understanding the Uber Business Model

At its core, Uber operates as a technology platform, connecting drivers and riders through its innovative app. This model has revolutionized the transportation industry , providing a convenient and reliable alternative to traditional taxis.

The Concept Behind Uber

Uber was founded with a simple yet powerful concept - to make transportation as easy as tapping a button. With a vision to create seamless and efficient journeys for riders, Uber capitalized on the growing popularity and ubiquity of smartphones to disrupt the traditional taxi model.

But how exactly does Uber achieve this? Let's dive deeper into the key components of Uber's business model .

Key Components of Uber's Business Model

Uber's success can be attributed to several key components of its business model. First and foremost is the ability to leverage the idle capacity of privately-owned vehicles, turning them into a vast fleet of on-demand transportation options. This not only reduces the need for traditional taxis but also provides individuals with an additional source of income as Uber drivers.

Imagine a scenario where you have a car sitting in your driveway for most of the day, not being utilized to its full potential. Uber allows you to put that idle vehicle to work, earning money as a driver whenever you have spare time. This flexible and inclusive approach has empowered countless individuals to become micro-entrepreneurs, contributing to the gig economy.

Additionally, Uber's rating system ensures a high level of trust and accountability between drivers and riders, fostering a safe and reliable service experience. Before getting into a car, riders can view the driver's rating and read reviews from previous passengers. This transparency not only helps riders make informed decisions but also motivates drivers to maintain a high level of service quality.

Furthermore, the cashless payment system simplifies transactions and eliminates the need for physical currency, adding to the convenience. With Uber, riders can link their credit or debit cards to their accounts, allowing for seamless and hassle-free payments. This not only saves time but also provides an added layer of security, as there is no need to carry cash or worry about making exact change.

Moreover, Uber's technology platform constantly analyzes data to optimize driver routes, reduce wait times, and ensure efficient utilization of resources. By leveraging advanced algorithms and machine learning, Uber can match riders with the nearest available drivers, minimizing travel time and maximizing convenience.

In conclusion, Uber's business model has disrupted the transportation industry by leveraging technology, idle capacity , and a rating system to provide a convenient, reliable, and efficient alternative to traditional taxis. As Uber continues to innovate and expand its services, it will be fascinating to see how the company shapes the future of transportation.

Dissecting Uber's Revenue Streams

When it comes to Uber, most people think of ride-hailing services as the company's primary business. However, Uber has successfully diversified its revenue streams to include various other services, allowing it to tap into multiple lucrative markets.

Ride-Hailing Services

Undoubtedly, ride-hailing is the core revenue generator for Uber. By leveraging their innovative platform, Uber connects drivers and riders, revolutionizing the way people commute. With each completed trip, Uber collects a percentage of the fare, which has proven to be a significant source of revenue for the company. Over the years, this revenue stream has experienced exponential growth, fueling Uber's expansion into new markets and cementing its position as a leader in the transportation industry.

But Uber's ambitions don't stop at ride-hailing. The company has recognized the immense potential of other sectors and has strategically ventured into various additional services, further expanding its revenue streams.

Food Delivery Services

One of the most successful endeavors by Uber is its foray into the food delivery market with Uber Eats. Realizing that people's desire for convenience extends beyond transportation, Uber launched this service, allowing customers to order from their favorite restaurants and have the food delivered right to their doorstep. By partnering with a wide range of restaurants and charging a fee for every delivery, Uber has tapped into yet another lucrative revenue stream. This expansion has not only increased their market share but also provided customers with a seamless and convenient way to satisfy their cravings.

Freight and Logistics Services

Going beyond passenger and food delivery services, Uber has also ventured into the realm of freight and logistics. With Uber Freight, the company aims to disrupt the traditionally fragmented trucking industry. By leveraging their advanced technology and extensive network, Uber connects shippers and carriers, streamlining the process of transporting goods. Through this service, Uber charges a fee for facilitating the transportation of goods, providing a win-win situation for both shippers and carriers. This strategic move has not only expanded Uber's revenue streams but also revolutionized the way goods are transported, making it more efficient and cost-effective.

By diversifying its revenue streams, Uber has not only solidified its position as a leader in the ride-hailing industry but has also successfully tapped into other lucrative markets. With their innovative approach and commitment to providing convenient services, Uber continues to explore new opportunities for growth, ensuring that their revenue streams remain diverse and robust.

The Role of Technology in Uber's Success

One of the key factors behind Uber's remarkable growth is its innovative use of technology.

Technology has revolutionized the way we travel, and Uber has been at the forefront of this revolution. Through its innovative use of technology, Uber has transformed the way people commute, making it more convenient, efficient, and accessible than ever before.

At the heart of Uber's success lies the Uber app, a technological marvel that has changed the way we hail and ride in taxis. The Uber app is the cornerstone of the company's success, providing a seamless and user-friendly platform for riders to request a ride, track their driver's arrival, and make cashless payments.

The Uber app's user-friendly interface and seamless functionality have played a significant role in the widespread adoption of Uber. With just a few taps on their smartphones, riders can easily book a ride and have a driver arrive at their location within minutes. This level of convenience has made Uber the preferred choice for millions of commuters worldwide.

But it's not just the convenience that sets Uber apart. The company's ability to harness and analyze vast amounts of data has given it a competitive edge in the market. By analyzing rider and driver data, Uber can optimize its algorithms to provide more accurate arrival times and efficient matching of drivers and riders.

Uber's data-driven approach has helped enhance its customer experience and maximize operational efficiency. By analyzing data on rider preferences, Uber can tailor its services to meet the unique needs and preferences of its customers. This personalized approach has not only improved customer satisfaction but also increased customer loyalty.

Furthermore, Uber's data-driven approach has allowed the company to make data-backed decisions when it comes to pricing and surge pricing. By analyzing data on supply and demand, Uber can adjust its prices dynamically, ensuring that riders can always find a ride when they need it, even during peak hours.

Moreover, Uber's use of technology extends beyond the app itself. The company has invested heavily in developing advanced mapping and navigation systems, enabling drivers to navigate efficiently and find the best routes to their destinations. This not only saves time for both drivers and riders but also reduces congestion on the roads, contributing to a more sustainable and efficient transportation system.

In conclusion, technology has been instrumental in Uber's success. From the user-friendly Uber app to the data-driven decision-making process, technology has allowed Uber to revolutionize the way we travel. As technology continues to evolve, it will be fascinating to see how Uber further leverages it to enhance its services and shape the future of transportation.

Uber's Global Expansion and Market Dominance

With its tremendous success in the ride-hailing industry, Uber has expanded its footprint to become a global force. The company's innovative business model and technological advancements have propelled it to operate in numerous countries around the world, spanning six continents.

Uber's international footprint is a testament to its ability to adapt and cater to the transportation needs of millions of people globally. By leveraging its extensive network of drivers and riders, Uber has revolutionized the way people travel, offering convenient and affordable transportation options in cities across the globe.

Uber's International Footprint

Uber's presence can be felt in major cities and towns in countries such as the United States, Canada, Mexico, Brazil, the United Kingdom, France, Germany, Spain, Italy, Australia, India, China, Japan, South Korea, South Africa, and many more. This expansive reach has allowed Uber to connect passengers with drivers in even the most remote corners of the world.

Through its strategic partnerships and collaborations with local transportation providers, Uber has been able to seamlessly integrate its services into various markets. By adapting to local regulations, licensing requirements, and cultural differences, Uber has successfully established a strong presence in each country it operates in.

Competition and Challenges in the Global Market

While Uber's global expansion has been impressive, it has also faced stiff competition and regulatory challenges in many markets. Local regulations, licensing requirements, and cultural differences have presented unique obstacles for Uber to overcome.

In some countries, Uber has faced resistance from traditional taxi services and local transportation providers who view the ride-hailing giant as a threat to their livelihoods. This has led to legal battles and protests in some cities, as established players try to protect their market share.

Additionally, regulatory frameworks vary from country to country, making it necessary for Uber to navigate a complex landscape of rules and regulations. This requires the company to work closely with local authorities and adapt its operations to comply with local laws.

Cultural differences also pose challenges for Uber. Each country has its own unique customs and preferences when it comes to transportation. Uber has had to tailor its services to meet the specific needs and expectations of each market, ensuring that it provides a seamless and enjoyable experience for both riders and drivers.

Despite these challenges, Uber has demonstrated its ability to overcome obstacles and thrive in the global market. The company's relentless pursuit of innovation, coupled with its commitment to providing reliable and convenient transportation options, has solidified its position as a dominant player in the ride-hailing industry worldwide.

The Future of Uber: Opportunities and Threats

As Uber continues to innovate and grow, it faces both exciting opportunities and inherent risks.

Potential Growth Areas for Uber

Uber has identified several potential growth areas to expand its services. These include autonomous vehicles, electric vehicles, and partnerships with public transportation agencies. By embracing these opportunities, Uber aims to solidify its position as the leading mobility provider worldwide.

Risks and Challenges Facing Uber's Future

Despite its success, Uber also faces significant risks and challenges. These include legal battles, regulatory hurdles, and public perception issues. Uber must navigate these challenges with care to ensure its long-term success and sustainability.

As we delve into the intricacies of Uber's business model and revenue streams, it becomes evident that Uber's success lies in its ability to adapt and innovate. By leveraging technology, diversifying its services, and expanding globally, Uber continues to disrupt and shape the future of transportation. With a relentless focus on customer experience and a commitment to pushing boundaries, Uber is poised to maintain its position as a dominant force in the transportation industry.

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Uber: Business Model, SWOT Analysis, and Competitors 2023

Inside This Article

In this blog article, we will delve into an in-depth analysis of Uber's business model, conduct a SWOT analysis, and explore its competitors in 2023. As one of the pioneers in the ride-hailing industry, Uber has revolutionized the way people commute. We will discuss the key drivers behind Uber's success and examine the challenges it faces. Additionally, we will evaluate Uber's strengths, weaknesses, opportunities, and threats to gain insights into its future prospects. Lastly, we will highlight the competitive landscape and identify the key players vying for market dominance alongside Uber.

What You Will Learn:

• Who owns Uber: Discover the key stakeholders and major investors behind Uber, gaining insight into the ownership structure of the company.
• Uber's mission statement: Understand the core values and goals that drive Uber's operations, and learn how the company aims to revolutionize transportation.
• How Uber makes money: Explore the various revenue streams that contribute to Uber's financial success, including ride fares, delivery fees, and other innovative services.
• Uber's Business Model Canvas: Gain a comprehensive understanding of Uber's business model, examining the key components and strategies that have propelled its growth and disruption in the industry.
• Uber's competitors: Identify the main players in the ride-hailing industry that directly compete with Uber, uncovering the challenges and opportunities faced by the company in a competitive market.
• Uber's SWOT analysis: Evaluate Uber's strengths, weaknesses, opportunities, and threats through a detailed analysis, providing a holistic view of the company's current position and future prospects.

Who owns Uber?

Introduction.

One of the most frequently asked questions about Uber is, "Who owns it?" With its rapid growth and global presence, it's natural to be curious about the ownership and stakeholders behind this tech giant. In this section, we will delve into the ownership structure of Uber and shed light on the key players involved.

Major Shareholders

Uber is a publicly traded company, listed on the New York Stock Exchange (NYSE) under the ticker symbol UBER. As of [current year], the ownership of Uber is distributed among various institutional and individual shareholders. Let's take a look at some of the major stakeholders:

Founder and Early Investors : Uber was founded in 2009 by Travis Kalanick and Garrett Camp. While Travis Kalanick is no longer actively involved in the company, he still holds a significant ownership stake. The early investors, including venture capital firms such as Benchmark, First Round Capital, and Google Ventures, also own substantial shares.

Institutional Investors : Over the years, Uber has attracted a wide range of institutional investors, including mutual funds, pension funds, and sovereign wealth funds. Some of the notable institutional investors in Uber include SoftBank Group, Toyota, and Alphabet (Google's parent company).

Employees : Uber's employees, both current and former, also own a portion of the company through employee stock options and restricted stock units (RSUs). This ownership structure allows employees to have a vested interest in the company's success.

Key Individuals

Apart from the major shareholders, there are several key individuals who hold influential positions within Uber:

Dara Khosrowshahi (CEO) : Dara Khosrowshahi took over as Uber's CEO in 2017. While he doesn't have a significant ownership stake, his leadership and strategic decisions play a crucial role in shaping the company's future.

Board of Directors : The board of directors consists of individuals who provide oversight and make important decisions for Uber. Notable board members include Ronald Sugar, Ursula Burns, and Yasir Al Rumayyan.

While Uber is a publicly traded company, its ownership is diverse, comprising founders, early investors, institutional investors, and employees. This broad ownership structure allows for a diverse range of perspectives and interests, contributing to the company's growth and success. As Uber continues to evolve and expand, it will be interesting to see how its ownership landscape may change and adapt to the dynamic business environment.

What is the mission statement of Uber?

The mission statement of uber.

Uber's mission statement is "to ignite opportunity by setting the world in motion." This concise statement encompasses the core values and goals that drive the company's operations and expansion.

Igniting Opportunity

Uber's mission is centered around creating opportunities for both drivers and riders. By providing a platform that connects riders with drivers, Uber aims to empower individuals to earn a flexible income by providing transportation services. This mission is particularly relevant in regions where traditional employment opportunities may be limited, allowing drivers to utilize their personal vehicles to generate income.

Setting the World in Motion

Uber's mission statement also emphasizes the company's commitment to revolutionizing the way people move. By offering a convenient and innovative transportation solution, Uber aims to provide a viable alternative to traditional taxi services and private car ownership. Through their technology-driven platform, Uber seeks to transform urban mobility by making transportation more efficient, accessible, and environmentally friendly.

Embracing Innovation

Implicit in Uber's mission statement is the company's dedication to innovation. Uber has been at the forefront of disrupting the transportation industry by leveraging advanced technology and data analysis to enhance the user experience. This commitment to innovation extends beyond the basic transportation service, as Uber continues to explore new ventures such as autonomous vehicles and food delivery services.

Uber's mission statement encapsulates the company's vision of igniting opportunity and revolutionizing transportation on a global scale. By providing a platform that connects drivers and riders, Uber aims to empower individuals and communities while redefining how people move in cities around the world.

How does Uber make money?

Ridesharing revenue.

The primary source of revenue for Uber is its ridesharing service. Uber charges a commission fee from the total fare for each ride provided through its platform. This fee varies by location but typically ranges from 20% to 30%. The remaining portion of the fare goes to the driver. As Uber has expanded its operations globally, its ridesharing revenue has grown substantially, making it the main contributor to the company's overall revenue.

Surge Pricing

Another significant revenue stream for Uber is surge pricing. During periods of high demand or limited supply of drivers, Uber implements surge pricing, also known as "dynamic pricing." Surge pricing allows Uber to increase the fare rates temporarily to incentivize more drivers to come online and meet the increased demand. This surge pricing mechanism enables Uber to balance supply and demand efficiently while generating additional revenue during peak times.

In recent years, Uber has diversified its revenue streams by entering the food delivery market with Uber Eats. This platform allows users to order food from local restaurants and have it delivered to their doorstep. Similar to the ridesharing service, Uber charges a commission fee from the total order value for each delivery facilitated through Uber Eats. As the popularity of food delivery continues to rise, Uber Eats has become an important revenue generator for the company.

Other Services

Uber also generates revenue through additional services and initiatives. These include Uber for Business, which provides companies with a convenient way to manage employees' transportation needs and offers various billing options. Additionally, Uber offers subscription-based services like Uber Pass and Uber Rewards, providing customers with benefits such as discounted fares and priority support for a monthly fee.

Partnerships and Advertising

Uber has established partnerships with various companies to generate additional revenue. For example, Uber has collaborated with airlines, hotels, and travel agencies to offer integrated transportation services to their customers. These partnerships often involve revenue-sharing agreements, where Uber receives a portion of the fare for each ride booked through these partner platforms. Furthermore, Uber has also explored advertising as a potential revenue source, displaying ads on its app to generate additional income.

In conclusion, Uber primarily makes money through its ridesharing service, taking a commission from each fare. Surge pricing, Uber Eats, additional services like Uber for Business and subscription-based models, partnerships, and advertising all contribute to the company's overall revenue. As Uber continues to innovate and expand its offerings, it will likely explore new avenues to generate revenue and maintain its position as a leading player in the transportation industry.

Uber Business Model Canvas Explained

The Uber Business Model Canvas is a strategic tool that provides a visual representation of Uber's business model. It helps to analyze and understand the key elements of Uber's operations, revenue streams, and customer segments. In this section, we will delve deeper into each component of the Uber Business Model Canvas and explain its significance.

Key Partnerships

One of the crucial elements of Uber's business model is its partnerships. Uber collaborates with various stakeholders to ensure the smooth functioning of its operations. These partnerships include:

Drivers: Uber relies on a vast network of independent drivers who provide transportation services through the platform. These drivers are considered key partners as they are the face of Uber and directly interact with customers.

Vehicle Manufacturers and Dealerships: Uber partners with vehicle manufacturers and dealerships to offer incentives and financing options to drivers who wish to purchase or lease vehicles specifically for Uber use. By collaborating with these partners, Uber is able to attract more drivers to its platform.

Payment Gateways: Uber partners with payment gateways to enable seamless and secure transactions for both drivers and riders. These partnerships ensure that payments can be processed efficiently and provide a convenient experience for users.

Key Activities

The key activities of Uber are centered around providing a reliable and convenient transportation service. These activities include:

Matching Passengers and Drivers: Uber's platform utilizes advanced algorithms to match passengers with available drivers in real-time. This activity ensures that riders can quickly find a suitable and available driver for their transportation needs.

Transportation Logistics: Uber manages the logistics of transportation by dynamically calculating routes and estimated arrival times. The company continuously optimizes its algorithms to ensure efficient and timely pickups and drop-offs.

Customer Support: Uber provides customer support services to address any issues or concerns raised by riders or drivers. This activity helps to maintain a high level of customer satisfaction and resolve any disputes that may arise.

Key Resources

Uber relies on various key resources to deliver its services effectively. These resources include:

Technology Infrastructure: Uber heavily relies on its technology infrastructure, including its mobile application and backend systems, to facilitate the matching of drivers and passengers, handle payments, and provide real-time updates.

Network of Drivers: Uber's success is largely dependent on its network of drivers. The company invests in driver recruitment and retention strategies to ensure an adequate supply of drivers to meet the demand of passengers.

Brand and Reputation: Uber's brand and reputation play a crucial role in attracting both riders and drivers. Building a positive brand image and maintaining a reputation for reliability and convenience are essential resources for Uber.

Cost Structure

Uber's cost structure is primarily driven by the following factors:

Driver Compensation: Uber incurs costs related to compensating drivers for the services they provide. This includes the driver's share of the fare, incentives, and bonuses.

Marketing and Promotions: Uber invests heavily in marketing and promotional activities to attract new riders and drivers to the platform. These costs include advertising campaigns, referral programs, and discounts.

Technology Development and Maintenance: Uber invests in continuous technological advancements to enhance its platform's functionality and user experience. This includes costs associated with app development, server maintenance, and data analytics.

The Uber Business Model Canvas provides a comprehensive overview of Uber's operations, revenue streams, and key partnerships. By understanding the various components of Uber's business model, we can gain insights into the company's success and the strategies it employs to remain a dominant player in the transportation industry.

Which companies are the competitors of Uber?

Traditional taxi companies.

One of the main competitors of Uber is traditional taxi companies. These companies have been providing transportation services for decades and have a well-established customer base. However, they have faced challenges in recent years due to the emergence of ride-sharing services like Uber. Traditional taxi companies often argue that Uber has an unfair advantage as they do not have to comply with the same regulations and licensing requirements. Despite these challenges, traditional taxi companies still remain a significant competitor for Uber, especially in areas where ride-sharing services are not as popular.

Lyft is one of the most prominent competitors of Uber and operates in a similar manner. Like Uber, Lyft offers a mobile app that connects passengers with drivers. Lyft has gained popularity in the United States and has expanded its services to several countries. While Lyft may not be as globally recognized as Uber, it has managed to establish a strong presence in many cities, often competing directly with Uber for market share. Both Uber and Lyft constantly engage in price wars and promotions to attract customers, making them fierce rivals in the ride-sharing industry.

Didi Chuxing

Didi Chuxing is a Chinese ride-sharing company that has become a significant competitor for Uber, particularly in the Chinese market. Didi Chuxing merged with Uber China in 2016, which allowed Uber to gain a stake in the company. However, Didi Chuxing still dominates the ride-sharing market in China and offers a fierce competition to Uber. With its extensive network of drivers and strong brand presence, Didi Chuxing poses a significant threat to Uber's growth and expansion plans in the Chinese market.

Grab is a Southeast Asian ride-hailing platform that operates in multiple countries, including Singapore, Malaysia, Indonesia, Thailand, and Vietnam. Grab offers a range of services, including ride-hailing, food delivery, and digital payments. It has gained significant popularity in Southeast Asia and has become a strong competitor for Uber in the region. Grab has managed to secure partnerships with various local businesses and government agencies, giving it a competitive advantage over Uber in terms of market penetration and customer loyalty.

Ola is an Indian ride-sharing company and a major competitor for Uber in the Indian market. It operates in over 100 cities in India and offers various transportation services, including auto-rickshaws and bikes. Ola has a strong presence in India, with a large fleet of drivers and a loyal customer base. The company has also expanded its services to international markets like Australia, New Zealand, and the United Kingdom. Ola's focus on localizing its services to suit the Indian market has helped it maintain a competitive edge against Uber in India.

In conclusion, Uber faces stiff competition from various companies operating in the ride-sharing industry. Traditional taxi companies, Lyft, Didi Chuxing, Grab, and Ola are among the key competitors challenging Uber's dominance in different markets around the world. As the ride-sharing industry continues to evolve, it will be interesting to see how these competitors adapt and innovate to gain an edge over Uber.

Uber SWOT Analysis

Market leader: Uber is the dominant player in the ride-sharing industry, with a presence in over 60 countries and 700 cities worldwide. This market leadership gives Uber a significant advantage in terms of brand recognition and customer trust.

Technological innovation: Uber's use of cutting-edge technology, such as its mobile app and GPS tracking system, has revolutionized the transportation industry. The app provides a seamless user experience, allowing customers to request rides, track their driver's location, and make cashless payments.

Diverse service offerings: In addition to its traditional ride-sharing service, Uber has expanded its business to include other transportation options such as UberEats (food delivery) and UberFreight (cargo shipping). This diversification allows Uber to tap into new revenue streams and cater to a wider range of customer needs.

Dynamic pricing model: Uber's surge pricing algorithm adjusts prices based on supply and demand, allowing the company to maximize profits during peak times. This pricing flexibility provides an incentive for more drivers to be on the road during high-demand periods, ensuring shorter wait times for customers.

Regulatory challenges: Uber has faced numerous regulatory challenges and legal battles in various markets around the world. Local governments and taxi associations have raised concerns about issues such as licensing, insurance, and driver background checks. These challenges have resulted in bans or restrictions on Uber's operations in some cities.

Negative public perception: Uber has been criticized for its treatment of drivers, surge pricing practices, and alleged disregard for local regulations. These controversies have damaged Uber's reputation and led to a negative public perception in some markets. The company has made efforts to improve its image and address these concerns, but the impact of these efforts remains to be seen.

High driver turnover: Uber's business model heavily relies on independent contractor drivers. However, many drivers have reported dissatisfaction with their earnings, lack of benefits, and limited support from Uber. As a result, driver turnover is high, which can impact service quality and customer satisfaction.

Opportunities

Expansion into new markets: Uber has the opportunity to expand its operations into new markets with untapped potential. Emerging markets, such as India and Southeast Asia, present significant growth opportunities for Uber due to their large populations and increasing smartphone penetration rates.

Partnerships with other companies: Uber can explore partnerships with other companies to enhance its services and offer additional benefits to customers. For example, partnering with airlines or hotels could provide seamless transportation solutions for travelers, while collaborating with food delivery services or grocery stores could expand UberEats' customer base.

Autonomous vehicles: The development of autonomous vehicles presents an opportunity for Uber to reduce its reliance on human drivers and lower operating costs. By investing in self-driving technology or forming partnerships with autonomous vehicle manufacturers, Uber can position itself at the forefront of this emerging technology.

Intense competition: Uber faces intense competition from both traditional taxi services and other ride-sharing companies. Competitors such as Lyft in the United States and Didi Chuxing in China have gained market share and pose a threat to Uber's dominance. This competition can lead to price wars, increased marketing expenses, and reduced profitability.

Changing regulations: As governments continue to grapple with the regulatory implications of ride-sharing, Uber faces the risk of stricter regulations or bans in certain markets. Compliance with evolving regulations can be costly and time-consuming for Uber, affecting its ability to operate in a profitable manner.

Security and safety concerns: Uber has faced criticism and legal challenges related to passenger safety and driver background checks. Incidents involving assaults or accidents have raised concerns about the security of using Uber's services. Failure to address these concerns adequately can erode customer trust and loyalty, leading to a decline in user adoption.

Key Takeaways

• The ownership of Uber is distributed among multiple stakeholders, including investors, co-founders, and employees.
• The mission statement of Uber is to "ignite opportunity by setting the world in motion," aiming to provide convenient and reliable transportation for everyone.
• Uber primarily makes money through its ride-hailing services, taking a commission from drivers' fares, surge pricing during peak hours, and additional fees for services like UberEats.
• The Uber Business Model Canvas highlights key aspects such as customer segments, value proposition, channels, customer relationships, revenue streams, key activities, key resources, key partnerships, and cost structure.
• Competitors of Uber include Lyft, Didi Chuxing, Ola, Grab, and other regional ride-hailing services, as well as traditional taxi services.
• In terms of SWOT analysis, Uber's strengths include its strong brand, global presence, and technological innovation, while weaknesses include regulatory challenges and controversies. Opportunities lie in expanding into new markets and services, while threats include competition, legal and regulatory issues, and changing consumer preferences.

In conclusion, Uber has revolutionized the transportation industry and become a household name worldwide. When it comes to ownership, Uber is a publicly traded company, meaning it has numerous shareholders who collectively own the company.

The mission statement of Uber is to create opportunities through technology to help people get where they need to go. This speaks to their commitment to providing convenient and accessible transportation options for everyone.

Uber generates revenue primarily through its ride-hailing services, taking a percentage of each fare as a commission. Additionally, they offer other services like Uber Eats, which further contributes to their revenue stream.

The Uber Business Model Canvas provides a comprehensive overview of how the company operates. It outlines key elements such as customer segments, value proposition, channels, customer relationships, revenue streams, key resources, key activities, partnerships, and cost structure. This canvas helps us understand the different aspects of Uber's business model.

In terms of competition, Uber faces stiff competition from companies like Lyft, Ola, Grab, and Didi Chuxing. These companies provide similar ride-hailing services and are constantly vying for market share. The competition in this industry is intense, driving innovation and improving services for consumers.

Finally, conducting a SWOT analysis reveals Uber's strengths, weaknesses, opportunities, and threats. Uber's strengths lie in its global presence, strong brand recognition, and technological capabilities. However, weaknesses such as regulatory challenges and controversies affect its reputation. Opportunities exist in expanding into new markets and diversifying services, while threats include increased competition and potential regulatory restrictions.

Overall, Uber's journey has been remarkable, transforming the way people travel and challenging traditional transportation systems. With its mission, business model, and robust competition analysis, Uber continues to adapt and evolve in a rapidly changing industry.

What is Uber's SWOT analysis?

• Strong brand recognition: Uber is one of the most recognized brands in the ride-sharing industry globally.
• Extensive market reach: Uber operates in over 900 metropolitan areas worldwide, giving it a significant market presence.
• Technological innovation: Uber's user-friendly app and advanced algorithms have revolutionized the transportation industry.
• Diverse service offerings: In addition to ride-sharing, Uber has expanded its services to include food delivery (Uber Eats) and freight transportation (Uber Freight).
• Low cost structure: Uber does not own a fleet of vehicles, allowing it to operate without the expenses associated with vehicle maintenance, fuel, or insurance.

Weaknesses:

• Regulatory challenges: Uber faces legal and regulatory hurdles in many cities, which can hinder its growth and profitability.
• Safety concerns: Incidents involving unsafe drivers have raised concerns about the safety of using Uber's services.
• Dependence on gig economy workers: Uber relies on a large pool of independent contractors, which can lead to issues related to worker classification and labor rights.
• High competition: There are numerous competitors in the ride-sharing industry, both locally and internationally, which intensifies competition and puts pressure on Uber's market share.
• Negative public perception: Uber has faced criticism for its corporate culture, aggressive expansion strategies, and controversial business practices, leading to a negative public perception in some cases.

Opportunities:

• Expansion into new markets: Uber has the opportunity to further expand its operations into untapped markets, both domestically and internationally.
• Growth in food delivery: The online food delivery market is experiencing significant growth, and Uber Eats can capitalize on this opportunity by expanding its presence in this sector.
• Integration of autonomous vehicles: Uber has been investing in autonomous vehicle technology, which could significantly reduce labor costs and increase efficiency in the future.
• Partnerships with other service providers: Collaborations with airlines, hotels, or other service providers could enhance Uber's value proposition and reach a broader customer base.
• Expansion of additional services: Uber can consider diversifying its services further, such as offering micro-mobility options like electric scooters or bikes.
• Intense competition: Lyft, Didi Chuxing, and other local ride-sharing competitors pose a significant threat to Uber's market share.
• Regulatory restrictions: Changes in regulations and legal challenges can limit Uber's operations in some regions or increase operational costs.
• Economic downturns: During economic recessions or downturns, people may reduce their discretionary spending on services like ride-sharing, adversely affecting Uber's revenue.
• Security breaches: Cybersecurity threats and data breaches can erode customer trust and have a negative impact on Uber's reputation.
• Negative public sentiment: Continued negative publicity, scandals, or controversies can damage Uber's brand image and lead to a decline in customer loyalty.

What is Uber's biggest strength?

Uber's biggest strength is its extensive and efficient network of drivers. The company has successfully created a large pool of independent drivers who are readily available to provide transportation services to customers. This extensive network allows Uber to offer quick and convenient rides to users in numerous cities around the world. Additionally, Uber's technology-driven platform and user-friendly app contribute to its strength by providing a seamless experience for both drivers and passengers.

What are the positive and negatives of Uber?

Positive aspects of Uber:

• Convenience: Uber provides a convenient way to book a ride anytime, anywhere through its mobile app.
• Affordability: Uber is often considered more cost-effective than traditional taxis, especially for longer rides.
• Flexibility for drivers: Uber allows drivers to work on their own schedule, providing them with flexibility in choosing their working hours.
• Safety features: Uber has implemented safety features such as real-time tracking, driver information, and sharing trip details with friends or family.
• Reduced drunk driving: Uber has been credited with reducing drunk driving incidents as people have a readily available alternative to driving themselves after consuming alcohol.

Negative aspects of Uber:

• Surge pricing: During busy periods or high-demand times, Uber implements surge pricing, leading to increased fares that users may find expensive.
• Lack of employment benefits: Uber drivers are considered independent contractors, which means they do not receive traditional employment benefits like health insurance or paid time off.
• Safety concerns: Despite safety features, there have been reports of incidents involving Uber drivers, raising concerns about passenger safety.
• Impact on traditional taxi industry: The rise of Uber has had a negative impact on traditional taxi drivers and companies, leading to protests and conflicts in some cities.
• Legal challenges: Uber has faced numerous legal challenges regarding its operations and classification of drivers in several countries, causing regulatory issues and uncertainty.

What are Uber eats strengths?

Some potential strengths of Uber Eats are:

Extensive network: Uber Eats has a large network of restaurants and delivery partners, allowing them to offer a wide range of food options to customers.

Convenience: The platform is designed to offer a convenient and seamless food delivery experience, allowing customers to order food from their favorite restaurants with just a few taps on their smartphones.

User-friendly interface: The Uber Eats app and website have a user-friendly interface that makes it easy for customers to browse through menus, place orders, and track their deliveries in real-time.

Fast delivery: Uber Eats leverages its advanced logistics technology to provide fast and efficient delivery services, ensuring that customers receive their orders in a timely manner.

Integration with Uber platform: Uber Eats benefits from its integration with the larger Uber ecosystem, utilizing the existing infrastructure and user base of Uber to expand its reach and provide additional value to customers.

Promotions and discounts: Uber Eats frequently offers promotions, discounts, and deals to attract and retain customers, making it an attractive option for those looking for affordable food delivery.

Customer reviews and ratings: Uber Eats allows customers to leave reviews and ratings for restaurants, helping other users make informed decisions when choosing where to order from.

Cashless transactions: The platform supports cashless transactions, providing a secure and convenient payment method for customers.

Global presence: Uber Eats operates in numerous cities and countries worldwide, making it accessible to a large customer base globally.

Customer support: Uber Eats provides customer support through various channels, allowing users to easily reach out for assistance or resolve any issues they may encounter.

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Uber Technologies, Inc. (UBER): Business Model Canvas

• Marketing Mix

Introduction

The transportation industry has undergone significant changes in the past few years with the advent of ride-hailing services. Today, these services have become an integral part of our daily commute, with millions relying on them for transportation. According to a report by Statista, the global ride-hailing industry was valued at $75.6 billion in 2019 and is expected to grow at a CAGR of 14.8% from 2020 to 2025. The rise in smartphone usage, ease of payment options, and increasing traffic congestion are some of the factors driving the growth of the ride-hailing industry.

One of the largest players in this industry is Uber Technologies, Inc. Founded in 2009, Uber has disrupted traditional taxi services and has become a household name in the transportation sector. Its innovative approach to connecting riders with drivers has made transportation more accessible and convenient. In this blog post, we will discuss Uber's business model canvas and how it has become one of the leading ride-hailing services globally.

• Overview of Uber’s business model
• Key partners, resources, activities and value proposition
• Customer segments and revenue streams
• Cost structure and key metrics

By the end of this blog post, you will have a better understanding of Uber's business model canvas and how it is changing the way we think about transportation. Let's get started!

Key Partnerships

• Drivers: Uber's primary partners are the drivers who provide the ride-hailing services to the customers. The company has developed strong partnerships with its drivers by offering them incentives, support, and training. Uber provides its drivers access to discounted gas, insurance, and maintenance services that help them to reduce their operational costs.
• Suppliers: Another crucial partnership for Uber is with its suppliers who provide the vehicles for the ride-hailing services. Uber has formed alliances with various automakers, such as Toyota, to offer discounts and exclusive offers to its drivers. This partnership ensures that Uber gets access to a steady supply of vehicles for its ride-hailing services.
• Payment Partners: To facilitate seamless payment transactions, Uber has partnered with payment gateways, such as PayPal, Braintree, and Stripe. These payment partners offer secure and convenient payment options for customers worldwide. This partnership ensures that the payment process is hassle-free, secure, and swift.
• Local Regulatory Agencies: To operate legally in different regions worldwide, Uber has formed partnerships with local regulatory agencies. The collaboration with regulatory agencies ensures that Uber's operations comply with regulatory standards and policies. This partnership enables Uber to operate in various countries legally.
• Technology Partners: To maintain its technological competitiveness in the market, Uber has partnered with various technology companies. This collaboration ensures that Uber has access to cutting-edge technology that helps it provide seamless ride-hailing services globally.

Key Activities

Uber Technologies, Inc. has a number of key activities in their business model that enable them to provide ride sharing services to millions of customers worldwide:

• Develop and maintain the Uber app: The development and maintenance of the Uber app is a critical activity for the company as it is the key interface between the customers and drivers.
• Recruit and onboard drivers: Uber relies on a large network of drivers to provide its service. The company continuously recruits new drivers and provides training and support to ensure quality service.
• Market and promote the Uber service: Uber invests heavily in marketing and promoting its ride sharing services to attract new customers and differentiate itself from its competitors.
• Provide customer support: Uber understands the importance of providing excellent customer support to enhance the overall customer experience. The company has dedicated teams that respond to customer queries and concerns in a timely manner.
• Ensure regulatory compliance: As a ride sharing platform, Uber must comply with local regulations in the markets it operates in. The company has a team responsible for monitoring and maintaining compliance with relevant regulations.
• Develop and maintain partnerships: Uber partners with a number of businesses, such as hotels and airlines, to provide additional value to its customers. The company has a dedicated team responsible for building and maintaining these partnerships.
• Invest in research and development: To stay ahead of its competitors, Uber invests in research and development to explore new business models and technologies that can help enhance its service offering.

Overall, these key activities enable Uber to consistently provide a reliable, convenient and efficient ride sharing service that meets customer needs and demands.

Key Resources

Uber Technologies, Inc. (UBER) relies on a range of key resources to support its operations and growth, including:

• Technology platform: Uber's technology platform is its primary resource, enabling it to connect drivers and riders in real-time through its mobile app. The app includes advanced features such as geolocation, ride tracking, and payment processing, supported by sophisticated algorithmic systems that analyze data, optimize routes, and set pricing rates.
• Drivers: Uber's drivers are a key resource, providing the essential service of transportation to riders. Uber maintains a large pool of drivers in urban areas worldwide, providing flexibility and convenience to riders while creating income opportunities for drivers.
• Riders: Uber's riders are the primary customers of its ride-hailing services. The company has built a sizable following of users in many parts of the world, and its focus on providing reliable, affordable, and convenient transport has helped to fuel its growth.
• Strategic partnerships: Uber has developed numerous strategic partnerships with other companies to expand its reach and enhance its services. Examples of these partnerships include tie-ups with airlines, hotels, and rental car companies, as well as with technology firms such as Google and Facebook.
• Financial resources: As a fast-growing technology company, Uber has had significant access to capital markets and venture funding. These financial resources have enabled the company to fund its expansion into new markets, develop new product offerings, and acquire other companies in the transportation space.
• Brand and reputation: Uber's brand and reputation are vital resources that have helped to establish its credibility and attract riders and drivers to its platform. The company has invested heavily in marketing and public relations efforts to build its brand and develop a loyal user base.

By leveraging these key resources, Uber has been able to build a highly successful business model that has disrupted the traditional taxi industry and transformed the way that people access transportation in cities worldwide.

Value Propositions

Uber's value proposition revolves around two key factors:

• Convenience: Uber provides a simple and comfortable way to hail a ride from anywhere, anytime. With just a few taps on the app, the customer can get a ride at their doorstep within minutes.
• Affordability: Uber's pricing model is designed to be affordable for everyone. Customers can easily estimate the cost of their ride upfront, and there are no hidden fees. This helps the company to stand out in the market compared to traditional taxis.

Uber also offers several other value propositions that contribute to its success:

• Safe and Reliable: Uber ensures the safety and security of its customers through its strict driver background checks and insurance policies. This gives customers peace of mind while travelling.
• Availability: With a large fleet of drivers, Uber provides near-instant availability to its customers. This is particularly important during peak hours and in areas with low taxi availability.
• Variety: Uber provides various ride options that cater to different needs – from basic UberX to luxury UberBLACK. This allows customers to tailor their ride to their specific requirements.
• Cashless Payments: Customers can pay for their rides without the need for cash, improving convenience and offering increased security.

Customer Relationships

Customer segments.

• Riders: Individuals who need transportation and want a more convenient and reliable option than traditional taxis or public transit. This segment includes business professionals, tourists, commuters, and people traveling to and from airports, among others.
• Drivers: Individuals who are looking for flexible work and want to earn money driving for Uber. This segment includes people who own their own cars and are looking to make extra money on the side, as well as those who want to become full-time Uber drivers.
• Enterprises: Companies that need transportation services for their employees or customers, such as hotels, event planners, or corporate clients. This segment benefits from Uber's efficient and reliable transportation solutions.
• Delivery Partners: Businesses looking for a reliable and fast delivery service, such as restaurants or retail stores, can utilize Uber's delivery platform to provide their customers with on-demand delivery services.

Cost Structure

Uber has a unique cost structure that characterizes its business model. The company presents a variable cost structure that significantly changes with the increase in demand for its services. Uber’s cost structure is categorized into two main segments: fixed and variable costs.

Fixed Costs

Fixed costs represent expenses that do not alter in the short-term despite the change in the demand for the services. The following are the fixed costs incurred by Uber:

• Driver Acquisition: Uber incurs costs in recruiting, vetting, and verifying the qualifications of drivers to ensure safety and compliance with local regulations.
• Technology and Infrastructure: The company uses advanced technology, including a mobile application and website, to connect riders and drivers. Uber continually invests in these technologies to maintain its competitive advantage.
• Insurance: Uber provides insurance that covers both drivers and passengers in case of accidents while using the service.
• Marketing and Advertising: Uber invests in advertising and promotional activities to increase brand recognition and attract customers.

Variable Costs

Variable costs represent expenses that fluctuate depending on the volume of services provided. The following are the variable costs incurred by Uber:

• Driver Incentives: Uber provides incentives to drivers to encourage them to accept rides and work during peak hours. These incentives contribute to the costs incurred by the company.
• Payment Processing: Uber charges a fee for processing payments made by riders using the mobile application.
• Rider Subsidies: The company offers discounted prices to riders to encourage them to use its services. These subsidies contribute to the variable costs incurred by Uber.
• Vehicle Maintenance: Drivers using their vehicles must take care of expenses, such as fuel, maintenance, and repairs.

Uber’s cost structure enables the company to operate efficiently while continuously investing in its technology, advertising, and driver incentives. The company’s flexible cost structure allows it to lower or increase its prices based on demand or competition, making it more attractive to both riders and drivers.

Revenue Streams

Uber Technologies, Inc. generates revenue through various streams:

• Ride-sharing: The primary revenue stream of Uber Technologies, Inc. is ride-sharing. The company earns a fee for every ride taken by the passengers. The fee charged to passengers is determined by the distance traveled, the type of vehicle used by the passenger, and the demand for rides at any given point in time. The company offers various types of services, including UberX, UberBLACK, UberPOOL, and UberXL, among others.
• Delivery Services: Another revenue stream of Uber is delivery services. The company offers food, grocery, and package delivery services under the Uber Eats platform. This service enables customers to order food or groceries from their favorite restaurants or stores, and have them delivered to their doorstep. The company takes a commission fee from the merchants for every order placed through the platform.
• Advertisements: Uber also generates a significant portion of its revenue through advertisements. The company offers various advertising opportunities to businesses, such as sponsored rides or in-car advertisements. The businesses pay a fee to Uber to advertise their products or services on its platform.
• Uber for Business: Uber offers its services to companies through its Uber for Business program. The program enables companies to manage their transportation expenses and provide employees with a convenient transportation option. The company charges a fee for each ride taken by the employees.
• Uber Health: Uber has also launched a healthcare platform called Uber Health, which provides transportation services to patients who need to visit medical facilities. This service enables healthcare providers to arrange transportation for their patients, thereby improving the quality of care. The company charges a fee for each ride taken by the patient.
• Other Revenue Streams: In addition to the above streams, Uber also generates revenue through other services such as Uber Freight, which provides logistics services to businesses, and Uber Connect, which enables users to send packages or items to friends and family. The company also earns revenue by charging a cancellation fee to passengers who cancel their rides after a certain time limit.

Overall, the Business Model Canvas for Uber Technologies, Inc. presents a clear outline of the company's key resources, activities, and value proposition. By leveraging technology, Uber has been able to establish a seamless platform that connects riders with drivers, while keeping costs low and providing a reliable and safe transportation service.

One of the strengths of Uber's business model is its ability to rapidly expand into new markets, leveraging its existing technology infrastructure and using data analytics to identify and target new opportunities. Another key factor is Uber's ability to provide a flexible and convenient transportation option that is in high demand, particularly in urban areas.

However, the company faces several challenges including increased competition, regulatory scrutiny, and concerns around driver compensation and safety. Despite these challenges, Uber remains well positioned to continue to grow and innovate, thanks to its strong brand, loyal user base, and commitment to customer satisfaction.

• Key takeaway: Uber's success can be attributed to its innovative business model that leverages technology to create a seamless and convenient transportation platform. The company faces challenges from increasing competition and regulatory scrutiny, but is well positioned to continue to grow and innovate thanks to its strong brand and commitment to customer satisfaction.

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Uber Business Model | How does Uber make money

Company: Uber CEO :  Dara Khosrowshahi Year founded : 2009 Headquarter :  San Francisco, California, USA Number of Employees (Nov 2020):  26,900 Public or Private: Public Annual Revenue (2020): $14.1 Billion Profit |Net income (2020):   $-8.5 Billion

Products & Services:  Uber X | Uber XL | Uber Select | Uber POOL | Express POOL | Uber Black | Uber Plus Competitors:  Lyft | Curb | DidiChuxing | Ola Cabs | Local Taxis

Founded in 2009 in San Francisco , Uber began its inception as a transportation company that hired experienced and licensed drivers to provide its services. Over time the company began to grow dramatically and evolve owing to its ride-sharing app and adaptation of the current trending advertisement procedures. Business has been booming since although a number of controversies have dogged its brand.

The idea that it would connect with its passengers and potential customers through a mobile application has been attributed for it standing out from its competitors much to their chagrin. The experienced drivers are thoroughly vetted and are given the opportunity to drive their passengers in luxury rides in cars like Mercedes-Benz, BMW 7 Series or even Escalades.

All passengers have to do is to use their Uber app, and they are good to go. They can also track down the location of the vehicle as it makes its way to their destination. Although it has invited protests from the more public transportation organizations and taxi drivers, Uber has truly changed the global transportation system as we know it .

Table of Contents

Business Model Canvas of Uber

1. Customers of Uber

Uber benefits from segmenting both its customers and riders.

Passengers – With passengers, it is mostly directed by the usage of UberPOOL, UberX, UberBLACK, and UberSUV.

Drivers – With drivers or often known as their partners, they are segmented by their locations, get to use their own cars and can either be full time or part time depending on their preferences.

Retailers – Major retailers like Walmart and Organic Garage use apps and services of on-demand delivery companies acquired by Uber, such as Cornershop and Postmates. [ 1 ]

2. Customer Relationships of Uber

Uber’s customer relationship is comprised of four elements.  The driver, customer, regulators and the general public.

Customer – The customer is the critical component in all of this. Without their approval, the company’s credibility is shot, and they cannot maintain its sustainability.

Drivers – The same is the case with their drivers whose wages and management is authored strictly by the company.

General Public – Uber is geared to portray a positive image to the public in terms of services, campaigns, and contributions.

Regulators – For regulators, Uber offers compliance, accountability, and transparency through its review and rating system.

3. Key Partners of Uber

The key partners of Uber comprise of its drivers, lobbyists, and investors that help them become an official company.

Drivers – The drivers form a unique partnership with Uber in the sense that they are the ones who acquire Uber’s customers and deliver them their value proposition. Its drivers are independent contractors , not employees, and operate like semi-owners since they control the way Uber works. [ 2 ]

Lobbyists – Lobbyists ensure that their interests are advocated for in the political or entertainment spheres. Uber’s lobbyists were effective in convincing millions of voters in California to overturn AB5, which a law that required the company to recognize its drivers as employees. The company spent over $200 million on lobbyists and the campaign leading victory on the ballot, with 58% of voters overturning AB5 in support of Prop 22 that allows Uber to classify drivers as independent contractors. [ 3 ]

Investors – Investors make it their business to spend their profit on Uber which benefits its business dramatically.

Other Partners – These are mostly technology providers which include maps, insurance provider, payments, and analytics. In October 2020, Uber and SK Telecom announced a new partnership to expand its ride-hailing services in the South Korean market and explore future mobility services. Uber will invest more than $150 million in the joint venture with the telecom giant. [ 4 ]

4. Key Activities of Uber

The key activities of Uber are mainly related to utilizing their advantages while minimizing their disadvantages.

They work on enhancing their positive network effects while decreasing the negative ones in order to gain a competitive advantage .

• Platform (app) development and enhancement

The other activities deal with improving engagement with the network (driver, riders) and removing any friction that pertains to them. For example:

• Sales promotions to acquire new customers
• Communication with the driver, customers, and partners
• Customer support

Hiring drivers and handling their insurance and payouts through secure medium remains a top priority for Uber.

Their other activities include improvements in their value proposals as well as analyzing data to rectify any shortcomings. Uber also oversees the safety of its drivers and customers. In May 2020, the company partnered with Unilever International to provide hygiene kits for drivers and couriers in the UK. The partnership is expected to expand to other countries in Europe, the Middle East, and Africa. [ 5 ]

Introduce new services – Uber has been working to deliver its flying taxis under Uber Elevate that promises to revolutionize urban air mobility. To make this dream a reality, Uber has partnered with renowned aeronautics companies, designers, manufacturers, infrastructure providers, and regulators to begin testing its eVTOL vehicles in 2020 and start offering services by 2023. It has already launched the eVTOL simulator in collaboration with Embraer X. [ 6 ]

5. Key Resources of Uber

Some of Uber’s key resources include its network (Drivers & riders).

Their Platform (apps) for both the rider and driver has been an integral resource.

Uber’s focus on improving its algorithms and data analysis. Their analysis is also directed towards the growth of their network. In 2020, Uber expanded its Uber Elevate ecosystem by adding sensor and data processing company Hidden Level to its platform. The non-exclusive partnership allows Uber to access data collected by Hidden Level’s custom-built sensors around different cities to advance the development of safe and reliable airspace operations for its Elevate Cloud Services. [ 7 ]

Maintaining its brand image .

6. Value Proposition of Uber

Uber’s platform is utilized by both the passengers and drivers; hence it has a value proposition for both sides.

For the drivers , the value proposition is their ease in getting started, opportunity to earn, ease in accessing more passengers as well as having the freedom to choose their hours for work. Although drivers work as independent contractors, 58% of Californians voted on November 3 to ensure they receive guaranteed minimum wage and subsidies for health insurance. [ 8 ]

For riders , it offers safety and security, the chance to avail services with lower prices than the normal taxi service, it is much more convenient with easier transactions.

Uber’s app gives you the opportunity to get an insight as to the fare and duration of the ride.

The Uber rating system that allows for feedback has also been credited.

7. Cost structure of Uber

For Uber, the biggest cost element is the Customer Acquisition Costs (CAC), which includes sales, marketing & promotion cost- it was a weapon of choice when battling with China’s Didi and became its biggest market.

• Legal and settlement costs
• Insurance costs
• Research and development
• Lobbying & compliance
• Platform maintenance
• Infrastructure cost
• Customer support, and more.

8. Channel of Uber

Uber largely depends upon word of mouth and social media to channel its brand and traffic.

Some of their channelings are also utilized through voucher , digital ads , paid ads as well as public media coverage which is being used to rectify their flawed image.

Uber has invested much of their wealth on public relations since their public backlash .

9. Revenue Stream of Uber

Uber’s revenue model depends entirely on its transaction fees – booking fees and commission on the ride.

It applies a similar stance on its avoidance of license fees and employee entitlement costs.

• Fees on fuel, toll, safe driver’s fees, insurance, etc. are also part of its revenue.

According to the Wall Street Journal , this is how the Breakdown of Uber revenue (Q2 2018) looks like:

How does Uber make money?

1. Uber Ride

Uber’s consumers utilize its app to access cabs for a variety of reasons. Some of which normally include them not owning a car or choosing not to use one.

The booking process involves the choice of the driver as well.

If he receives a message at the nearest possible location from the app, he can reject the request.

• The message will pass on to another driver instantly.

Should the driver accept the request, he will receive information regarding the location and the customer in question who has booked the ride.

Once the driver picks up the customer and transports him to his destination, he will have to click on the “End Trip” flashing on his device.

This is when the customer is charged for the trip fare through his credit card/ account.

His trip fare will incorporate:

Booking fees – it’s about $1-3 based on location in the United States.

Distance per mile fare – Customers are charged after a fare distance in Local Currency per mile of travel. The charges tend to vary depending upon the type of cab and location.

• Travel time fare – Customers are charged after free X minutes in Local Currency per mile of travel. The charges tend to vary depending upon the type of cab and location.

Taxes will be in accordance with location.

Wait Time fare – If you make the driver wait for an additional period of time, additional charges will be applied.

Appetite Fee – This is a fee that Uber has recently begun charging its customers. This mostly depends upon the previous data Uber has of the customer.

Uber deducts the amount charged to the customer and moves on to deduct its percentage commission, income tax and pays the remaining to the driver’s bank account.

Drivers make about 75 % of the total ride fare, and Uber’s commission is about 25 % . However, the effective Uber’s commission can go as high as 45 – 55% if it’s a short distance ride due to booking fees and minimum fare charges. 

Types of cars used by Uber

The type of car chosen can significantly affect the per mile and waiting time charge. The usage of the type of cars that Uber uses tends to vary by country. It could be an SUV, Sedan or a Compact Car.

Uber Vehicle Types – An infographic by the team at Ridester

Apart from its well-known Uber Ride Share Service, Uber has begun to offer a myriad of services to its customers in order to evolve within the changing marketplace and attract newer demographics.

Some of the more prominent ones are:

2. Uber Eats – Food Delivery Service

Uber has become the parent company of its Uber Eats branch and now provides consumers with the opportunity to order from their favorite restaurants online.

Uber’s delivery partners will deliver the food to the customer’s doorstep. These delivery partners utilize their app to deliver their order as fast as possible with impeccable quality.

This has proven to be beneficial to restaurants as well. They can raise their profiles and become more visible in their online platform.

How Does Uber Eats Make Money?

UberEats is comprised of 3 revenue sources:

• Advertising income with Restaurant Partners.
• Customer Delivery Fee .
• Shares in Revenue with Restaurant Partners.

Customers have to pay a flat booking fee regardless of their order size when they order from Uber Eats. The fees may vary according to location. For example, its $5 in the United States. There may be price surging involved especially in Lunch or Dinner time hours.

Uber Eats has increased its delivery-as-a-service revenue through acquisitions. It recently acquired Postmates for $2.65 , which had 8% of the U.S. food delivery market as of May 2020. It increases Uber Eats’ market share from 22% to 30% and becomes the second-biggest player in the sector, ahead of GrubHub with 23% and behind DoorDash with 45%. [ 9 ]

The best remedy for a close encounter: Buy One, Get One burritos. See details in app. #NameThatMovie #BOGOtogether pic.twitter.com/f80H4VZ3tB — Uber Eats (@UberEats) February 24, 2019

3. Uber for Business

It’s a ride-sharing service aimed at business customers. Businesses can manage rides , send multiple rides and book rides even 30 days in advance for their clients or employees.

4. Uber Health

Uber has partnered with different healthcare organizations. It did so to provide patients with different ride scheduling options. Professionals in the Healthcare industry can now book rides for their patients and give them access to their required care.

Uber Health's latest API integration into @Ambulnz ’s on-demand non-emergency medical transport system enables healthcare providers to schedule rides for various levels of care from one portal. Read more: https://t.co/iAtBLHSpK5 pic.twitter.com/Rf9my3kH4Y — Uber for Business (@Uber_Business) February 13, 2019

5. Uber freight

Uber Freight is a business-oriented transportation service app. It provides its customers with a convenient way to handle their transportation goods .

It is a free app that allows shippers to use a button and book whatever goods they want to ship. Its mechanism is built to give an insight as to the trip activities along with his upfront cost and other expenses.

Post My Truck makes it simple to find loads at the right place and the right time. Just tell the Uber Freight app when and where your truck will be empty, and you'll get a preview of available loads that match your needs, so you can keep on rolling. pic.twitter.com/YrzTlkLZWp — Uber Freight (@UberFreight) January 24, 2018

6. Delivery-as-a-Service

In the recent past, Uber has expanded its delivery-as-a-service ecosystem to include groceries from major retailers. It recently acquired Cornershop, an on-demand grocery app, to provide delivery services to retailers. Under Uber’s portfolio, Cornershop has partnered with major retailers in the US and Canada, including Walmart and Organic Garage , to deliver their groceries to customers. [ 10 ]

In Conclusion

This picket friendly company has contributed to society remarkably. It costs lower than a city cab or personal driver and is easily accessible to the general public. All in all, it has made life easier for many in the working class.

That being said there is room for improvement especially in terms of communication where the company is still trying to recreate its image that has been affected by the controversies it has been immersed in.

Of course, it is not the only mobile app transportation service available. Lyft is giving it a run for its money. That said, it is a more recognizable entity for its customers who prefer it over anything else.

 References & more information

• Organic Garage (2020, January 29). Organic Garage Enters Into an Agreement With Uber Affiliate Cornershop . BUSINESS WIRE
• Bellon, T. (2020, Nov 4). Californians pass a proposition to let Uber treat drivers as contractors: projection . Reuters
• Hawkins, J. (2020, Nov 4).  Uber and Lyft had an edge in the Prop 22 fight: Their apps . The Verge
• Lee, J. (2020, Oct 16). Uber joins forces with SK Telecom to crack the tough South Korean market . Reuters
• Unilever (2020, May 14). Uber–Unilever’s partnership drives confidence as lockdowns start to ease . Unilever
• Goldstein, M. (2020, Aug 5). Despite Pandemic, EmbraerX Speeds Development Of Flying Cars . Forbes
• Garrett, G. B. (2020, July 22). Uber Elevate Adds Hidden Level as Sensor, Airspace Awareness Partner . Aviation Today
• AP (2020, Nov 4). Uber, Lyft win big-bucks battle in California vote on how to classify drivers . CBS
• Sawers, P. (2020, July 6). Uber confirms a $2.7 billion Postmates acquisition . Venture Beat
• PYMNTS. (2020, Jan 30). Uber Pushes Partnerships In Pursuit Of Profits . PYMNTS

 Tell us what you think? Did you find this article interesting? Share your thoughts and experiences in the comments section below.

A management consultant and entrepreneur. S.K. Gupta understands how to create and implement business strategies. He is passionate about analyzing and writing about businesses.

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How Uber Works: Business & Revenue Model

Uber is an on demand marketplace for transportation service which has brought a revolution in the taxi industry all across the world. The business model has made it possible for people to simply tap their smartphone and have a cab arrive at their location in the minimum possible time, leaving a lot of budding startups yearning for an App like Uber .

Uber is one of those few tech companies in the world that has been valued over $70 Billion. Uber has already received  an equity funding of $22.2B and is present in 663 cities worldwide. These facts surely show the trust of investors in the business model and make it easy for us to imagine how much revenue an organization can make once it attains liquidity.

In this post, we’ve have highlighted some unknown facts and figures along with a detailed explanation of the model by which Uber earns money and does business. Uber’s customer segments, value propositions, key problems, solutions, cost structure and revenue model have also been discussed. 

Founders Travis Kalanick and Garrett Camp.

Company Headquarters San Francisco, California, United States.

Funding received $22.2 Billion. (as of December 2017).

Company Valuation Over $70 Billion.

Number of Users More than 50 Million.

Number of registered drivers Approximately 7 Million (as of November 2017).

Average number of daily Trips 1 Million

Uber Success Timeline

Uber’s Revenue Generation Model

If you have ever travelled in a taxi, you might have paid the driver in cash at the end of your journey. The cash collected by each journey is the only source of revenue for a traditional cab company. Uber is no different. Neither does Uber have a different revenue model than the one mentioned above nor it has any other source of revenue as of now. But just imagine 1 million rides a day. It will help you calculate those big numbers that the company earns. Let’s dig a little deeper to understand Uber’s source of income.

What is uber technologies fee and what has made them so successful is the fact that the revenue model is as unique as their business model. It can be explained as:

Different cab models to cater to everyone

Uber has not limited itself to a particular segment of cars or to a particular segment of people. There is Uber X, Uber Black for those who love to travel in a black car, Uber Taxi for those looking for cost-efficient solutions and Uber SUV for those who want luxury.

Surge Pricing Technology

Variation in cab fares according to situation is an important aspect of their business model. Whenever the demand increases, per mile prices are automatically increased. The new price depends on the number of available drivers and the number of requests made by people who want to travel. It has applied for a price surge technology patent in the US.

Other Uber rides

Uber has come a long way from cabs. It now offers boats, helicopters, as well as some other transportation, means on demand. They recently launched a motor­cycle-pickup service in Paris, a delivery service in San Francisco, and an ice-cream-truck-delivery service in a few cities too. However, these means are available in selected geographical locations but it has led them to add new streams of revenue into its business model.

Salient Features of Uber

• A user can tap his smartphone and call a cab at his location.
• The driver has the option to accept or reject a ride.
• If the driver accepts the ride, driver details are sent to the customer along with ETA.
• The customer can track the driver as he arrives at his location.
• The driver can also track the exact location of the customer and reach his exact location.
• The payment procedure is handled by them.
• In some countries like India, they have even started accepting cash payments which are paid directly to the driver.
• The business model had a rating system in place for drivers right from the beginning, where a customer can rate the driver after his ride.

Value Propositions

• No need to wait for a taxi for long times.
• Free rides on certain occasions and discounts from time to time.
• Prices lesser than the normal taxi fares.
• Uber’s tagline says – Your personal driver. It lets customers travel in style.
• Fixed prices for common places like Airport etc.
• The additional source of income.
• Flexible working schedules. Can work part-time or simply whenever they like.
• Easy payment procedure.
• Those who love to drive can earn money while pursuing their hobby.
• Uber pays drivers to be online, even if they don’t get any request.

Customer Segments

• Do not own a car.
• Do not want to drive themselves to a party or function.
• Like to travel in style and want to be treated as a VIP.
• Want a cost-efficient cab at their doorstep.

Uber has such a vast customer segment that it has got something on offer for everyone. From Uber Taxis to Uber Black and from Uber X to Uber SUV, the company has got a vast range of its customers to make a choice.

It serves professionals as they hire an Uber cab to and for work. For this Uber did few tie-ups with corporates in the beginning and does so when it launches in a new city in a new country. Apart from professionals, Uber tries to touch hearts of people by offering special services like:

Uber for Kids- A special service from Uber dedicated to parents who want their kids to reach home from school in an Uber cab.

Uber for Senior Citizens- Another special service from Uber where it targets senior citizens. As per the statistics, Senior citizens make for up to 30% to 40% of total rides in many cities. This made Uber have some special features for seniors and hence attract more senior citizens on the platform.

All this might raise another question in your mind. The question about how does Uber find them or how does it market out to its target audience? We extended our research beyond Uber business model and came up with an entire growth model of Uber and some insights about how you can build an Uber-like App.

Growth Model

In less than 6 years, Uber has managed to become the best example of a city-by-city mobile service company roll-out. Many generic pointers that I talked about in this Blog Post regarding scaling User Acquisition efforts for On Demand platforms borrows elements right from Uber’s playbook.

Let’s try to decode its Playbook and how it plays out as it launches in a new city or a country:

The underlying principle here is that for every city it launches, it faces the same chicken and egg problem. The advantages that Uber has as compared to new startups in this space are:

• Lot of money to incentivize both drivers and customers.
• Rock solid processes or playbooks that have evolved through experience launching Uber in 311 cities till date.
• An already known brand that gets early curious adopters.

Everything starts with a small city launch team. Every city has a general manager who heads  the customer acquisition as well as driver acquisition. The first cabs to come on board are generally professional drivers who are already associated with local taxi companies and have their own cars.

First customers come from various local advertising channels like FM radio, newspapers, online advertising etc. Uber is such a large name that people are already waiting for the cab company to start services in their city.

Business Model Canvas

Uber Business Canvas- Understand to make an app like Uber

4 Step Model About How Uber Works

• Step 1 (Request a cab): The first step in the business model is about creating a demand. People have a smartphone app which lets them request a cab instantly or schedule it for some time later.
• Step 2 (Matching): As soon as the request is made, a notification about your details is sent to the nearest driver. Cab driver has the option to accept or reject the ride. In case he rejects, notification is sent to another driver in that area.
• Step 3 (Ride): Customer can track the cab when it is arriving and the ETA is also shown to the customer. The meter starts as soon as the customer sits in the cab which can be tracked through the customer side app as well. Friendly drivers make sure that the ride is comfortable for the passenger.
• Step 4 (Payment & Rating): Once the ride is over, the customer gets an option to rate the driver. A rating system is an important part of the business model as it lets a person know about the driver before booking a ride and helps him trust the driver.

How And Why Uber Became So Successful

Uber’s business and revenue model just can’t be stated as complete if this widely asked question about their successful journey is not answered. There were certain factors that led to Uber’s success. Here’s a brief journey that Uber went through when it launched. A similar journey can be followed by any startup which aims to make it as big as Uber.  

The problem with local taxis

Earlier, people had to stand on the street side and wave their hand in order to signal a taxi to stop. The wait time, the inconvenience and high rates were a problem for everyone. Quite a few taxis were available and drivers/taxi companies used to charge whatever they thought was right. There was no control on prices and people were left with no other option. Apart from this, the situation was worse during the peak hours as it was quite hard to find an empty cab.  

The launch of Uber

Uber recognized the ongoing problem in regard to booking a taxi and gave a technological solution through a mobile app. The solution to book a cab by tapping a smartphone brought a revolution in the taxi industry. The app was officially launched in 2010 and soon became popular due to the value it provided to people.

The early adopters

It is quite difficult to market a newly launched product or service in any geographical area. What gave it the edge is that it launched in San Francisco, a city which is home to tech-savvy people. The first drivers on the platform came through cold calling. Many of them were professional drivers with other cab companies or were self-employed as a taxi driver.

To get their first customers, they took to social media and other mass marketing means. It offered discounts, free rides, and rates that were too less as compared to other cab services in the city. The first customers were those who enthusiastically wanted to try a new service. It offered rides from club venues to user’s doorstep so the party people were amazed. It offered rides to the corporate sector who worked in offices helping them to save time.

Word of Mouth advertising

Whosoever took a ride in Uber was baffled by the first-hand experience. This made the early users become regular customers and they also helped spread the name by word of mouth advertising. This word of mouth advertising was one of the major driving force

Main Growth opportunities tapped by Uber

• Party people who go to clubs, parties or events.
• Business Travelers and Tourists.
• Cab at the doorstep in bad weather conditions.
• City’s Nightlife.

Problems Uber Still Faces

Lawsuits : Uber has pending lawsuits in courts of New York and San Francisco. According to Uber, all drivers working for it are its partners while the court says that they are employees. Uber is not the only company facing such a problem but in fact, almost all companies who hire 1099 workforce are under the scanner.

Chicken & Egg problem (New city Launch) : Uber faces the chicken and egg problem whenever it launches in a new city. Acquisition of customers as well as partnering with new drivers is not an easy task. To solve this problem, a marketing team starts working in the new city by reaching out to professional drivers. Soon, online and offline marketing is initiated. Discounts are always the main USP to woo customers in the starting stage. 

Trust and Safety Issues : There have been cases where Uber drivers have acted rude to passengers. Some cases where Uber drivers have outraged the modesty of female passengers have come to the limelight. This is a big challenge for Uber. Although the company takes all steps such as police verification of drivers and their ID details but still such cases cannot be ruled out completely.

Takeaways From Uber Business Model

• Go for less ownership model. Uber does not own any cab but still provides over 1 million rides a day through its partner network.
• Choose an industry. Think about the most common problem it has. Find a solution and disrupt the existing model through technological infrastructure. That is what Uber did in the cab industry.
• Treat your initial users as kings. They are really important for the growth of your business.
• Expand step by step. Do not add everything in your business model on the first go. Uber started with cabs but now even has boats, helicopters, bikes and other means.
• Opportunity won’t come to you. You have to look for them. Uber created an opportunity by offering discounted rides for particular events/party venues and hence got its first customers.
• Treat your workforce an important part of your business. Uber calls its drivers as partners and gives them a decent 80% of the total fare.

There’s no doubt in the fact that Uber has brought a revolution not just as a taxi company but as a business model where businesses reach out to serve customers at their location. A lot of startups have already made their app like Uber and many others have made small iterations to launch startups in various industry verticals.

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Develop Innovation Capabilities

• Corporate Innovation
• Culture of Innovation

Build an Invincible Company

• Business Model Design
• Startup Coaching
• New Market Space Creation
• Social Innovation

Create & Execute Strategy

• Strategic Planning

Business Model Canvas – Design & Innovation

What is a Business Model?

Your business model is how you –          “create, deliver, & capture value.”.

In today’s world, you can’t just focus on your proudct or service – you must focus on your entire business model.  No longer is the “idea” the key thing to worry about.  Ideas are Free!    You can only create value in your business if  you can also deliver that product/service to the customer, and do it at a profit.

Your customers needs have changed – sometimes overnight (think Covid)!  You need a way to better understand your customer and how you can find unmet demand, as well as create a competitive advantage.  Business models provide you deeper insights to customers and how you can create, deliver, and capture value from them.

Benefits of Business Models?

Create a shared language.

The concept of business models has become common knowledge.  It is taught in most business schools, used by the biggest companies in the world, and used by the leading startup accelerators and investors.   The terminology is understood by most people in business.  Your employees and stakeholders will understand the meanings  you are trying to convey.  

Communicate Your Idea Clearly and Concisely

A 1-page business plan enables you to tell your business story in very simple terms that anyone can understand.  It helps you pass the “Mom Test.”  If your mom can’t understand your business idea, it’s to complicated!

It is an executive summary of your buisness idea that discusses all of the major areas in your business.  From your solution and the customers you are targeting, to channels, to your internal operations, and your finances.  

 Simple, Visual, and Practical

1-page business models (like the Business Model Canvas) are simple for your employees and stakeholders to understand.  You can pull up the Business Model Canvas and create a discussion around any of the elements that will be easy for all to understand.

You can even use pictures to enhance the mesage.  It is a document everyone can pull up on their laptop, or paste on a wall, that enables dialogue from a common starting point.  

The Uber business model canvas to the right shows both pictures and words to describe how the company operates and creates value.  This is a “multi-sided” business model.

Business Plans are Dead!

Business models are the new business plan.  Neither your employees, banker, nor stakeholders will read your business plan.  By the time you spend months creating it – it is out of date and irrelevant.

It is ok to have research documents and more in depth analysis of your plan.  However, you need to create dynamic, real-time, and succinct business models that everyone can understand.  The speed of learning is the real unfair advantage.

A business model is a 1-page diagram of your business idea.

What is the Business Model Canvas?

How Do We Use It?

Business model design and innovation processes starts with deconstructing your business idea onto The Business Model Canvas.

In these processes, we also incorporate other leading buisness concepts and frameworks such as Design Thinking.   In the old days, it was all about the idea, and how well you could sell it to others.  In the current environment, it is all about reducing risk in your business model and providing evidence that the entire model will work.

One of the first steps we take with the new idea is to view it from the 3 lenses of design thinking so that we can identify our riskiest assumptions that we need to work on.  The 4th lens is a bonus that helps us understand how long the model might last.  We ask ouselves the following questions:​

• Desirable: Does anyone want it?​
• Feasible:   Can you build it?​
• Viable: Can you make a profit?​
• Adaptable:  Can it be evolved?

The Business Model Canvas is the original 1-page view of your business model.  It was designed by Alex Osterwalder and his company Strategyzer.

• The left side is the Supply Side view, or vendor side.
• The right side is the Demand Side View, or customer side.
• The Value Proposition, or your offering, is in the Center.

There are other adaptations of the Business Model Canvas that can be used asd well.  The Lean Canvas is used by many startups and some large firms as well.  You can read more about it in the Startup Coaching section of this site.

How Do We Innovate Our Business Model?

Examine External Forces

By examining the external forces that affect our business model, you develop a better, and shared, understanding of of completely new opportunities and avenues for the development of new and innovative business models.

We recommend a brainstorming workshop session that looks at:

• Industry Forces
• Market Forces
• Macro Economic Forces

A visual map of your business model’s environment will make things more tangible, and it will allow you to uncover new associations, discover new patterns, and lead to new opportunities to pursue.

Discover Opportunities in Our Current Model

We can use the Business Model (or Lean) Canvas to innovate our business and continuously stay ahead of the competition.The most innovative companies in the world continuously examine their business models to find new opportunities.  Most large firms have more than one business model.  A startup, or small-mid-sized firm might only have one model.

We can examine each of the 9 boxes in our Business Model Canvas.  Each of these could illuminate a new idea from your team, or from customer feedback.    Some ideas can be very different from your core capabilities, and some could be internal in nature that provide efficiencies.

Business Model Workshop Program

Learn the skills, processes and tools needed for unearthing new value.

The business model workshop process is your key to empowering participants, by using the tested Business Model (or Lean) Canvas to identify areas of business growth, by following an approach used by the leading organizations.

Workshops are run virtually and in person, allowing you to build a program that suits your situation.

Workshop Outcomes

Baseline business model.

• Design and document how you create, deliver, and capture value now

Deep Understanding Of The Business Model Environment

• Examine the external forces that affect your buisness model so that you can minimize threats and take advantage of opportunities

Development of High Growth Models & Opportunities

• Identify new areas of opportunity within your model, and adopt an innovation process to continually create competitive advantage

Change Mindset

• Develop new perspectives on how you look at customer problems, your solutions, and how  you create and capture value with your business model.  Move your thinking from ‘product/service’ focus to ‘business model’ focus.

Knowledge Transfer

• Si2 will coach your team through the journey, but they will learn new skills by doing.  The goal is to accelerate your teams learning so they can use these tools, processes, and frameworks in the future without the need for external help.

Business Model Canvas Examples

Airbnb is an online marketplace that connects travelers in a specific area, with hosts that have an extra room or home to rent. Airbnb is as an intermediary, bringing these two customer segments together.  This is called a ‘multi-sided’ business model .   Airbnb must bring both sides (the ‘hosts’ and the ‘travellers’) to the platform for it to be successful. 

Netflix is a pioneer of subscription-based content.  Subscribers pay for a monthly plan and are given access to a vast library of media that is streamed to the user via the internet.  The company originally mailed physical DVD’s of content to customers in the mail.  They are considered a ‘direct’ business model since they sell directly to the customer.

Amazon is one the largest and most innovative companies in the world.  They originally started as an online bookstore and then evolved their business model to become digital. They have since developed many business models under the Amazon name.  They operate as a ‘marketplace’ business model , which means they bring products to their platform to sell to customers.

Included in the Innovation Process

Define Your Value Proposition

A major part of the business model design process is defining your value proposition. We’ll get to know you, your product, and your customers—and then we’ll help you come up with a value proposition that’s sure to satisfy. We offer in-person workshops, remote workshops, and consulting services within your business.

Testing Business Ideas

Your business is innovative and unique. But how do you know what customers want? How do you know which options are the right ones to pursue? Testing helps you reduce the risk of investing in business models that might not work out, while also helping you find the best route to growth.

Other Services Used With Business Model Innovation

Design Thinking

Also known as Human Centered Design, Design Thinking has been the leading methodology driving ideas for businesses over the last 20 years.

What makes Design Thinking unique is it helps you to dream up scores of ideas about new products and services from the user’s point of view. Creating innovative new solutions rooted in people’s actual needs.

Jobs To Be Done

You need to understand your customer’s problems better than they do. To solve problems, customer’s ‘hire’ products and services to “get a job done!”

Brian is an expert and certified coach from Strategyzer in Business Model Canvas, Value Proposition Canvas and Testing Business Ideas.

(Picture on the right) Alex Osterwalder, CEO & Founder of Strategyzer, and Brian during a Strategyzer Masterclass.

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Business Model Canvas for Taxi app like Uber

Project Made For

Here is a business model canvas of uber that depicts its business plan and growth in this decade long journey., creative fields.

Graphic Design

• uber business model
• business model canvas
• app like uber

No use is allowed without explicit permission from owner