The Uber Future – Shaping The Taxi Industry Eugene Suslo Mar 23, 2015 Tweet Uber is arguably the largest name currently in the transportation industry. They get good press, bad press, and everything in between. Whatever your opinion of the “ride-sharing” company, the one thing you can count on is they will shape the Taxi and Limo service industry’s future. With Google Ventures even giving Uber their vote of confidence, there is no doubt they will be around for a while. Uber is an interesting company and it fuels a very hot debate with regards to safety, ethics, and their place in the industry. Lets face it, the opposition comes from the world of Taxi’s who are desperately trying to compete, as well as keep Uber out of their cities. Arguably this should not be the goal seeing as competition is what made economies like the United States so great. So the fact that Taxi Lobbyists are keeping Uber out of states like Nevada and huge Taxi using cities like Las Vegas, as well as countries around the world, is only going to hurt the progression of the Taxi and Limo service industry as a whole. Let me provide you with an example of this sort of competition at work, but to do so, we will need to take a trip to the state of Washington, and take a look at their wine industry. What Can We Learn About Competition From Wine Wine is an extremely competitive industry, with low margins, and plenty of choices for consumers. If you don’t believe me, then take a trip to your local store with a wine section, and try to pick out a bottle of wine. This is a task that makes most people fear drinking wine in general. But this isn’t a lesson about selecting your favourite wine. We are going to look at wine from a competitive point of view in the Northwest United States. More specifically, Washington State. Washington State is known for Seattle and for the rain, which it is joked that you get rain 364 days out of a 365 day year. Actually East Washington is quite beautiful and has quite a booming wine industry, and probably the best valued wines in America. This was not always the case. The Washing State government for a long time put a huge tax on the importing of wine, and in particular California wine. The fear was that their consumers would prefer California wine and as a result, the Washington wine industry would fail. What actually happened, is Washington wine makers got lazy and were producing terrible wines that were not bought by anybody outside the state. The only reason they stayed in business was due to the fact that they had the buyers in their home state, which bought the wine as a result of no other choices. When the state lowered the cost to import California wines, the Washington wine makers had a choice. Either sink or swim. The result was the winemakers produced better tasting wines to compete with the wines from California. Who won this battle? The consumer. They now had the choice of both spectacular Washington wines, as well as California wines. Now your probably asking what does wine have to do with Uber? It is not so much wine as it is competition and Uber creates disruptive competition. Uber’s Capitalisation It is a very real possibility that the reason everybody likes Uber so much is that it is far more convenient than a Taxi. For starters, you don’t have to stand on the corner to “hail a cab.” Second, when it comes time to pay there is no exchange of cash, or disappointment from the driver for a customer who wants to use a credit card (the driver doesn’t want to pay the fee). This is how Uber won the battle for the “Millennial” generation in America. Also, the fact is that Taxi’s have had there own fare share of bad press over the years. From taking longer routes to charge customers more, to being under the influence while driving, they are not perfect. So by Uber exploiting the weaknesses of the Taxi industry they began to win customers. But as we learned from the Washington wine industry, this is not a time to block them out of your cities. This is a time to embrace competition and change the way Taxis do business. Uber is not a threat, but an opportunity. The Taxi companies got lazy in their service of customers, and seeing as there was no competition to the way they did business, this was a natural result. This is the same thing that happened to Washington wine. There is now plenty of competition in the Taxi and limo industry and it is Uber. Taxis should not fear and block Uber from their cities, but embrace the competition, and do what makes the market place great, compete. Taxis still have advantages, and that is access to more cities, and already established credibility. With Uber bringing the competition, the winners of this battle will be just like the winners of the Washington wine story, and that is the consumers. Also, it will make the industry as a whole a far more efficient place to operate. Since Uber is here to stay and is surely going to shape the path of the Taxi and Limo service industry, lets take a look at what their future holds. Uber’s Future Uber’s future is bright. This is a fact seeing as they are one of the fastest growing companies in history. The question becomes what is their future going to look like? Well if you want to think in terms of a few decades from now, it is surely going to include self driving cars. Uber has made a public statement that they see them in their future, and it is clearly their goal. The self-driving car is a fascination at this point in the tech industry and in all reality it should be. Once the self driving car hits the roads, there is going to be a huge disruption to how we move around. But seeing as this is realistically not going to occur anytime before 2020, and there are going to be a number of hurdles in the process, lets look at the more near future. Looking at the near future of Uber can give us a better idea as to what changes are going to be immediate. The first thing we need to look at is what Uber’s mission truly is and that is getting less cars on the road. If this is the case, then really Uber is a logistics company and not necessarily a ride service company. They are in essence in the logistics of people, and not necessarily goods. Looking at Uber from this point of view makes their future look a whole lot different, and really the future of cars and taxis different. This will mean more opportunities of all ride services seeing as people will rely more and more on a ride service to get around. In essence it is the new age of public transportation. With more economical fares and cities becoming more congested, it only makes sense for people to want to rely more on car services. So in essence, it seems that the future of Uber is really to be a replacement for an individuals car. And this brings everything full circle to the long term future of the self driving car. Taking this to how they operate in the Taxi industry, this is where Taxi and Limo service companies should be targeting their future as well. The ultimate goal should be to put less cars on the road. We Have To Mention Lyft Uber not only competes in the Taxi and Limo service industry, but it also competes in its own niche the “ride-sharing” industry. So if we are going to discuss Uber, then we also need to discuss Lyft, seeing as they are attacking a similar problem, but in slightly different ways. Lyft seems to operate in a more “ride-sharing” type fashion and this is what the company’s mission is. The goal is to partner people together who are going in the same general direction in order to carpool. From a logistical standpoint this has been a difficult task, and really hasn’t been the core service as of late. This is about to change though. Lyft has released its “Lyft Line” service which will partner people going in the same general direction, as well as Uber is competing on this front with “UberPool.” If we are discussing the immediate futures of these companies than this is the impactful way they will operate. Allowing people to move around in this capacity will lower the cost of fares for the individual. This puts both companies closer to the “less cars on the road” mission they are striving for. Lyft was really the first company to have true “ride-sharing” in this capacity, and if you are looking at the Taxi industry being reshaped, this is a great place for Taxis to change for the new competition. The Uber Expansion Uber is rapidly expanding, and they are doing so on a global scale. Uber is expanding the number of drivers they have in cities they already operate in, as well as are expanding to new cities around the world. For Uber to expand into new cities and countries, it seems that it is not opposition from consumers, but really from political and government agencies. As we discussed before, creating a lobby to keep Uber out is bad for the progression of the Taxi and Limo service industry as a whole. With the expansion of Uber into your city inevitable, seeing as they continue to get funding, it might be better to embrace them. The expansion efforts are in the form of getting laws written in their favour, as well as fighting the lawsuits in the new cities they are expanding to. This is a difficult task, but Uber has a number of financial supporters who believe in the company and their mission. The fuel that is truly allowing Uber to grow at unprecedented rates is pretty simple. It solves the problem of needing private transportation. With all the battling that Uber does in the courtroom, the one thing governments and lawmakers cannot deny is that they solve a problem. When you solve a problem, you have a product, and if you solve that problem very well you can grow and beat the competition. This is what is going to fuel Uber into the future, and that is how they solve the transportation problem. Your Local Market And How Do You Compete Now lets take a look at how Uber expanding to your local city is going to effect your business. You may even ask the question: how can I compete? In order to be able to compete, you have to know your competition. You have to know your competition almost to the point that you want to use your competitions service. In this fashion you can then convey to customers why they should choose you. So in order to compete with Uber, then we need to look at how Uber solves the problem of getting private transportation. The way Uber captures customers is really in three key areas. Uber is good at how you call a car, how you pay for your car, and how you interact with your driver. These are the areas the Taxi and Limo service industry need to focus on in order to compete. In knowing the competition we need to look at how Uber does these three things. The first is calling a car. This is done through a mobile to mobile app with GPS capabilities. This allows you to choose the closest car, and select a mutual meeting point to pick you up. This is a convenience that is essential to the new age user experience. The second is how you pay for your ride. You pay via mobile payment and get emailed a receipt. There is no fumbling of cash, and you don’t even need to discuss the fare and haggle over it. It is just billed to the customers Uber account, which is linked to their credit card. Fast, easy, and no hassle. The last is driver passenger interaction. How this is accomplished is all drivers get a rating and all passengers get a rating. Meaning it pays to have great customer service. This means a driver can refuse a bad passenger and a passenger knows the driver before getting in the car. These are the three ways Uber is going to improve your local market immediately. As you observe your local market and watch the future of Uber, which is the future of the Taxi and Limo service industry, remember the lessons of the Washington wine industry. Competition is good and therefore you should embrace it. Understand how Uber solves a problem and then compete with them. This will create a better future for the Taxi and Limo service industry, and a more pleasant customer experience.