Remember those nights, where you’ve used up all your fuel tickets tearing the dance floor up in Mooseheads only for the dirty lights to come on at 5’clock. You swing past the kebab shop and jump in the first cab possible. As soon as you get in to your cab the driver demands $50 cash for a $30 dollar trip and you are forced to accept because its the only way home. The cab driver then proceeds to drive half way around Canberra racking up the bill and there isn’t anyway to keep them accountable for this highway robbery. Fear not young whipper snappers, because Uber was founded in 2009 by Travis Kalanick and Garret Camp(Uber, 2019).
Uber is a ride share application developed to connect drivers and riders. Kalanick and Camp developed the application to address the high demand for San Francisco’s public transport. Powered by your IOS/android devices, the application allows you to request drivers to pick you up from your current GPS location. Features that distinguish Uber from traditional companies consist of a rating system, which holds drivers accountable and improves quality, price estimates upon requesting, driver monitoring to allow user to know how far away driver is and fare splitting. According to Uber, “In December 2018 they had 91 million monthly active users, 10 billion trips completed worldwide, in 63 countries and 700 cities and 14 million trips completed each day” (Uber, 2019). In return, “2018 Uber revenue came to 11.3 billion, an increase of of 43% on 2017” (Ibqal, 2019).
Uber has continued to progress it’s app with innovative updates and has diversified its core offerings over the years. Uber has recently implemented new features including; Uber pool, which offers cheaper fares in return for sharing rides with other users travelling to a similar location. Other new features include; UberXL which can carry more passengers, UberLux which provides luxurious and premium service and UberCHOPPER which allows you to beat the traffic by taking to the skies.
Furthermore, Uber has developed their existing business model by expanding into different sectors. Uber created a food delivery platform called UberEats, which allows you to order food and get it delivered to your door. According to Forbes, “UberEats is on track to deliver $10 billion dollars worth of food this year, up from $6 billion and taking into consideration UberEats takes a 30% percent fee that UberEats could generate $1 billion dollars in revenue this year”(Carzon, 2019). This shows that UberEats is one of the biggest food delivery platforms in the world. As well as UberEats, the company is heavily investing in autonomous cars, which is a car that can drive itself without human interaction. Whilst this vision hasn’t yet been achieved as the autonomous cars are undergoing vigorous testing, it is an example of how Uber is constantly looking for innovative ways to expand their business model and achieve a competitive advantage over its counterparts.
UberEats business model
As shown in the figure above, UberEats is a three sided market place connecting restaurant, delivery partners and paying customers. Restaurants pay commission on orders, customers pay for their food and delivery partners earn through delivering the product to customers. UberEats is beneficial for restaurants because it advertises and sells their product to another segment of customers and produces revenue through sales on the application. Delivery partners have the ability to earn money through reliable deliveries. According to Uber, they currently have “3.9 million drivers worldwide”(Uber, 2019). This incredible resource enables UberEats to facilitate their blazing fast delivery model of promising food in under 30 minutes. Paying customers are provided with goods in exchange for price of food/small fee for delivery. Supported by Uber’s already existing client base that could be potential customers.
How UberEats makes money
Delivery charge: When ordering your $14.90 burrito from Zambero’s UberEats because you can’t be bothered cooking dinner, UberEats will charge you a flat fee of $5 dollars for delivery.
Recurring Revenue share from Restaurant partners: When you order that burrito every Monday because you are feeling down that the weekend is so far away. UberEats takes a 15% to %40 cut on every recurring order that is fulfilled through the application.
Marketing and advertising fee from restaurant partners: UberEats helps Zambero’s to attract more customers and reach a larger customer base. For example, the promotion to get 10% of your next burrito when ordering your next burrito with UberEats, email marketing to UberEats users and relatable social media posts. For this reason, UberEats charges restaurant marketing and advertising fees for this coverage.
Revenue from UberEats
UberEats business model and revenue strategy is a clear cut system that provides healthy returns. “According to the files UberEats represented 1.46 billion dollars, or about 13%, of Uber’s total revenue and revenue grew 149% from the previous years 587 million dollar total” (Dowling, 2019). Further, Forbes stated “UberEats is on track to deliver $10 billion dollars worth of food this year, up from $6 billion”(Carzon, 2019). In return, Revenue should continue to grow. Demonstrating UberEats business and revenue model strategies continue to be a highly successful operation.
Carzon, B. (2019). Uber’s secret gold mine. Retrieved 9 5, 2019, from Uber: https://www.forbes.com/sites/bizcarson/2019/02/06/ubers-secret-gold-mine-how-uber-eats-is-turning-into-a-billion-dollar-business-to-rival-grubhub/#52c4941e1fa9
Dowling, J. (2019, 4 11). Inside The Uber S-1: Revenue, Growth, And Losses. Retrieved 9 6, 2019, from Crunchbase news: https://news.crunchbase.com/news/inside-the-uber-s-1-revenue-growth-and-losses/
Iqbal, M. (2019, 5 19). Uber Revenue and Usage Statistics (2019). Retrieved 9 6, 2019, from Businessofapps: https://www.businessofapps.com/data/uber-statistics/
Uber. (2019). Uber Newsroom. Retrieved 9 6, 2019, from Uber: https://www.uber.com/en-GB/newsroom/company-info/