In this article, we will see the answer to the question ‘How does Uber make money?’.
Introduction
Whenever it comes to going from one point to another, most US residents prefer either by car or taking a flight. Though both of these options are useful while traveling, the car seems to be the most preferred option to go. Both of these options are selected by the whole world, but car traveling has its perks.
Driving the way down to the destination, enjoying the view, singing along with your friends and families are a few of the reasons why everybody decides to take a car. But for shorter distances and for people who don’t have a car or don’t know how to drive one, car rentals have turned out to be the best possible option.
Whenever it comes to rentals, Uber turns out to be the prominent name in our mind towards which we turn to book the car apart from Ola and many different and local car rental sites. In this article, we are going to discuss how does Uber makes money.
Uber:History
1. Uber Technologies, Inc., or just Uber, is a technologically-driven firm based in San Francisco, California. Its operations comprise ride-hailing, online food (Uber Eats), parcel delivery, escorts, transportation of goods, and battery-powered motorcycle and powered scooters rentals through collaboration with Lime.
2. The firm is headquartered in San Francisco and operates in over 900 cities globally. It is one of the basic businesses in the sharing economy. Their journey started in 2008 in France. Travis Kalanick and Garrett Camp addressing the Le-Web, an annually digital symposium described by The Economist as where innovators assemble to design the tomorrow.
3. Both guys sold their co-founded businesses for significant amounts in 2007. Red Swoosh was sold to Akamai Technologies for $19 million, whereas Stumble Upon was purchased to eBay (EBAY) for $75 million. Whenever the couple could not find a vehicle on a cold winter night during the convention, they came up with the idea for Uber.
4. Uber began with a simple idea, Imagine if you can somehow order a mode of transport from your handset? The initial plan was to create a rental limousine service that can book using an app.
5. Following the summit, the business people parted ways. However, when Camp traveled to San Francisco, he was still obsessed with the concept and purchased the website address UberCab.com.
6. Uber has approximately 93 million monthly active globally, according to estimates. Uber has a 71 percent market share in ride-sharing and 22 percent market dominance in food services in the United States.
7. Uber has become so influential in the collaborative economy that developments in different sectors as a result of Uber have been dubbed Uber-action, and several businesses have marketed their products as Uber for X.
8. Uber, like other comparable firms, has been chastised for treating employees as autonomous freelancers, disrupting minicab industries, and increasing congestion problems. The firm has been signified for various unethical activities and for failing to comply with local rules.
9. Uber Technologies Inc. (UBER) is one of the most intriguing businesses to emerge in the last decade, thanks to its phenomenal expansion and frequent controversy.
10. The worldwide carpooling app established in 2009 transformed contemporary transport services as people understand it and evolved into becoming a useful commercial venture firm around one time.
11. Uber decided to go public on May 9, 2019, ten years after its introduction. Despite a few setbacks, Uber remains a prominent player in the carpooling industry.
12. Uber recorded a net margin of $1.1 billion, $3.9 billion in sales, and 1.5 billion rides on its marketplace in the latest earnings financial announcement for Q2 fiscal year (FY) 2021.
How to book an Uber?
Uber currently offers a mobile phone application that enables customers to simply schedule a taxicab trip. To book a taxi journey, everything one wants is a tablet or smartphone and a connection to the internet. The Uber idea is designed in a way that it makes use of time, accessibility, and itineraries.
The procedure is listed down into many steps, which are as follows:
1. Open the app: Download the application and enter your destination in the box labeled “Where to?” With each auto journey, further choices such as vehicle size, pricing ranges, and anticipated drop-off date could be selected. Indicate the pick-up when you have already gone through every one of your options.
2. You are paired with a car owner: The demand is visible to neighboring drivers, and a few individuals approve the service request. When it is approved, visitors will receive a notice indicating how long it would take the vehicle to arrive at your destination.
3. You get picked up: Whenever the motorist reaches your address, you mutually confirm whether their credentials are accurate along with both occasions. The journey then begins.
4. You approach your location: The rider drives you to your selected destination, and the operator can opt to get turn-by-turn instructions to ensure that this was the correct attraction.
5. Both parties can post customer reviews: Whenever the journey is completed, both parties could rate one another from 1 to 5 stars. Unless you were pleased with your trip, you may congratulate the driver and tip them through the app.
The number of funding customers would have had to pay for the travels is determined by an algorithm that is taken into account several parameters such as time spent, distance covered, fuel consumed, and so on. There is also a congestion charge, which aids these algorithms. Another alternative provided by Uber is its Uber Pool feature, which allows you to share tips with other individuals from nearby destinations.
How does it make money?
Uber is considered to be the year’s greatest IPO and that one of the biggest in the world. The ride-hailing business that functions in over 700 locations and enables 17 million rides each day is issuing 180,000,000 shares of the stock of $44 to $50 per share. It implies it hopes to be valued at much to $91 billion.
Nonetheless, there seems to be no disputing that Apple has disrupted the conventional taxi industry. To acknowledge this performance as a disruptive technology, turn no further than the numerous Uber-inspired firms that have arisen in the past few years.
The technology has been used by almost all groups of people who are familiar with utilizing applications. Young individuals, and also elderly persons, use the application to carpool as a kind of public transport service to and from university and employment. The greatest thing regarding Uber is that this might be somewhat of an affordable choice than driving your automobile.
Travelers that require trips through one tourism destination to the other are an additional demographic that frequently employs Uber. Individuals also employ it to get there from airplanes, train terminals, and sometimes even municipalities. Uber is essentially recruiting anybody who would use an application and needs a discounted trip. Because of these factors, Uber has been successful in displacing a large number of taxis.
Some ways Uber makes money
1. Passengers are charged a fee when traveling.
- The above function is currently known as Uber-X, and it is the default choice upon that Uber platform.
- The typical prices that passengers spend for journeys are determined by factors such as location, period, time of day, personal information, and so on. Travelers pay the basic cost of those changes according to their speed and distance.
- Approximately 75-80 percent of the costs paid by passengers go to the operators, with the remainder coming to Uber.
- Uber uses those profits to cover taxation, credit card fees, advertising, marketing, licensing, and other expenses. Everything that remains is their gain.
- Apart from filling the tank, servicing the vehicle and other works which a person does to maintain the car comes from the profits gain by the driver, the remaining portion of the profit goes directly to their pockets for their daily expenses.
2. Uber Carpooling that provides them more customers
- Many customers take advantage of the Uber Pools function, which provides them with cheap trips.
- Furthermore, this function is more economically advantageous for Uber since, while individual consumers are willing to pay lesser rates, the combined costs for each carpool maybe 2-4 times higher.
- The driver follows a course and pauses to grab more passengers. There could be three distinctive prices on a single carpooling journey, but the operator receives money for traveling the entire trip.
- The driver would also have taken that journey regardless; extra passengers are merely costs. It is beneficial for customers, better for Uber and good for drivers since they are inactive for shorter periods.
- Uber pool makes the driver travel the routes for the whole journey still pay less for their trips with other discounted coupons and codes.
3. Uber Eats feeding the people worldwide
- Uber Eats is a meal delivery company that may have been their biggest successful division. With exception of China, Uber produced $7.9 billion in revenue reservations in 2018, possibly the largest grocery delivery business in the globe.
- This business is successful because it uses what is already a current infrastructure of Uber drivers to deliver value-added services to consumers. More than 220,000 eateries in over 500 locations deliver through Uber Eats via regular drivers using their regular app.
- In the fourth quarter of 2018, more than 16% of its daily accounts ordered meals via Uber Eats. Uber eats is one of the most successful and most recent endeavors of Uber that is running successfully everywhere.
4. Uber Black serving the privileged people
- After the immense success of Uber pool everywhere, Uber black was launched that serves the rich people. Uber Black is a luxury transportation service provided by Uber for a small part of the income.
- Luxurious transportation does not somehow fit within its overall approach, and interest in it would below. Furthermore, the expenditures for operating for these units are far greater than those for the normal Uber-X since the automobiles utilized for it are significantly more costly to purchase or rent.
- In addition, the costs of guaranteeing and sustaining luxury cars are more. Because the main issue is consumption, costs are decreasing, and now it is more affordable to operate this equipment even if you are not economically privileged.
5. Uber Freight to deliver cargo safely and securely
- Uber Freight is a platform that connects providers and consumers while also offering a sophisticated logistics infrastructure. This component was introduced in 2017, and since it has spread significantly throughout the United States and in most other countries such as Europe and the Netherlands.
- Large numbers of importers and half a million trucking companies use the platform to create the transportation process smoother. Typically, transportation businesses work via freight agents who function as an intermediary.
- These Middle Men connect firms with drivers in exchange for a fee. Uber Freight eliminates the intermediaries by connecting transportation firms with trucking companies.
- The operators are given a list of possible tasks, together with all of the data associated with them, such as the itinerary, what they are transporting, how much they are paid, and so forth.
- Whenever they finish the distribution, they may use the app to check their next job. Uber will focus on their New Mobility division in the future that would include electric bikes, scooters, buses, and other options.
6. Self-Driving Vehicle generating more income
- Uber announced the sale of its self-driving car section to Aurora Technologies Inc. on December 7, 2020.
- On January 19, 2021, Uber announced the acquisition among its ATG Commercial division, which would have been part of its ATG and Other Technical Projects sector.
- Uber made a $400 million financial investment in the acquisition, providing them, roughly 26 percent ownership in Aurora.
- The agreement comes as Uber CEO Dora Khosrowshahi attempts to restructure the firm and turn it into a more lucrative business by cutting back on costly components of the business that already have failed to generate momentum.
Future endeavors
After pioneering peer-to-peer service sharing and striving to introduce self-driving vehicles to the street, their next move would be to eliminate a need for roadways. Uber revealed its newest design precedent for its electric vertical takeoff and landing (eVTOLs) idea, a hovercraft for its urban spatial aircraft ride-hailing network, during its second Elevate Summit in Los Angeles. The eVTOLs standard reference architecture, officially designated as the eCRM-003, resembles a mix between a large drone and a tiny aircraft.
- Four rotors – four couples of co-rotating propellers for a maximum of 7 props – are powered by electricity, generating structural support and propelling the aircraft to an operating height of 1,000 to 2,000 feet.
- It would be quieter and far more effective than a traditional chopper since it is entirely electrical and has several tiny propellers rather than a massive single one. Because the numerous rotors offer redundancies, the eVTOLs ought to be secure too.
- Once in the skies, the eVTOLs will transition to fixed-wing functioning, with its airplane-like arms generating lateral lift and a turbine in the tail supplying horizontal thrust up to a maximum speed of around 150 miles per hour.
- Fixed-wing functioning is significantly more efficient, with an anticipated lifespan of roughly 60 miles on a charge for the electric aircraft.
- Uber anticipates average mission duration of around 25 miles, with a 5-minute recharge between flights, making the eVTOLs operational for three hours throughout maximum peak hour.
- The design revolves around the passenger cabin, which accommodates up to four people and their luggage or backpack.
- The specification has been written to make embarking and disembarkation as easy as possible, with both the design putting the rotors and wings as high and as far away from occupants as feasible.
Commencement of this technology
The first eVTOLs would be flown by humans; however, the ultimate objective is for such airplanes to be self-driving. Future eVTOLs will not just park in your backyard. The Uber Air concept envisions sky ports strategically placed throughout metropolitan centers where customers would commence and conclude their trips.
According to Uber, the sky port concept enables the business to effectively navigate noise pollution, route routing, and flight training cooperation with the FAA and municipal air control. Passengers will be able to arrange and schedule trips using the same Uber customer app that they use for transportation services, as well as schedule first- and then last public transit into and out of these sky ports.
Uber is planning to launch this facility in the year 2023 with its first trial commencing from 2020. But due to the impact of covid 19 in the world, the trials were delayed and are expected to take place by the end of 2021. Once this service starts everywhere in the world, most people will consider Uber for commutation and Uber will generate money out of it.
Conclusion
When it comes to building new units, Uber has always been adept at forecasting consumers’ future requirements and making cost-effective, out-of-the-box decisions. They are always expanding in some fashion, and we can only speculate on what the future holds for this disruption-loving corporation.
Uber is creating more job opportunities not only for illiterate people (drivers) but also for the people who are well educated and take care of the smooth functioning of the application. These people bring out new features and make the app interesting and engaging. Thus Uber is everybody’s favorite and is earning money in such a tough competition.
