Uber Business Model connects and manages a network of drivers who offers the services and passengers (demand) through a technology platform that offers cheaper transportation through a phone application. The business model is also referred to as multi sided platform business that uses a platform has revolutionized urban transportation.
In order to access Uber services, you need a uber app installed in your mobile phone and once the app is opened, you can enter the destination which enables to locate a driver through the platform. The driver drives you to the destination using the same app which has the navigation system.
The uber application runs an algorithm to determine the fare based on a number of parameters like travelled distance, time elapsed , fuel used etc . In addition, the Uber used a rating system for the driver which is rated by the rider and at the same time the driver rates the passenger.
Few features of the uber business model include:
- It has a simpler structure and has no inventory which enables uber to realize lower costs. It also does not pay for the fees as it is not a taxi service provider but a technology platform which implies it only provides a platform for the passengers and drivers to transact
- Uber driver are considered as partners and not as employees and they work part time basis which has much more ease in becoming a uber driver.
- Due to presence of the algorithm who works on the demand and supply situation, increase uber rates to ensure reliability when the demand is not met and thereby more supply of driver who are interested in working with uber. The algorithm works in such a way that the demand and supply is accurately measured depending on the shortage/excess and pricing adjusts accordingly.
For each ride, the total fare received from the passenger reflects the payment of the payment, fees, taxes and the commission for uber. In addition, the company also makes income from the promotional marketing campaigns that it runs for the partners.
The customer segments considered of two types of people – passengers who ride in the uber and the drivers. The customer relationship side on the other hand looks at the passengers, drivers and regulators
The drivers who constitute the major part of the workforce is not considered as employee but as independent contractors and does not enjoy the benefits which are offered for the regular employees. The company has other regular employees who are part of running the technology platform.
The product offered by uber is a technology platform that offers ride hailing services for customers looking for rides to different destinations, delivery of food or even shipping along with people selling those services.