In this week’s news, we’ve got Lyft increasing rider service fees to offset rising insurance costs and Uber allowing targeted ads within their app. Two different means of making more money. Which will be more effective? For this and more, keep reading this week’s roundup with senior RSG contributor Paula Lemar.
Lyft increases service fees for riders amid rising insurance costs (Tech Crunch)
Summary: Lyft is increasing the service fees its riders in the U.S. pay for each ride. The rise in cost, which will go directly to Lyft, aims to cover the higher costs of insurance, reports Reuters.
Lyft’s service fees pay for overhead costs like driver insurance and security background checks. The company expected a rise in insurance costs to affect Q3 margins, according to Lyft’s Q2 earnings call, which is one of the reasons it lowered full-year guidance. At the time, Lyft hinted at changing its pricing structure to accommodate the insurance price hike — the company really needs to increase its per-rider revenue, which actually decreased from Q4 2021 to Q1 2022, and remained flat from Q1 to Q2 despite a slight rise in active riders.
But will this service fee increase be enough to help Lyft inch closer to traditional profitability, or will it only help offset the costs of rising insurance? Or worse, will the slight price increases send would-be Lyft riders into Uber’s cushioned seats? Uber told TechCrunch that it has not increased its service fees, and according to data from YipitData, Uber’s service fee has stayed at $2.87 since 2020….
My Take: While the increase is less than $0.50 per trip nationally, it wouldn’t surprise me if drivers would also demand a pay increase. This will give drivers more fuel to show that these platforms are taking more and more from passengers while keeping even more away from their drivers.
Uber to Let Marketers Target Riders by Destination (WSJ)
Summary: Ride-hailing company Uber Technologies Inc. wants to help marketers target consumers with ads based on where they have been and where they are going.
Uber announced the new capability as it rolled out its mobility media division, offering ads across its ride-hailing app for the first time. These ads will be available in select markets at launch. The company sees huge potential for revenue growth in the new ad-targeting product, though some experts say it could raise concerns about consumer privacy.
Companies like Alphabet Inc.’s Google and Meta Platforms Inc.’s Facebook have long recorded users’ web behavior to target them with ads. Retailers such as Walmart Inc. and Kroger Co. can track when, where and how you shop for the benefit of brands that advertise with them.
Uber has been building its ad business for several years, though most of its growth to date has come from ads placed on the Uber Eats food-delivery app, said Mark Grether, general manager of Uber Advertising….
My Take: On RSG’s Facebook page, reader Larry mentioned, “There was discussion of them doing this almost eight years ago under Travis. There was discussion again when UE came out. They’ve left a lot of money on the table. As long as riders and drivers can easily opt out, they should do it asap.”
Jeremy stated that this is an unsurprising move:
“Everyone is learning from YouTube. You can’t use it unless you pay premium or watch adds. Netflix is the same way. You can pay cheaper with ads so why not Uber? Maybe the stream of extra income will help with driver pay. Only one can wish.”
While Bobby stated what every driver would love, but what is highly unlikely, “Give us a cut.”
Wouldn’t that be great? But, yeah, I highly doubt Uber will give drivers a cut of advertising proceeds. They want to make more money; they are not looking to give that income away.
EV startup Arrival to refocus business on electric vans for the US market (Engadget)
Summary: In 2018, fledgling EV maker Arrival partnered with UPS to build a new generation of electric delivery vans, beginning with a pilot fleet of 35 vehicles, for use in both the US and Europe. The company quickly expanded its scope from there, working on plans for an electrified bus, an EV rideshare vehicle for Uber and an $11.5 million battery plant. However, on Thursday the company abruptly announced that it has decided to shutter its bus and automotive projects to instead “refocus its resources on the US market while further advancing its enabling technologies.”
In a press release Thursday, the company stated that “scaling production in the Bicester [UK] microfactory requires significant further investment in hard tooling and working capital and the Company has determined that the benefits of such an investment would be best directed to the US market.” As such, the company will restructure and focus its efforts on the Van and the underlying tech that makes it run….
My Take: On the Uber & Lyft EV Drivers Facebook page, reader Ray said, “I have high hopes for this company. I’d love to ant in a rideshare-specific vehicle. All of the accessories I bought from Amazon to make the PAX more comfortable would (hopefully) be built-in. It would also be great to use the car’s infotainment system instead to the puny, portrait-oriented phone screen.”
Bringing more EVs to the U.S. in a way that would benefit rideshare drivers sounds like a step in the right direction. A platform providing vehicles is a huge way to set itself apart from the main players of Uber and Lyft. Drivers will get a chance to drive an EV vehicle without paying for it themselves.
Also in the news…
Gridwise launches My Trends feature within app (LinkedIn)
Thoughts: The My Trends feature within the Gridwise app will let drivers see their earning trends across all platforms, their true dollars per hour, trips per hour, and earnings per mile.
Uber Eats Partners Up With Leafly To Deliver Marijuana In Toronto (Forbes)
Thoughts: As some drivers point out, this just means that drivers in the area will be legally delivering marijuana. With Uber Connect’s delivery services, drivers tend not to know what they are transporting. It’s possible marijuana delivery has been happening all along.
Lyft is buying legitimacy through its deal with Motivate (QZ)
Thoughts: Focusing on other mobility options, Lyft is aligned to buy Motivate, a bike-sharing program in the U.S. Will this keep Lyft set apart from its competitors?
Would you drive for Arrival if they come to your market? Share your reasoning in the comments!
-Paula @ RSG