There is a lot of interesting news in this week’s roundup, including a study that shows Uber and Lyft could raise prices without affecting demand much, and new startups that are seeking to challenge Uber and Lyft’s dominance. Senior RSG contributor John Ince covers all that and more below.
Uber and Lyft know they have to raise prices in order to turn a profit. Neither of them wants to make the first move. [Business Insider]
Sum and Substance: Uber and Lyft are playing chicken with each other.
Both companies need to raise prices and wean customers off the coupons that helped grow market share in years past if they ever want to turn a profit.
Lyft said last week that it tried to cut back on coupons, but didn’t see it matched by Uber, leading it to change course. Analysts agree that rationalization is coming to the ride-hailing industry. But someone has to lead that charge, and so far, neither company seems to want to go first.
The day of reckoning is coming. Uber, and later Lyft, got consumers around the world hooked on ride-hailing with heavily subsidized rides. (You can thank Softbank, Saudi Arabia, and plenty of other venture-capital investors for that).
But things are different now. Following lackluster initial public offerings this year, both companies are under tremendous pressure from investors to turn a profit. The only way to get there — besides big job cuts — is convincing the public to pay what these rides actually cost to provide. That’s the hard part.
My Take: There is a little cat and mouse game going on. Uber and Lyft both have something to gain by raising prices… but they also have market share to lose. Who is going first?
Worried about Uber’s safety report on sexual assaults? How to stay safe when riding Uber and Lyft [USA Today]
Uber has for the first time released data on the number of passengers and drivers alleging they’ve been sexually assaulted, raising new concerns over the safety of the popular ride-hailing service.
According to Uber’s safety report, there were more than 3,000 allegations of sexual assault last year. So, how do you stay safe on Uber and Lyft?
Here are some tips:
Wait indoors for your ride: Avoid spending unnecessary time outside alone with your phone in your hand. Instead, wait indoors until the app shows your driver has arrived.
Pay attention to the vehicle: Check out the make and model of the car that pulls up and compare the license plate number to the one listed on the app. Also, look at the driver photo and name. Make sure it matches what’s listed in the app…
My Take: With the release of its first ever Uber Safety Report, there were a slew of articles like this that mostly viewed the danger from the perspective of the passenger, but we know the danger goes both ways.
Uber Drivers Are Victims of Violence Too [Fortune]
Sum and Substance: Earlier this year, Tammie Jean, an Uber driver in Los Angeles, had frightening experience while on the job that left her feeling traumatized. Late at night, a drunk passenger became angry, grabbed her hand and tried to pull her out the back door.
Operating on instinct, Tammie Jean stepped on the gas, leaving her assailant behind. Once safe, she called 911 to report the assault. “I was shook up,” said Tammie Jean, before adding, “I’m always concerned about who’s getting in my car. It is frightening how many stories I’ve heard.”
Last week, Uber published a report detailed thousands of crimes committed during rides. Initial public attention immediately focused on passengers who were victimized, overlooking the fact that a huge number of drivers were also attacked.
Drivers accounted for more than 2,500 of the nearly 6,000 reports of sexual assaults in 2017 and 2018, the company said last week. Meanwhile, of the 19 homicides reported over the two years, seven of the victims were drivers…
“Rideshare companies, they don’t reach out to us after and say, ‘Hey, is there any way we can have you treated with therapy or some kind of support. Can we make sure your hand is Okay?’ “Nothing,” she said. “It’s silence.” …
My Take: This has long been a pet peeve of mine. What is Uber doing to protect the driver? They’ve rolled out this and that, but it’s still a dangerous job – and drivers should be compensated for that.
Uber and Lyft ‘Well Positioned’ to Turn a Profit, Barclays Says [Bloomberg]
Sum and Substance: A new analysis by Barclays Capital of about 2.4 billion taxi and ride-hailing trips in New York City addresses the biggest question investors have about Uber Technologies Inc. and Lyft Inc. When will they turn a profit?
The good news, according to analysts Jeffrey Meli, Adam Kelleher, Ryan Preclaw and Ross Sandler, is that Uber and Lyft are well-positioned to achieve profitability. The analysis looked at how higher prices affected the number of Uber and Lyft rides, and found that they can raise prices to achieve an operating profit with only a modest impact on volumes, “disproving a key piece of the bear case.”…
My Take: If the chief conclusion of this report is true, then it’s significant. If Uber and Lyft can raise prices without affecting ridership, then we’ve got viable businesses here. Only one way to find out, right?
These posh ride-sharing startups aim to leave Uber and Lyft in the dust [CNET]
Sum and Substance: VW and several startups are exploring ways to make commuting less painful — for riders and the planet.
I’m running late for dinner in Hamburg, Germany, with no time to walk or take the bus. Time to fire up a ride-sharing app. But rather than Uber or Lyft, I quickly open an app called Moia. It tells me to cross the street and my driver will arrive in nine minutes. Right on time, a big, golden van pulls up in front of me, and the side door opens. “Shara?” the driver says as I take a seat in a sleek cream-colored seat and take in my surroundings.
The roomy interior is softly lit by white lights on the ceiling, almost making it feel like the vehicle has no roof. I lean back against the wide headrest that shelters my face from the other rider in the vehicle. A monitor hanging in front of me says I’ll be at my destination in 15 minutes, right after we drop off my fellow passenger and pick up another.
While this sounds like a normal — albeit premium — shared ride service, Moia, which launched in Hanover in July 2018 and expanded into Hamburg six months ago, is run by Volkswagen…
That’s where the similarities end. Unlike Uber and Lyft, whose drivers are independent contractors, Moia drivers are employed by VW, and its vehicles are specially designed VW electric vans…
“On-demand mobility services are often too expensive for everyday use, and current ride-hailing solutions for sharing aren’t optimal because personal space is compromised,” said Brian Solis, an independent digital analyst at his own firm. “This creates an opportunity for ride-sharing services that solve for the ‘last mile’ or ‘last kilometer.'”
On Moia, you might be sharing a ride with five other people, but you somehow feel like you’re alone. That’s the point. …
Like Moia, CleverShuttle owns all of its cars and employs its drivers full time with benefits like health insurance and paid vacation…
Instead of making you walk to a designated meeting spot, CleverShuttle will pick you up from your starting point and drop you off directly at your destination. It has 1,400 drivers and operates 350 vehicles. It would have even more cars if national law allowed (Germany has strict ride-sharing laws and regulations for drivers) — and if it could actually get them from automakers. …
My Take: This is a victory of sorts – a ridesharing service that works. No complaints from drivers about this and that. But is it sustainable? Without getting a peek at its financials, it’s difficult to know.
Did Uber Just Enable Discrimination by Destination? [CityLab]
Sum and Substance: In California, the ride-hailing company is changing a policy used as a safeguard against driver discrimination against low-income and minority riders.
If you call an Uber to bring you to a low-income neighborhood in Oakland or Los Angeles, you might have to wait longer than you used to—and it’s possible you won’t be matched with a driver at all. These are potential consequences of changes Uber quietly announced in its driver platform in California last week. Drivers in that state will now be able to see each would-be passenger’s destination upfront—before the ride is accepted. As a result, California cities could now have a new ride-hailing worry to add to their growing list: discrimination based on a rider’s destination…
These changes could strengthen Uber’s position on AB5 and help build goodwill with drivers, whose job satisfaction has been falling. Harry Campbell, a former driver who founded The Rideshare Guy blog, says that Uber drivers in California can now make more efficient decisions whether to accept trips: “Seeing the destination lets drivers determine if the ride is going to be profitable, which depends on a trip’s length, and the distance you have to travel to pick up the passenger.”
But these benefits for drivers also open the door to rider discrimination. The danger is that some drivers could capitalize on their new access to destination information to systematically decline trips to low-income or minority neighborhoods, much as taxis have a history of doing. A nightmare scenario for cities could involve minority, low-income residents waiting longer to take an Uber home after a late shift (which are more common among low-income workers), and being at a greater risk of finding no available drivers at all. …
My Take: It’s difficult to know whether this will happen. Logic suggests that it will, but logic doesn’t always have its way. There just may be enough drivers who don’t care… or don’t know.
Readers, what do you think of this week’s roundup?
-John @ RSG