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Uber Business Model and what you can learn from them

By Sumit Banerjee|4th May 2020
Here you will get the information about Uber Business Model and Revenue Model and also what you should do to build a great startup
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Uber is an on demand transportation provider, it is Uber who made it possible to connect with a taxi driver whenever you need it, be it far away from you, if you need it they will provide it. All you need is a smartphone and Uber mobile application in your smartphone and you don’t have to wait for much and a taxi will be on your door.


And if we talk about the valuation of the company it has already crossed the mark of $70 billion which only few companies have made possible in all over the world. They have their presence in more than 633 cities all over the world and raised an equity funding of about $22 billion.


These facts and figures of the company also raised the trust among the investors and also among their customers.


So in this article we will cover some more facts and figures about the company with that we will also give you a detailed explanation about the Business model of Uber and also about the revenue model of Uber. Customer segmentation, their value proposition, what are the problems and their solutions, and also their cost structure so if you are a budding entrepreneur this article will surely help a lot in your entrepreneurial journey and do let us know what you learnt from our article and what else you want to know.

Founders Of Uber

Travis Kalanick - Travis was the co-founder of Uber who has resigned from the company in the year 2017 because of some issues in the company. Before Co-founding Uber Travis already ran two startups, first was Scour a peer to peer file sharing technology from 1998 to 2000 , then from 2001 to 2007 Red Swoosh an another peer to peer file sharing company which also didn’t worked then in the year 2009 he met with camp they share the idea and started the company in the year 2010.


Garrett Camp - A Canadian billionaire who discovered the awesome website called StumbleUpon he is also a product designer and investor. Right now he has helped many different companies to grow and he is also the chairman of Mix which is the successor of StumbleUpon. He is also working upon Cryptocurrency right now and also formed a new company named Expa in the year 2013.

So what do you get to learn from them, so the most important thing is you must not quit and also ending is the new beginning so try harder and you get there gradually.


What are the Different Value Propositions of Uber

Value Propositions for Drivers

  • It makes an additional Source of Income for the drivers as many times customers and taxi Drivers as very close to each other but don’t have the information about each other which creates the problem for each other.
  • Drivers can choose to work according to their timing which increases the effectiveness of the driver.
  • Uber also makes their payment procedure very easy so that drivers don’t have to wait for a long time to get their money.
  • Can earn while pursuing their hobby, people who love to drive can also earn with performing their hobby.

Value Proposition for the Customers

  • Customers don’t have to wait for a long time to get a cab which earlier was a big problem for the customers.
  • Also with some of their coupons you can make your ride free sometimes so Uber also saves your money.
  • You pay less than private taxi, as they charge per KM you can choose the way which can also save your money.
  • Maintain the class of the customers. They have different products for different segments so you can choose accordingly. If you want to take your girlfriend for dinner you can opt for prime one and if you want to go to the mall with your friend you can opt for the small cab so you maintain your class with their different product.

What is the Uber’s Customer Segment

As Uber has a huge customer base they have segmented their customers in different types of segments which are;

All the people who do not have their own car’s, People who have the car but don’t want to drive themself due to their own problems, People who have the car but not according to the situation where they need a prime one, or one who wants a low cost ride. So this all covers in one segment where they simply need a ride there.

Next they also have the tie ups with different corporate where the driver picks and drops the employees of the corporate.


They also segmented kids into a totally different segment where parents want to send their children from Uber and also want them to pick them from the schools.


In their other segment they targeted senior citizens as they make 30 - 40% of their customer base so they introduced some totally different services for senior citizens.


Uber Business Model (How do they work)

So basically they have a very simple 4 steps business model let's take a look at the Business Model of Uber.


First Step

In the first step of the Uber business model they first find the demand with the help of their mobile application, where customers make a demand with the help of Uber mobile application where customers can schedule or demand for instant cab.

Second Step

Second step is the matching of the customer and driver so when the customer makes the request it shows to all the drivers nearby the customer and the driver who is free and ready to take the ride accept the request and reach the customer.

Third Step

So in the third step of business model of Uber the Driver reach customer and ask for the otp which is one time password without that the ride will not start, after the OTP ride will start and customer track the whole ride in the mobile application and if they want they can ask the driver to change the path and drive make the ride comfortable for the customer.

Fourth Step

In the last step the customer simply pays for the ride and also gives the ratings to the driver and this is also a very important part as with the help of that company get to know the driver is behaving with their customers.

Revenue Model of Uber

Uber's revenue model is also not much different from others with Uber. You also paid for a ride but the only thing here is a small amount of the ride was gone from the Uber account and the rest was gone to the driver's account.

But their main earning source was when they surge their price, like where there is higher demand than the number of drivers then per kilometre price automatically increases and there they earn large amounts of commissions.

And also now Uber has expanded their transportation services to boat helicopters too so now you can choose any transportation service you want.

Conclusion

So this is all about the business model of Uber and also the Revenue model of Uber so if you are about to start your own startup the first and main thing is try to cater the problem of your customer what Uber did and you will become successful with that.

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