13 Most Asked Questions About Uber as a Successful On-Demand Business Model

Introduction

Yes, we all know this fact. The fact that Uber is one of the most successful startups in the world with a highly followed business model. This is one of the primary reasons most aspiring entrepreneurs and startups tried replicating its model, but several failed.

Hence, our expert consultants at TRooTech decided to pen an article on  Uber’s successful business model and strategy by answering the 13 most asked questions about it. After reading the article you will be able to discuss and hand over the project like Uber with more confidence and clear understanding. We assure you that the chances of your project failure will be nullified.

So let’s start

Q.1 Is Uber’s Business Model Sustainable?

To begin with, we have come across this question multiple times. And now to answer your question, yes, Uber’s business model is highly sustainable.

But the question is why? When we conducted in-depth research to know the reason, we found that the foundation of Uber’s business model is laid on the platform of efficient demand and supply planning. The supply is well aligned with the business functionality.

Uber is an on-demand cab booking service company that partners with drivers who have their cars. Uber does not have a fleet of cabs, where the stakeholders are third-party partners.

The Uber model allows drivers or service providers to work at their preferred time and this allows more flexibility, enticing them to join the platform and offer their services.

Ever since its launch in 2009, Uber has added hundreds of thousands of drivers to its array, expanding its venture successfully. However, when it started losing the trust of service providers, it came with a 180-day change campaign. This is how it strategized to win back the ‘feel good to work’ factor of its drivers.

And Uber hasn’t launched a single business model but a multitude of equally successful ventures. A few of these expansions include UberBlack, UberX, UberPOOL, UberMOTO, UberEats, UberFRESH, and self-driving cars and UberCOPTER. Hence, Uber is stretching its wide reach to every mode of transportation.

Now, I think you got the answer to why Uber's business model is highly sustainable.

Q.2 How has Uber expanded as a business?

The next obvious question that comes to mind is how Uber has expanded as a business. To be precise, Uber started with the idea to provide affordable cab services to compete with the Black taxis in the US, which were highly expensive. 

Here’s a timeline of Uber’s business model expansion. 

• 2009: Uber was founded as UberCabs
• 2010: UberCabs became Uber and started in San Francisco
• 2012: UberX was launched
• 2014: Uber started Uber Rush, a courier service using bicycle messengers to deliver parcels.
• 2014: Uber initiated UberPOOL
• 2014: Uber started Uber Fresh, an online grocery delivery service
• 2015: Uber began testing the self-driving cars
• 2015: Uber launched UberEats, an on-demand food ordering service
• 2016: Uber exhausted bikes and started UberMOTO, the least expensive ride
• 2017: Uber announces the acceptance of Visa credit card for the ride
• 2018: Uber acquires Jump Bikes to launch Uber Bikes 
• 2019: The company $8.5 billion in the IPO market, increasing its market value to $82 billion 
• 2020: Uber sells UberEATS to India’s premier online food delivery app company Zomato for a 9.99% stake.

Q.3 What is the difference between an UberX, Uber Black, Uber XL, Uber SUV, UberSelect, UberTAXI, and UberPOOL?

Business aspirants and even Uber customers, and service providers do get confused regarding the different types of Uber business ventures. Here, we are making everything clear by defining and differentiating each of the terms.

1. UberX - It is a critical cab booking service from Uber with a day-to-day ride facility, accommodating four people.
2. Uber Black: It is a luxurious car service with professional drivers for up to 4 people.
3. UberPOOL: It is the most affordable ride-sharing service. It allows people with different starting and ending points to travel in the same direction to share rides and costs.
4. Uber XL: It is an affordable SUV service for up to 6 people.
5. Uber SUV: It is a luxurious ride service for up to 6 people.
6. UberMoto: It is a bike ride service for one person as a pillion
7. UberSelect: It offers stylish, luxurious cars with top-rated drivers for up to 4 people.
8. UberTAXI: It allows you to book a yellow cab from the Uber app.

Q.4 What is the revenue model of Uber?

This is one of the most frequently asked questions about Uber. Many startups having a similar business plan or project, such as Uber are curious to know how Uber generates revenue to become a billion-dollar value company. Let’s find it out.

A majority of Uber’s revenue comes from the commission that the company takes from all its service providers. Most of you know that Uber charges the transaction fee from the drivers and the service fee from the passengers. 

Revenue Stream for Uber

• Commission from the customers — Service Fee
• Commission (15% to 30% per ride) from the Drivers — Transaction Fee
• Cancellation Fee from whosoever cancels the ride
• Surge Pricing — At peak traffic hours surge pricing is applicable
   

Q.5 How do I build a cab booking app like Uber with a real-time location facility?

If you are looking to build a fully functional and user-intuitive cab booking application like Uber with a real-time location facility, you must contact a leading mobile app development company, such as TRooTech.  We have a pool of experienced developers, UI/UX designers, QA specialists, and a skilled project manager to cater to your requirements quickly. 

• To integrate real-time location in the app, we use a Route Optimization tool that helps determine the shortest path between two points, becoming a cost-effective solution. It helps design the route with more than one stop in a complex path.
• To build route optimization, we consider the most relevant factors such as the number and location of all the required stops on the route.
• To be more specific, our developers integrate it with the Geo-analytical tools which change the location-based data into representations that can help focus more on the optimization.

Read More: Route Optimization – The most underrated feature in the Uber-like application development

Q.6 What is the business model of Uber Eats?

Uber Eats is another successful venture and subsidiary of Uber founded in 2014 with almost a similar business model. Uber Eats has three main stakeholders namely

1. The restaurants partnering with Uber Eats 
2. The delivery partners delivering food to customers 
3. Customers who place orders through the application

Now let’s throw some light on the Uber Eats business model.

As we mentioned earlier, Uber and Uber Eats have almost identical business models. So, what are the common similarities?

1. Like Uber, Uber Eats does not own restaurants but partners with restauranteurs.  
2. The company hires a fleet of delivery persons who collect meals/food from restaurants to deliver them to the customers.
3. The Uber Eats user can filter the search results on the basis of the restaurants, cuisines, and deals in eateries.
4. The application has food baskets that act similar to shopping carts in the eCommerce platforms. The customer adds his/her favorite cuisine to the basket, followed by the checkout process. 
5. Uber Eats provides customers with an estimated time of arrival. 
6. The delivery partner gets the request for food delivery and once he accepts it, he gets the restaurant's pickup location and the customer's drop-in location.
7. Once the food item gets delivered, the customer can rate the restaurant based on its quality, quantity, packaging, and others.

The Revenue Model of Uber Eats

• Commission (flat $5 per order) from the customers – Service Fee
• Commission (15% to 40% per order) from the restaurants – Delivery Fee
• Featuring Fee from the Restaurateurs
• Listing Fee
• Cancellation Fee -Mostly charged to the customers
• Surge Pricing – At peak lunch and dinner hours surge pricing is applicable

Revenue Generation Stream

1. Marketing Strategy
2. Word-of-Mouth Marketing
3. Social Media Marketing
4. Offers and Discounts

Q.7 What is the on-demand service business model?

• In the on-demand service business model, there is no product owned. It operates completely with the help of third-party service providers and their personalized resources.
• It gives the service providers the ease to be flexible in their timings and work hours.
• The demand for the service is aggregated and then the supply is accordingly strategized.
   

Q.8 What are the core differences between Uber and Lyft?

Q.9 What is an Uber clone business? What other businesses can be created using a business model similar to Uber's business model?

Uber has created a successful and winning business model that has allowed it to reap huge profits and establish a staunch hold over the market over the last decade. Fascinated by Uber’s phenomenal success, many businesses and startups have tried to copy the same business model in different ways to launch Uber's clone business.

However, the Uber clone business model is not confined to starting a cab booking/sharing business, they have used it intelligently to establish a more feasible niche. Here, the demand for the service is aggregated and the supply is planned.

These businesses are also known as Uber for X business.

Businesses created using a business model similar to Uber's business model

• Uber for Online food delivery services
• Uber for Medicine
• Uber for Dog Walking
• Uber for Beauty
• Uber for Grocery
• Uber for Courier Delivery
• Uber for Fitness
• Uber for Sports
• Uber for Logistics
   

Q.10 Which failed aggregator start-ups tried to copy Uber and failed and why?

Here we have listed out the names of failed aggregator startup businesses that copied Uber but were unsuccessful and the core reason for their failure.

Homejoy

• Expanded too fast
• No training for service providers
• Could not retain customers

Exec

• It served all possible jobs
• Financial planning has gone wrong

Rivet and Sway

• High cost to customer acquisition
• The competitor was heavily funded

HelloParking

• Unclear about the business idea
• Inability to expand

Tutorspree

• Single channel dependency to acquire new customers

For detailed information, you should be here.

Q.11 Will Uber survive once the heavy discount era ends?

• The most basic business ploy of heavy discounts is to make as much customer acquisition as possible.
• Once the customers have landed on the platform, it solely depends on the quality of the service provided to the customers.
• If Uber provides quick pickups and quality rides killing the heat of the traffic and helping the passengers reach in a hassle-free manner, discounts won’t matter to loyal customers.
• If you develop a thoughtful application and provide quality service, nothing else matters.
   

Q.12 What conclusions can be drawn from the marketing strategies of Uber?

• If you market for your business, you can acquire customers; if you market for the features that your business provides, you retain customers.
• When you market show why you are different with your offerings and not with your operation.
• When you market for a feature, make sure to make it relatable to your targeted audience. You can make use of Geo-targeted ads.
• Get the line clear — You are here to solve one of their problems permanently and would work in that direction.

Read More: Uber’s Marketing Examples

Q.13 What is the advice for any business aiming to be the next Uber?

We decided to wind up our discussion on the Uber business model with this important question because several businesses are willing to relish the taste of success and write their flourishing stories as Uber in the last 15 years.

We recommend or suggest they consider these pivotal factors, aiming to become the next Uber apart from staying cautious towards their goals.  These crucial factors include

1. Figure Out ‘Why’

The best advice for the startup is to try to figure out the true calling of why you think your business needs to be established. On the other side, figure out why the customers would prefer you.

2. Front Stakeholders

Talking about the Uber business model deals with both the service providers and the customers and tries to meet their needs.

So when setting out to Uberize your startup business the problem you try to meet must be feasible and acceptable by both the front stakeholders.

3. Expansion

Even though you are funded quite well, the startups need to dwell in the business well before going on the expansion.

As important as funding may sound to you, equally important is the customer acquisition for the business, and then expansion can be planned.

4. Revenue Model

As easy as it may sound for Uber, the revenue model for your particular Uber for X might be different so a rough analysis of the unit economics should be made about where the cut from every transaction is to be made.

5. Frequency of Usage

When you are finalizing the niche for your Uber startup, what you need to look out for is the customer frequency of service usage and the transactions made within the application.

6. Customer Retention

Once the analysis of the customer base is made, progressively the data can be used to analyze the customer retention rate.

7. Multi-sided Platforms

With launching the applications on more than one platform, reaching a considerable amount of mass is the first landmark that any startup should target.

8. On-demand service startups

The critical mass accumulation can be ensured once the loyalty of customer retention and the efficiency of the service providers reach a certain level.

9. Scheduling Vs. Instant

The right design choices are extremely necessary for any Uber for X model since every model strives to choose the right model that makes it different from the rest.

For a scheduled design, it is easier when the startup is bootstrapping a business.

When going for an instant, it puts more pressure on the supply-side infrastructure.

10. Aggregated Vs. Integrated Supply

There are two types of service providers: Freelancers and Contracted Supply.

While the freelancers help in providing external strength to the business, the contracted suppliers are more reliable for the business.

Hence, keeping in mind the frequency of your on-demand service, you should invest in targeting whichever supply resources complement your business to its core.

11. Total Addressable Market Size

Talking about Uber, it first started serving the ones who already used the taxi service by launching a black luxury car and later introduced its service to other groups of people.

While your business is in its initial stage of development you need to target only a specific audience.

Conclusion

TRooTech is a premier and leading mobile app development company specializing in custom software development and web development that helps startups and organizations establish robust connections with their target audience and enhance their digital experience to make a remunerative and profitable business.

We shape and model business ideas, offering tailored solutions through our full-stack development expertise and implementing the latest tools and technologies to write thriving business stories.

Our aim to present the successful Uber business model was to help all startups and aspiring entrepreneurs understand how Uber works and establish a strong grip over its customers and market.

So, why wait to get started with an app like Uber that incorporates the same business model? Get in touch with our experienced and seasoned development team now to build an innovative app.