A high-tech startup firm laid the foundation of the ride-sharing online platform Uber in 2009. It integrated the technology with the transportation industry. The headquarter of the ridesharing, food delivery, and transportation service providing company is in San Francisco, USA.
Currently, Uber is operating its business and offering ride-sharing services in over 785 cities worldwide. Forbes named the ride-sharing platform as the most valuable backed venture firm in 2014.
Ever since the launch of this business in the transportation industry, it has dramatically impacted the country’s economy. Its strong impact has laid the foundation for the term “Uberization” on various businesses and companies. Users need the website and the application to operate the platform.
Uber Revenue
| Year | Revenue (billion) |
|---|---|
| 2017 | $7.9 billion |
| 2018 | $11.3 billion |
| 2019 | $14.1 billion |
| 2020 | $11.1 billion |
| 2021 | $18.3 billion |
Uber’s main products and services are Uber Eats, UberSelect, UberPool, UberPlus, UberXL, UberSUV, UberBlack, and UberX. However, some of the main competitors of Uber are Didi Chuxing, Grab, Curd, Ola Cabs, and Lyft.
Today, we’ll discuss the Uber swot analysis. It will focus on the internal strengths and weaknesses, and external opportunities and threats of the ride-sharing platform in the transportation industry.
Here’s Uber swot analysis as follows;
Table of Contents
Strengths of Uber
Convenience
Compared to traditional taxi services, the ride of Uber is economical and convenient to use. Customers won’t have to spend a lot of time on the street or road waiting for a taxi. The mobile-based application has made it easier for customers to share the ride.
One of the main reasons behind the success of Uber is that it offers ridesharing services cost-effectively and conveniently rather than just having a cab. Uber drivers and customers could easily communicate with each other on the platform and discuss each other’s location. You can book an economical and low-cost cab with a just few taps on your phone.
The platform also allows its users to integrate their Debit/Credit cards into the platform, and customers could pay the drivers on the platform without exchanging paper currency. The business model of Uber promotes the interaction between customers and drivers in order to keep things clear. In fact, the platform allows customers to pass reviews and rate their experience with the driver. The rating and reviews system helps the platform to categorize top drivers.
Diversification
The most important element for the success of Uber is adaptability and innovation. It has allowed the platform to expand its business in various areas like Postmates, UberEats, Logistics with Uber Freight, and others. The growth of Uber in the ridesharing business hasn’t stopped the company from expanding its business into the other relevant delivery services areas like Uber Bikes, Uber Rent, and Uber Eats.
Uber has made tremendous growth in terms of earnings, revenue, and market share, and it has allowed the company to diversify its income and market share. For instance, the ride-sharing brand is investing its resources in the development of self-driving vehicles and autonomous driving technologies.
Dynamic Pricing Strategy
When it comes to setting the price of the ride, Uber uses various pricing models to set the final price. The fair of the ride increases when your location has got more demands concurrently at the time of your booking. However, the drivers of Uber are satisfied with the company’s pricing structure, and they earn more during the busy working hours and the Saturday night shift.
When the platform notices a high number of demands, then it issues a surge notification to its drivers. Such a pricing method is equally good for the customers because they can reach their high-demand destination on time without delays when paying a little extra.
Ridesharing Platform
Uber has become the world’s largest ride-sharing platform recently, and it used to be the only platform in the past. Uber had approximately 5 million drivers, now reduced to 3.5 million, from 93 countries (900 cities) offering services to 103 million customers every month. Uber is a multinational brand and the company is operating its business in over 85 nations across the world.
Globalization has increased the company’s customer reach and brand publicity. It makes sure that the company is following globalization while keeping in mind the local rules. It allows the company to satisfy customers’ needs and keep on following its objectives.
Market Leader
The market share of Uber in the USA is approximately 68% (2021) in the ridesharing transportation industry, and the company completes roundabout 40 million trips every month. Uber’s top main competitor is Lyft and its market share is 10%. However, out of the total market share, 69% of the share is from the ride-hailing business. Uber has developed a strong brand identity in the USA, and it has made it much easier for the company to expand its operations.
Uber Trips
| Year | Trips |
|---|---|
| 2017 | 3.79 billion |
| 2018 | 5.21 billion |
| 2019 | 6.9 billion |
| 2020 | 4.98 billion |
| 2021 | 6.3 billion |
Weaknesses of Uber
Brand Connection Strategy
Technology is rapidly changing the socio-cultural environment across the world. Uber should follow such a business model that is relevant to the new reality of this world. For instance, the company should follow the latest communication and branding strategies. I mean the company should work on changing the medium rather than the message. Branding and marketing on social media platforms is a very good option for the company. If the company would change its business practices, then it would become very costly for the company.
Continuous Losses
It’s no doubt the company has experienced great growth in terms of revenue in recent years, but the loss figure also comprises billions of dollars. The aggressive strategy of the company in terms of offering discounts to customers and bonuses to drives has resulted in the form of high losses and limited profitability.
If we analyze the company’s financial history, the company has been facing losses since 2009. It began when the company offered discounts and bonuses to the drivers.
Uber has excellent financial growth in terms of revenue; on the other hand, it has been facing losses since its foundation. Uber generates a lot of money but spends it on promotions, incentives, refunds, discounts, and taxes.
Uber Profit (Loss)
| Year | Profit (Loss) |
|---|---|
| 2017 | ($4 billion) |
| 2018 | $1 billion |
| 2019 | ($8.5 billion) |
| 2020 | ($6.7 billion) |
| 2021 | ($0.4 billion) |
Copycat Model
Lyft copied the business model of Uber, and Uber copied some features of Lyft. Ridesharing is such a business model that no company can protect its proprietary traits. In fact, many labor unions and government departments are forcing the company to change its model. It’s because when drivers work with Uber on contract rather than as permanent employees, then they lose a lot of benefits and advantages.
Plaintiffs claimed that the company has misclassified its drivers in the two separate lawsuits against the ridesharing brand. OLA cab is a perfect example of Uber’s competitors and it has dominated the Indian market.
Relying on Drivers
Uber heavily relies on its drivers and the company doesn’t have any type of direct contact with them. There are many complaints from customers about the rude behavior of drivers, picking up customers in a drunk state of mind, and sexually harassing customers. For instance, one Indian driver raped a customer in 2015, and the company had to shut down its operations temporarily.
Many questions the nature of the company’s relationship with drivers if it doesn’t have the capability to provide a safe mode of transportation. Overall, it is jeopardizing the company’s reputation and brand image. At the same, the ridesharing brand relies on them.
Poor Culture
Uber spends a lot of capital on the welfare of its employees like fuel responsibility, vehicle maintenance, and insurance, and it’s good from the employees’ perspective. From the business point of view, the drivers work on their own and it jeopardizes the company’s financial position.
Immorality and misogyny issues have hurt the company’s reputation to a great extent. In fact, co-founder and CEO of the company, Travis Kalanick had to resign from their position. There was a campaign on social media (#deleteuber) and approximately 500,000 deleted Uber from their phones.
Opportunities of Uber
Review & Rating System
There are various companies offering ridesharing services, and drivers feel no obligation to follow any type of rules. However, Uber has a very good rating and review system and evaluates the performance of drivers on the road. The company should develop such a rating system that would improve responsibility among drivers.
Diversifying Business
Uber offers various types of products and services to its customers, but there is still room for adding new types of services to its portfolio. The location feature of Uber is available to the public, and the company can benefit from it. However, the only way to earn more revenue is to offer more products and services and become visible to a wide range of customers.
The company should also consider focusing on the niche and subset of the transportation market like the ride of pets and animals.
Delivery System Boost
The delivery service market has increased a lot in recent years. For instance, Uber Eats offers a food delivery service and it has got great growth potential.
Autonomous Driverless Technology
Driverless vehicles technology has got an excellent potential for growth. It also poses a great challenge for the company to become fully driverless. However, the driverless vehicles of Uber on the road would offer the customers a sophisticated experience, increasing the company’s profitability, and making transport safer than ever.
Uber should bring driverless technology to order types of transportation businesses like emergency vehicles and ambulances. Offer such a service would increase the company’s popularity in public. Investors have already shown interest in such technology and they want it to work.
Performance
The performance and popularity of the ordinary taxi cab business are decreasing. It presents a great opportunity for Uber to approach a wide range of target customer markets. The platform can improve its performance by focusing on responsibility and outcomes. When the brand tracks the performance of its drivers, then it can create a list of the most valuable drivers. It would allow the company to deal with the misconduct of drivers
Market Expansion
If Uber works with the government of the developing countries, then it can expand its market in developing economies. It would increase the ridesharing customer market share to a great extent. The growth in high-speed internet connections is also increasing the market of Uber.
Threats to Uber
Employee Retention
There are various other ride-sharing platforms offering similar types of offers and incentives to the drivers. It gives drivers an opportunity to move from one platform to another. According to an estimate, the satisfaction level of Uber’s drivers has been decreasing since 2019, and it has made it difficult for the platform to retain its employees.
Lawsuit & Regulations
Uber is a multination brand and operates its business in various countries across the world. The change in legislation and regulation in some countries doesn’t allow the company to run its business there. The platform has been difficulties in complying with the regulations of different countries.
For instance, Taxi Deutschland filed a lawsuit against the company in Germany claiming that the company doesn’t have licenses and violates the competition law of the country. Resultantly, the lawsuit banned the company from operating its business in the US. Non-friendly wheelchair cars imposed a fine of 650 million dollars on the company.
High competition
Uber is facing fierce competition from the competitors like Lyft, DIDI, and OLA in the ridesharing industry. It’s making the company reduce its rates in the long term, and it means lower revenue and profitability. Nowadays, passengers have got a lot of options available to them, and they choose the cheapest ride available. Uber has to work hard to stay ahead of the competition and retain the attention of customers.
Lawsuits
Uber is facing various types of lawsuits in different categories considering employees as independent contractors and others. Approximately 300000 drivers filed a lawsuit against the company for minimum wage and the company settled the case before going to trial.
Limited Profit
The customer-focused strategy of Uber has made the company offer cheap rates, and it resulted in the form of a limited profit margin. The lower profitability means that the company is offering a lower margin to its drivers and riders.
