Uber is an online transportation company, which develops, markets, and operates the Uber app with its headquarters located in San Francisco. Using these application riders can submit a trip request and the app does the remaining task. Though there is a lot of improvement it still faces a lot of issues. During the year 2016, uber lost 2.2 billion dollars due to various reasons.
Uber Follows Amazon’s Strategy
Uber undergoes continuous loss since it was founded in 2009 and its loss continues to enlarge. An obvious judgment of these results is that Uber’s fundamental business is ineffective and will never reach the profit. It is important to recognize that Uber looks like Amazon, because like Uber, Amazon also faced a lot of issues like that of the Uber. This situation makes the company owners think that they will never gain a profit. But the investor of Amazon-Jeff Bezos was not just lighting their money on fire.
It tried differently in selling books than a traditional bookstore using websites and warehouses rather expensive retail locations staffed by an hourly sales clerk. Finally, the cost of selling the book has always been less than those of Borders and Noble. The final result is that the growth of books kept going down as the company grew.
Amazon’s loss during 1990’s was a false appearance which was devised by Amazon’s intrusive investment in growth. Since Amazon is continuously spending a lot of money on things such as warehouse and new software that we are going to give profit after few years. The company puts up their profit by spending less on these things, but Bezos suggested that it was worth prioritizing growth over profits if we shift to a low gear and began to show modest profits.
Reason for Uber’s Loss
It is a usual thing for a company to lose its money as it as it looks for market share and traction. But Uber is testing shareholders endurance to a degree that is extraordinary in the history of Silicon Valley. A report from Bloomberg says that ride-sharing service lost over $2.2 billion in the first nine months of 2016. The leaked documents say that the loss of uber has grown for sale along with the company rather than declining in a way that suggests a clear path to profitability.
Uber has been continually praised as a new model for metropolitan transportation. But if Uber is never more profitable, that will suggest a different judgment that the service has not really transformed the transportation market at all. It’s just convinced some unsophisticated investors to contribute a lot of people’s taxi rides.
The company has found a new way to make the the taxi market more effective. The car industry is on the edge of introducing self driving cars that have the ability to totally transform the transportation industry. This service gives an equal position in a self-driving car market that is highly advantageous.
Interpreter Discloses That Uber’s Core Business is Illogical
In comparison, Uber still requires a car, a driver, and some fuel just like an ordinary taxi ride. So there is no way for Uber to reduce their competitors. However the transportation company has the simplest cost structure, labor is about 58 percent, fuel costs 9 percent, and so on. This gives the opinion for the Uber which gives a great experience. It seems like the company has found out how to provide a clean and fast ride at a lower fare.
The rides are not cheaper to provide than traditional taxis and it seems like it since Uber is talking about the loss on every ride. The company accepts this huge loss in an effort to drive traditional taxi companies and rivals like Lyft out of business. They are taking steps to displace a large number of effective producers. Once this condition is achieved Uber will enjoy a huge profit by raising prices, especially surge prices and charging customers more than they were paying before Uber came along.
Ubers Enormous Network Makes Taxi Rides Fast and Cheap
The other feasibility that has figured out ways to make taxi cabs market more effective. There are three big ways that Uber’s model is far superior to ordinary taxi cabs. The first one is that it is customer friendly for the service uses smartphone app than making a call which is an old method. Uber application gives the customer a real suggestion on how long it takes for a car to pick them up. Once the rider hails a cab it allows him to track a car’s progress. This is much greater than the traditional taxi cab model where the rider needs to call the drivers and wait for a long time for the cab to arrive which has no way to track the car’s progress.
Before Uber’s existence, it was inconvenient for the rider to book a cab that many people did not worry about it. There is a difference that Uber’s dominance is connected to lower costs that are made possible by network effects. This would imply that Uber becomes a profitable one without even raising fares to pre-Uber levels. An Uber dominated market might be a lot more efficient that a competitive leaving room for low cost, highest driver compensation and healthy profits for their stakeholders.
Enlarging the Retail For Taxi Services
The estimation of ride-hailing company has always given unbelievable occlusion. One of the most commonly invoked judgments of the ever-increasing and mind-blowing valuation levels of the company has achieved $ 40 billion says the final report. The report says that shareholders are valuing this service as if it is bigger than the whole taxi market. Uber’s large, profitable market in San Francisco has been already greater than the whole taxi market. According to Uber CEO, the whole taxi market in San Francisco is about $140 million per year.
At present, the revenue is about $500 million every year which is 3 times greater than the size of the taxi market. The company recently launched “Uber Pool” which allows the riders to share rides which reduces the cost of an individual. Using this service in which drivers pick up other riders along the first rider’s route will improve the productivity of Uber cars. Pooling continues to drive down the cost of using Uber with respect to owning a car which removes some cars from the road.
The uber’s services have brought a lot of benefits and also a lot of failures in it. Even though they introduce so many wonderful facilities they faced a lot of issues. This is not a final stage as profit and loss is a part of a business and it is believed that Uber will soon attain a strategy that will enhance the growth of both the riders and the company as well. The only thing is that people should make use of these opportunities to get a luxurious lifestyle.
Uber has so many advantages that it is not like other transportation services. We can make use of our mobile applications and within a single tap, the process gets sorted. With the help of Uber, riders can conveniently make their trip, for it is necessary for the riders to have a safe journey during their travel.
Author Bio: Anand Rajendran is CEO and Co-Founder of Dectar apps, best PHP scripts development company located in India. Dectar is a part of Casper on Technologies a leading social and mobile development company which is Developing Taxi Dispatch Software. I’m a Tech geek, Digital marketing expert, Entrepreneur, and Atheist who loves to write everything about PHP Scripts and mobile application development. Cabily Script is a clone of Uber, which developed by the tech gigs of his company.
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