Whenever there is an opportunity, a savvy entrepreneur with a futuristic vision always nails an innovative idea. Uber did the same by making a luxurious service quite affordable for daily commutes - the on-demand taxi service. In fact, Uber offers the service in comparatively a more valuable way than what on-demand taxi services used to offer way back in time.
Just see the costs of booking - they were too high; calling over the phone was the medium to book; no other way to track real-time location, except for calling the driver just to get an answer like “on the way, will be there in 5 minutes”.
This is what Uber did to nail this service marketplace industry:
- Regulated the booking cost.
- Offered real-time location tracking.
- Allowed discounts and offers.
- Offered an accessible touchpoint to book.
- Offered Add-on services
Uber does not disclose its market share data. However, trusting on credible sources, we can say it shares 70-72 % of the US ride-sharing market. Now, let us see its competitor Lyft, which shares 30% of the US ride-sharing market. 2 years ago, this stat was somewhere around 20%. With this projection, one can assume that Lyft is also making a good impression and would continue to grow. (Source).
Can you start an Uber-like ride-sharing business?
Considering the performances of both the business in the same niche, it would not be a vague claim that ride-sharing is a profitable niche. Starting an Uber-like business would be a good idea, depending on the market in your locality.
So, if you think you possess a great business idea to nail the ride-sharing business in the local or the market abroad, this article is for you.
Let’s understand the business model, key partners, and key touchpoints involved in a typical online ride-sharing service.
A taxi business like Uber constitutes three key partners:
- Taxi drivers;
- Business owner.
In technical terms, when you are developing an app like Uber, you can also call these key partners as three actors on the app.
As there are three actors involved, there are three separate touchpoints for each. That means a total of three mobile apps are required to conduct the business operation.
- mobile app for users;
- mobile app for taxi drivers;
- mobile app or Dashboard for Admin.
Each of these mobile apps would offer some definite set of features and functionalities to each key partner.
Key Revenue models
An Uber-like ride-sharing business works on on-demand service delivery model. Like every other business in the niche, the taxi service can offer two payment options to the customers:
- cash payments;
- digital payments.
Digital payments can be classified into various categories depending on the medium. You can allow the media like:
- credit card;
- debit card;
- digital wallets: E.g. PayPal.
Revenue from customers
The best-suited revenue model that supports the above monetization methods is –Transactional model. Users pay the fare once billed. The final billing is done only after completing the ride. It is also important to note that both driver's and customer's mobile app should offer real-time notification to let the two key partners know the bill amount.
So, the Transaction revenue model equipped with real-time billing and invoice generation is the most suitable design for a ride-sharing business like Uber.
Revenue from Drivers
The revenue model that suits here is commission based method. Drivers would be paying commission to the admin on each ride they complete. Admin receives the payments from the customers. After deducting the applied commissions, a weekly or monthly billing can be done for the accumulated funds to the drivers. Admin can transfer the drivers’ funds with any digital medium like PayPal or wire transfer.
Additional revenue - Cancellation and waiting charges
Cancellation and waiting time management is a whole separate feature in itself. All three touchpoints must be in perfect sync to let every key partner stay aware of the additional charges. For cancellation charges, the billing can be done on the user's next ride billing right after the canceled ride. For waiting charges, Admin can set up per-minute cost and bill the same on the final billing of the current ride. Depending on the business policies, Admin may choose to share these two revenues with the drivers.