Ride-hailing service Uber, which has until recently been associated with cars, has announced a shift in focus towards bikes and scooters in order to drive growth and keep people using the platform.
The Challenges
Uber has faced a number of challenges in recent times, some of which have been of its own making. These challenges have included:
- Congestion in inner-city areas (particularly in rush hour), the exact places where many of its customers use the service in large numbers to travel short distances. Uber itself has been accused by Mayor of London, Sadiq Khan, of adding to city’s congestion problems. This has resulted in another challenge in that city for Uber – a suggested cap on the number of Uber drivers. New York has also voted to impose a temporary cap on new licences for ride-hailing vehicles in order to tackle congestion
- Trouble over licences, the effect on revenue, and associated bad press. For example, Uber only has a 15-month provisional licence in London which was only granted on appeal this year.
- The need to get the company into good financial shape before it is floated on the stock market, with a value of up to $70bn.
- More bad press and potentially costly problems relating to Uber resisting court rulings giving employment rights to its drivers.
- The opportunity of getting a substantial piece of the mobility market, but not being in the ideal position to do so.
- The need to keep engagement of customers with the company / brand.
- The need to drive growth in the longer term.
The Solution
The solution for Uber, according to its Boss Dara Khosrowshahi, is to diversify into bikes and scooters. The main reasons for this is that they will be more effective and efficient than cars in congested city areas, they represent a way to get another slice of the lucrative mobility market, and they can be used to help shape consumer behaviour and keep levels of engagement high.
How?
Uber has already also invested in electric scooter company Lime, invested in several bike firms over last year (including spending $200m on bike-sharing firm Jump), and added e-bikes to its app in some US cities. This has already enabled Uber to offer Jump electric bikes in eight US cities, including New York and Washington, and soon Berlin.
Playing The Longer Game
Uber has admitted that although the shift in focus will not bring short-term financial benefits, it should take the company nearer to where it wants to be in the longer term.
What Does This Mean For Your Business?
This is an example of a business thinking with more strategic clarity, seeing their market as the whole ‘mobility market’, and finding a relatively simple solution for themselves to position themselves for a wider share of it through diversification, and in the meantime finding a way around some of the more immovable challenges e.g. congestion.
Uber has built a brand that has married new technology with existing technologies and services (mobile use and apps with car-hailing services), has experimented with future technologies e.g. driverless cars, but has also made the headlines for less positive reasons. Users of the service simply have a basic need to get from A to B as quickly, safely, and cheaply as possible, and bikes may well prove popular, as well as addressing some environmental concerns.