What makes Uber so successful?

Hello everyone, welcome to a new dose of curiosity to better understand the world in which we live. Today we will talk about Uber and the taxi service. Although Uber has certain problems, his success is undeniable around the world, and it is important to understand why. To answer this, I will address two topics that I consider to be the most important in its success: its popularity among users and profitability for the company.

Popularity among users

Taxi service has long been the most commonly used service for transporting private individuals. However, it presents several problems of quality of service, which are being better covered in Uber. Here are 4 of these problems and their solutions. As the transportation service varies a lot from city to city, the ones presented here represent the case of Panama City (where I currently live):

Problem 1 of the taxis - the taximeter: In the case of Panama the taxi drivers do not have taximeter. For this reason, every time a user take the taxi, he must agree with the driver how much he will be charged. And if you have not previously agreed, you run the risk that the taxi driver will charge a fare to his liking (maybe high) and then there will be discussions.

Solution: Uber through its platform defines the prices, and functions as a third party that informs both the driver and the passenger the cost of the trip. This not only avoids conflicts between the parties, but also expedites transport, since: 1) When the user take the vehicle does not have to invest a little of his time in doing a verbal negotiation with the driver. 2) When the user leaves the vehicle does not have to ask how much it is, nor spend time doing a money transaction (this in the case of payment by card).

Problem 2 of the taxis - I'm not going there! Typical situation: The user before taking the taxi tells where he wants to go, and if the taxi driver does not want to go there he simply leaves and the user has to continue to look for someone willing to take him. It is important to note that the taxi driver does not have to worry about giving a good service, since later can find another passenger and this works as start over with a clean state, the new user will not know if the taxi offers a good service or not.

Solution: Uber's service includes a ratings system, where users can evaluate drivers and this is public for all users. By simply including this detail, the driver feels obliged to offer a good service so as not to lower his reputation. In addition to this, Uber only accepts in its platform drivers with a good reputation.

Problem 3 of the taxis - pool service: It is of frequent use among taxi drivers to pick up people while there is already a user in the taxi. That is, the taxi will be making two or three trips at a time and this without the consent of its passengers.

Solution: Here again comes into play the rating system, a 1 to 5-star image that says a lot about what the user experience will be like once you take it.

Problem 4 of taxis - conflict resolution: The solution of some type of conflict must be done through the police or another competent entity, which is time consuming and must be done at the moment. For this reason it is not worth to face minor conflicts like price or quality of service.

Solution: Uber as a company serves as a third party that the parties trust and through which they can resolve their conflicts if any. As this is done electronically, both the user and the driver can continue their tasks and can report and follow through Uber support. Likewise the rating system reprimands for a bad service even if it is of minor importance.

I believe that these points represent one of the fundamental keys to Uber's success. Let's go to Part Two.

Profitability for the company

Here is one of the key points of its success:

Uber offers a group of cars without having bought any

The main asset of Uber is its platform, a well thought-out system that allows passengers to connect with drivers. However, Uber does not have to be present, it does not have to carry the passenger, it does not have to be the owner of the car, it does not have to do car maintenance, it does not suffer the depreciation, and it does not have to hire the drivers as employees ... and despite that it charges 25% of the profits! And you have to keep in mind that there are hundreds of users who use the service on a daily, so it is a very profitable business for them.

They must be aware of their main asset ... their App !! ... and they should complement it with support to give a good service. But as I said, once you have this Uber can offer a group of cars without having bought any or be the owner.

And this is the key to the scalability of the business. To open Uber in a new city is necessary to do a good market study to analyze its feasibility, however, once you get started you do not have to buy any car, just distribute the App either through advertising or through a Mouth-to-mouth referral system. Therefore it is very scalable.

Sharing economy applications

These advantages of Uber in general are advantages of the collaborative Economy Apps (like Airbnb, Blablacar, Yourparking, Airdine, etc). The main keys of these Apps can be summarized in two points:

Offer a service needed in the community which can be supplied by the same community, the App only takes care of connecting them and create an order within the disorder.

The rating system is the key to ensure good service and build trust between the parties. The App allows two strangers to trust each other since both rely on the system.

And what do you think? What important points lead Uber to success? Have you thought of a business idea of this type?