TL;DR: Started on a new idea - Uber Subscription! It’s an interesting business model for ride sharing, potentially food delivery
Why Uber needs a Subscription?
One thing I learned from our China business is that as soon as the product service becomes an utility service. The competition will chase to the bottom of profitability and end up unsustainable operation. Thanks to mobile apps, customers’ service switching cost is near 0, and thus customers will easily compare price per transaction/trip to get the cheaper service provider. (Uber vs Lyft, Uber vs DiDi)
But subscription model could help reducing that behavior. Based on our early testing result and industry research, when customers enroll in monthly subscription, they will engage with one service provider and stop dual apping behaviors. That’s very understanable because you already pre-commit something down to get benefit (trip discount) back.
[How] Bundling effect
Uber has a big plan to expand its service beyond ride sharing: Uber Eats, Trucking, Uber Rush. Our competitiors (Lyft, Didi) are only in one vertical now. Imagine following subscription by paying $19.99 monthly:
- Discount or Eta promise on Uber Rides
- Discount or Eta promise on Uber Eats food
- Discount or Eta promise on Uber Rush
This scales well together with current Uber’s service expansion strategy.
With above set up, we actually build moat against our vertical competitor (Lyft, Didi, Grubhub etc)
[Potential] 3rd party revenue sharing
If we can get bundling package right and grow our subscriber user base. Uber APP will become entry point for offline world. This is my primary reason to switch job from Facebook (online world entry point) and Uber has the potential to become the offline world entry point
In that sense, Uber actually could provide traffic redirection and take 3rd party service providers’ revenue (like Google, Amazon, FB today).