Year-End Review: How Was 2020 So Far For Uber’s Taxi and Food Business & Is Uber Profitable?
It has been a crazy year.
All businesses from candy stores to unicorn startups have come across unprecedented situations.
As a result, each business has a unique story to tell.
And here is where the learning for all new entrepreneurs hides.
Today, we’re going to talk about a less unicorn and more inspirational startup – Uber.
This will answer your question – is Uber profitable?
How is Uber surviving its most challenging year? – Is Uber profitable in 2020?
January 2020 (everything going smooth and normal)
• Uber rolled out a new feature across the USA and Canada to help riders get into the right car. The rider receives the four-digit pin code while booking the cab. To start the ride, the driver has to enter this pin in his mobile app. Upon entering the pin, the Uber algorithm matches the rider with the driver.
• When #seattleshooting was trending on Twitter, Uber was leveraging its surge pricing algorithms to make more dollars. People criticized Uber so badly but it again proved that the surge pricing algorithm is the reason taxi apps are earning millions of dollars.
• To be compliant with the new gig work law in California, Uber changed its fare algorithms and many other things. Uber enabled drivers to see more information about the trip such as distance, earning, destination, and trip time. Drivers could also reject rides without any penalty. Additionally, passengers could add drivers to the list of ‘favorites’.
• In search of rapid growth, Uber bled the money. The company reported a loss of $1.1 billion in the last 3 months of the year 2019. Overall, Uber had lost $8.5 billion in 2019.
• Uber decided to fuel its e-bike sharing business by announcing a launch of 400 e-bikes in Australia’s major city – Melbourne.
• Uber addressed one more safety concern with a new feature. The newly launched feature now allows riders to report the non-emergency safety issue in real-time while on the ongoing trip. Previously, riders could only report drivers’ unsafe behavior after the ride ends.
• Uber was testing a new feature that allows riders to dial a number and talk to a real person to hail the ride. With this feature, Uber was planning to bring elderly people under its customer base.
March 2020 (things getting more damaging from here)
• With coronavirus tightening its grip, Uber made a call to suspend its pool service across the USA and Canada. The company also announced to provide financial aid to the drivers infected with COVID-19.
• To help restaurants facing economic headwinds across the USA, UberEats waived delivery fees. More than 100,000 restaurants have been listed on UberEats. When the pandemic hit, the startup had anticipated that its food delivery business would break all records during the pandemic.
• Uber reported a drop in daily rides by 60-70% in the hardest-hit cities. However, Uber had a plan to survive the entire year if the rides went down by 80%. They quickly ramped up their efforts to keep revenue soaring by delivering other things such as medicines, goods, and food.
• UberEats partnered with a series of supermarkets, convenience stores, and other businesses to offer doorstep delivery of essential items including medicines and groceries.
• To help drivers during the challenging time, Uber launched a new feature for drivers called the Work Hub. Using this, drivers can find alternative work options even in other companies.
• In response to COVID-19, UberEats had revamped some modules of its app and introduced a contactless delivery option.
• To ensure safer rides, Uber started shipping car disinfectants to drivers in New York City and Miami.
May 2020 (the damage is visible now)
• Uber laid off 3,700 employees, about 14% of its workforce.
• Uber reported a loss of a whopping $2.9 billion in the first quarter of 2020.
• UberEats ended its operations in the Czech Republic, Honduras, Egypt, Romania, Ukraine, Saudi Arabia, and Uruguay.
• Uber brought a much-awaited feature. Users can now book the ride by hours, make multiple stops, and pay hourly. The fixed hourly rate was $50 per hour at the time of launch.
June-July 2020 (starting a new chapter)
• To end the dominance of DoorDash in the USA, Uber acquired a delivery startup – PostMates – in a $2.65 billion all-stock deal. Previously, Uber was in a talk with Grubhub. But Uber lost out in a bid for Grubhub.
• Uber announced that users will soon be able to book the boat ride in London. This was Uber’s most unexpected attempt to diversify its business.
• UberEats completely canceled delivery fee from black-owned restaurants through the end of 2020.
• UberEats rolled out a priority delivery feature. People ordering food now have two options – no rush delivery and priority delivery. If they select priority delivery, food arrives 15 min faster which costs them just $0.99.
• Uber mostly lost its legal fight with the California government with the judge denying to delay the driver reclassification order from going into effect August 20.
• Uber acquired a British tech company named Autocab that was selling booking and dispatch software to private hire firms. With this acquisition, Uber can now serve customers in areas where the Uber service is not available.
• Uber expanded the Uber Pass feature across the USA. It is a subscription service that costs $24.99 per month. All subscribers get a 10% discount on UberX, UberXL, and Uber Comfort rides; and 15 percent off Uber Black, Uber SUV, and Uber Premier rides.
• After a long legal battle, Uber was allowed to operate its ridesharing business in London for the next 18 months.
• Uber made a significant change in the app. If the driver reports that the rider is not wearing a face mask, the rider has to upload his selfie to verify whether he is wearing a mask. Uber deployed its advanced algorithms to scan the selfie of riders.
• Following trials in France and Australia, Uber launched a car rental service in the UK.
• UberEats started delivering medicine to the doorstep of the users in South Africa by introducing a medicine delivery service. It is worth noting that Uber already has the lion’s share of South Africa’s food delivery market.
• Uber tied up with Amazon Pay to let Indian users pay seamlessly from the app. With this partnership, India became the first market where two American companies tied up.
November 2020 (repair is possible, but not now)
• Uber reported a loss of $5.8 billion so far in the year 2020.
• After positive news of the vaccine, Uber’s stock price raised 7.38% and reached the highest close since the IPO.
• Uber rolled out one more feature to let users book rides 30 days in advance and pick a favorite driver. The new feature is called Uber Reserve. However, it will be only available in selected cities in the USA.
• Uber promised to be profitable by the end of 2021!
Key learnings from Uber’s business journey so far in 2020
• Diversity: A stand-alone taxi app does not guarantee success. You need to explore more use cases such as taxi + delivery service from the single app. (Needless to say Uber is surviving 2020 just because of UberEats!)
• Value: Advanced, unique, and useful features fuel the success of the app.
• Collaboration: Drivers are the most important stakeholders in the taxi app business. Thus, you should never give a cold shoulder to the driver app.
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