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The big difference between the two is that despite having spent billions of dollars Uber has not been able to build any customer loyalty. If they raise prices b
by paxy 9y ago
The big difference between the two is that despite having spent billions of dollars Uber has not been able to build any customer loyalty. If they raise prices by a dollar everyone will switch to Lyft or one of the other dozen competitors in an instant.
Amazon spent all of its profits over many years improving website infrastructure, logistics, warehousing, shipping, customer support and generally making life easier for its users. Uber did almost none of that, opting to focus on freebies and advertising.
- basseq 9y agoIf they raise prices by a dollar everyone will switch to Lyft or one of the other dozen competitors in an instant. I'm not sure this is true. I'd bet Uber has done significant sensitivity analysis, but speaking anecdotally: - I wouldn't even know if Uber raised prices by a dollar. - I don't price-shop between services. - Uber is still regarded as "cheap", including vs. taxis. - Uber's gotten people hooked on on-demand transportation: taxis are dead. I think there's less price sensitivity than you think. Combine that with the obvious PR move to spin price increases as a way to pay drivers more, and competitors will (have to) follow suit.
- aetherson 9y agoPrice sensitivity doesn't depend on every user obsessively tracking prices. If Lyft becomes a better deal, a vanguard of users notice it, they word of mouth it, and the equilibrium shifts somewhat. Not all the way, there are price insensitive users. But there are also price sensitive ones too.