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Uber's strategy right now is to maximize horizontal integration across as many markets as possible. They're leveraging cheap credit and an infusion of private m
by logicx24 8y ago
Uber's strategy right now is to maximize horizontal integration across as many markets as possible. They're leveraging cheap credit and an infusion of private money (mainly from Middle Eastern investors looking to diversify their portfolios) to expand as quickly as they can in local transportation.
This growth, combined with their subsidization across all their products, is producing huge near-term losses. However, I think it's a prudent investment. Uber needs to solidify its moat in an industry that offer little in terms of differentiation beyond price. By trying offer as many services as possible, Uber's trying to make itself the go-to hub of local transportation, and in doing so, start to change its role from a dispatch middleman to a full service transportation platform.
And so, I think in the years following IPO, we'll slowly see them reduce their efforts for horizontal expansion and slowly turn the lever back towards profit. This will happen slowly and differently across markets, with price rises starting in regions they have the strongest foothold, but will slowly trickle across all markets. The hope for them is that through this rapid expansion, they've bought enough leverage to raise prices without losing too many customers.
- deogeo 8y agoIt's interesting how little of this strategy involves providing a better service. But I don't think they're alone or even special from this perspective (e.g. similar to the rise of Microsoft). I think the prevalence of "business strategy", as opposed to product/service improvement, in the growth of corporations, warrants much more scrutiny than it gets. After all, corporations should serve society - how do strategic mergers, acquisitions, lobbying, PR do that?
- TuringNYC 8y agoGood for Uber, but I'm disappointed as a customer. I did extensive travel overseas in Qatar and the Careem app was excellent. They had a clear local strategy with local customization to capture users. For example - [Local flavor] Using a button called "Yallah" instead of "Go" - [Local Knowledge] Pre-coding airport pickup locations (unlike Uber which had you try and figure it out directly with drivers, who often did not speak English.) - [Local Knowledge] Understanding that many parts of the world do not have street addresses!
- plumeria 8y agoIt would be great if Uber accepted plus codes (https://plus.codes/ https://plus.codes/) when setting a destination.
- kinkrtyavimoodh 8y ago> Pre-coding airport pickup locations. Uber does this in many countries. Perhaps not yet in Qatar.
- aorth 8y agoIn Jordan the Uber cars I've used are always cleaner than Careems. The Careem app also used to send me annoying notifications about deals.
- fazilakhtar 8y agoUber has pre-coded locations for HIA now.
- creato 8y ago> The hope for them is that through this rapid expansion, they've bought enough leverage to raise prices without losing too many customers. In other words: sell at a loss, run all the competition out of business, then raise prices?
- logicx24 8y agoEssentially. I'm not endorsing it, but Uber's strategy is the classic monopoly strategy. It reminds of nothing more than Standard Oil giving it's competitors a "good sweating."