Uber is the next big thing
In the past, I have extensively followed Uber but have never been able to experience it in person. This was all set to change when I visited Delhi last week to meet some friends of mine. It was 2 days into the holiday when someone told me about Uber and all it took me was 2 minutes to download the app on my iPhone and get started. It was a beautiful experience from there on.
Delhi rates are like skyrocketing by the day
Places like Delhi can be expensive to travel around. The distances can run into many miles and traffic snarls make matters only add to the problem when you hire professional rental cabs. To make matters even worse, car rental companies like Meru/Easy Cabs etc. have been unilaterally increasing prices without any rhyme or reason. Although diesel prices have shop up uniformly every month due to government policies, increase in volumes and cost rationalization should have kept prices at reasonable levels. Today, you end up paying between Rs. 23-29 per km in addition to the booking fees, depending on what time of the day you travel. In case you decide to opt for 2nd grade rental companies, dont expect much as the quality and grade of vehicles will be many notches below. Not to mention that even top-tier rental companies dont have exceptional levels of cabin quality and the cars will generally be either a Tata Indigo or something like a Toyota Etios – none of which will ignite your fantasies.
Uber has a different business model altogether and will be increasingly disruptive in the days to come. This business model has the ability to transform the auto rental industry and has the potential to either limit or even drive out auto rental companies if they fail to innovate and challenge Uber’s upcoming dominance.
Uber’s business model in India revolves around connecting the service buyers and sellers
Uber’s business model in India revolves around connecting the service buyers and sellers (The European and the US model is much more evolved and sophisiticated). All this is comfortably done through an app that is very simple to use. Uber does not own any vehicles ( it simply connects you to the closest available service provider. It has kept rates consistent, charging Rs. 15 per km for sedans and Rs. 25 per km for luxury cars. (Booking rates are Rs. 50 and Rs. 90 respectively). Unlike other cab companies, the rates are uniform throughout the day and night, which is the correct way to proceed. In fact, cars will get better mileage in the night than in the day so why should a user pay a premium for ‘late night’ travel??
What does the magic for Uber are the following elements
The simplicity of the app itself and the element of surprise. First, lets talk about the mobile app first. I used the Uber app on the iPhone and it was a breeze to operate. You wouldn’t even require guidance in the first place! The app is neat and simple and seems uncluttered. Only the essential features have been displayed and Uber has smartly avoided the temptation of loading too much information on one small screen. The moment you open the app and select the Uberx (normal) or the Uber Black (luxury) option , it will as automatically locate you on the map and present you with the duration that it will take the closest car to reach the destination. You can manually alter the location if you wish to by redirecting the pin on the map. On the customer payment front, credit cards need to be punched in and you are automatically charged after you exit the vehicle. This is also an uninterrupted way of making payments instead of the driver handing you the bill and asking for cash payment. This can especially be annoying if you are with a guest and are out of change or cash. The downside of this mode is that people without credit cards are out of luck for now atleast.
Update: All drivers are given an iPhone free of cost through which they can reach and invoice their customers!
Update: It is mandatory for all drivers to undergo a 2 day training program in the Uber office and are given lessons on customer service and Uber policies.
Don’t forget the promo codes!
Also, make sure you get recommended by an existing Uber customer so that promo codes worth Rs. 300 or more can be shared with you. You in turn, can also avail more of these codes if you recommend Uber to a new customer. This cycle of encouraging you to get more customers is a win-win situation for all.
Uber’s secret weapon: The element of surprise
Secondly, Uber can be full of surprises. At Rs.15 per km, the grade of the vehicle can vary depending on the availability, and if you keep your expectations low, there will always be something better in store. Other conventional car companies, at nearly 50% more rates, will send you a vehicle that is considered standard for Uber. Also, with other companies, the grade of the cars will be known to you (Indigo/Etios). With Uber, you either get these or better vehicles if you are lucky. On my first trip, I got an Etios and on my next trip, a brand new Nissan Sunny was there at my disposal. This car was more spacious and comfortable than any Meru cab service/Easy Cabs service could possibly offer me. Also, I am told that Uber conducts regular checks on the quality of their vehicles so basic minimum quality of car and cabin quality is maintained. The best part about Uber is the also the ability to rate drivers. This, by default, means that drivers and car owners will be very well behaved and in some cases, offer you an extended range of services (additional wait time/complimentary water). Drivers can also rate their customers which makes for an interesting assessment of the upcoming customers!
Uber Black: Travelling on road in Business Clas. First class upgrades are also complimentary
When it comes Uber Black, the offering is even more wider. On one occasion, I got a Honda Accord and on the 2nd occasion, a Mercedes E Class arrived to pick me up. I am told by the chauffeurs that one could expect an S Class or even a 5/7 series on some days. The best part is that you can get transported on such such luxury cars at the prices that other cab companies charge you for very ordinary vehicles.
Uber’s app is at the heart of the Uber experience
But what truly distinguishes Uber from the rest of the competition is a seamless and human-less interface while booking your vehicle. It takes you less than a minute to book your ride and you can avoid the pain of some employee on the other side having you explicitly state your address and other details. Also, one doesnt need to wait for the person on the other side to pick your call so you can save precious minutes there.
The business side of Uber – Delhi edition
Uber’s business model is on the basis of booking vehicles without any pre-defined waiting time. So, you can only book a vehicle when you need it right away. One of the drivers mentioned to me that they are paid a salary of 9k from Uber and another 9k from their car owners. So, I understand that Uber supports the 3rd party car owners in monetary terms too and possibly through other channels of support and financing. In other cases, the car drivers were the owners themselves so Uber does it small bit to encourage these drivers as entrepreneurs. On the fee front, Uber charges a flat 20% of the rates that customers pay. This I believe, will be rationalized in the months and years to come.
Expect an even better customer experience in the days to come
An obvious downside is the inability for book cabs well in advance. Aside from this, prices are well below prevailing market rates and service quality, as experienced through 6 trips in 2 days was exceptional.
Uber, hence, I believe, will be the next Whatspp of the car rental industry. Valuations are already rocketing and with coverage of more and more cities, including, the UK, Europe and other nations, Uber has the potenatial to truly redefine the way we travel. In the times to come, Uber will come with differentiated pricing and this can be market determined too, depending on the demand and supply of vehicles around you. Also, you could soon have the ability to choose your vehicle and prices could be adjusted accordingly.
Whether Uber redefines car ownership is yet to be seen and I doubt that will happen unless we seem more innovation of Uber’s side. But when it comes to car rental services, Uber is already on its way to become the envy of the car rental industry.
20th August Update:
Uber has been launched in Kolkata, finally! The booking rates, however are slightly on the higher side at Rs. 80, compared to Rs. 50 for Delhi. To compensate for this, Uber has kept the per km rates at Rs. 12 instead of Rs. 15 that is chargeable for the Delhi commuters. This is possibly done to effectively compete with the local cabs out here that charge a rate of Rs. 13 per km. They are primarily the good old Ambassadors and new vehicles like The Dzire and Indigo etc. have been introduced a few months back with the AC option at a 25% premium so there will be competition from them. I expect competition here to be stiffer than Mumbai or Delhi that only offer Autorickshaws as a standard form of point to point commuting (Mega, Meru or other cab companies are way more expensive as of now atleast)
I have tried Uber on 2 occasions already in the last 2 days. One of the drivers didn’t look properly trained as he was uncomfortable with using the app on his iPhone so I had to guide him on that part. It appeared that he was hurried into this new assignment and hence came unprepared. Uber will need to work on this part if consumers are to fully appreciate Uber as a regular source of commuting.I received an Toyota Innova on both occasions and the cabin quality was in good shape.
Also, on the business end, since Kolkata is more socialist than any other major city, I expect some resistance and and opposition from the taxi drivers, especially since they are unionized and hence will likely oppose any change in the environment. I hope the government (although it is likely considering the party in power now) puts consumers first and allows Uber to operate without any roadblocks whatsoever, subject to compliance with the prevailing Indian laws.
UberX has not been launched yet and I doubt that will happen anytime soon. Kolkata is not a business hub and I expect the uninterrupted availability of luxury cars to be an issue, Also, demand will also be on the lighter side for Uber X.
Kolkata’s commuting industry is all set to change with the launch of Uber, and it means consumers will end up as the ultimate winners. That is not a bad thing at all right??!
23rd October update:
1) Uber has slashed its fares in Delhi by 25% for a limited period. This is most likely a result of aggressive competition from the likes of Ola. Ola is very similar to Uber except for the fact that users can pay via cash, a much more convenient option to many users who don’t have credit cards or are skeptic about putting such information on an app.
2) Uber has launched a very innovative marketing approach to drive its message. In Kolkata (not sure about other cities), Uber app users can send a specially packed Uber gift to any of their loved ones for free! There is a “Surprise Me’ option on the app and users can click on that to send a gift hamper that includes a bottle of wine amongst others! The receivers of this hamper will love this and will only enhance Uber’s brand image, albeit at a sizeable cost if many users take advantage of this offer! The mail received be Uber as below is self explanatory. Only the text part has been pasted here.
Surprises On-Demand!
Hi _______,
We’ve got BIG news! We’re giving you a chance to surprise your loved ones tomorrow, with an #UberSurprise gift hamper!
We’ve partnered with your favourite brands in the city and have put together a power-packed hamper, the perfect gift for the festive season! We will be delivering these FREE hampers all over the city tomorrow, October 23rd! Here’s a sneak peek into #UberSurprise
We know you love your football so thought we should bring you something special from our very own Atlético de Kolkata football team!
The good folks at Grover Zampa Vineyards have joined in the celebrations with some of their select wines!
What’s a holiday without some sweetness! Mama Mia saves the day with some delectable goodies fresh out of the oven!
The hamper will be packed with many more goodies but we thought we should leave those details out as a surprise!
Have a happy holiday!
Nikita, Varun
New ThinkInk 