Uber’s New Businesses

Uber is already a well-known brand across the world. Technically, the company is still a startup. However, Uber has a valuation of close to $70 billion. Also, the company is planning for an aggressive IPO. It is estimated that Uber’s post IPO valuation will be close to $120 billion. This is phenomenal given the fact that this valuation is more than the valuation of the three biggest auto manufacturers of the world put together! This is because the market views Uber as a concept rather than a cab-ride service.

Consider the fact that Lyft is the number one competitor for Uber, Lyft is also planning an IPO. However, the valuation being given to Lyft is much more conservative. Lyft is being valued at roughly 10% the total value of Uber with a price tag of $15 billion. This is odd given that both the firms have nearly identical business models as far as the cab business is concerned. Analysts who are experts in this regard claim that Uber is touted to be the next Amazon. Amazon started as a company that sells books. Later, they were able to adapt their capabilities to meet the needs of an ever increasing market. Investors have the same expectations from Uber. Up until now, Uber has been making several attempts to diversify its businesses. Some of its ventures have been listed in this article.

Electric Scooters: When Uber started its business, it was an app where you could book a cab. Traditionally, vehicles which have four wheels are called a cab. However, Uber has changed this definition is many markets. Now, Uber allows people to book electric scooters as well as bikes for their rides. This feature is working out to be very useful in developing countries. Booking an entire cab may be expensive. A bike can be booked for about 20% of the price of the cab. Also, in many developing countries there is a lot of congestion on the roads and commuting via bikes is actually faster and more convenient. This is the reason why the use of two-wheelers has been an instant hit with Uber.

Uber Eats: Uber Eats is the food aggregation business started by Uber. This model has been wildly successful if media reports are to be believed. Investment bank JP Morgan has valued Uber Eats at over $20 billion. Also, investment bankers are of the opinion that Uber Eats will become profitable before the ride-sharing arm of the same company! The good news is that Uber has already built a lot of scale in their food sharing business. The turnover of Uber Eats was over $6 billion in 2017. Hence, if this arm turns profitable, it would rake in significant profits.

The above-mentioned story is remarkable given the fact that the food aggregation market has traditionally been a tough market. Other companies have been struggling. This is because the human resources required to run the business are very expensive. On the other hand, customers are not willing to pay too much for food delivery. Many analysts believe that Uber Eats’ valuation is so high because it serves international markets where the cost structures are different. This could be the only reason that it is getting double the valuation of GrubHub which is a US-based food aggregation app.

Uber Freight: Uber is not only serving the passenger segment of the market. Of late, they have started showing interest in serving the commercial segment as well. This is the reason why they have recently launched Uber freight. This service allows them to mediate between companies who want their goods shipped and truckers who have spare capacity. Uber also allows drivers to find people who want to rent their trucks for a day in return for a fee. This division of Uber is called Powerloop.

Uber Works: Uber is also experimenting with a venture called Uber Works. As per this venture, Uber will work as a staffing agency and will provide temporary workers to companies which have short-term demand for labor. This would be a great platform for event management companies and retail companies, many of whom have seasonal demand for labor. At the present moment, Uber is testing the results of this service from Los Angeles. It is important to understand that at the moment, Uber is planning to supply temporary workforce to other businesses. This means that this is a business to business endeavor as of now. Uber does not seem to have any immediate plans to make Uber Works compete with companies like TaskRabbit.

Uber was also aggressively pursuing the automatic driving car. However, one of the company’s test cars ended up killing a pedestrian in Arizona. Since the incident, Uber has faced a lot of outrage and has decided to scale back its auto car venture.

To sum it up, Uber is not just a single company. Instead, it is a concept of an app based sharing economy. The first thing they applied the concept to was cab services. However, now, they are ready to branch to other areas of the economy where they can contribute by increasing efficiency.


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