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A Future Look At Taxi Services (Uber vs. Taxi)

Updated on February 1, 2015

Introduction

What is considered being trendy today? Is it driving your newly purchased electric car? Or is it moving into your luxury new condo? Millennials or the younger generation might say “no” to you, because we are now living in the so-called “sharing” economy or “collaborative” economy.

From renting out spare bedrooms, to delegate prescription pick-up errands, people have been growing accustomed to and actually enjoying the benefits of product or service sharing in the past few years. Most recently, growing ridesharing services such as Uber, Lyft or Sidecar allow riders to find their “private” drivers nearby anytime anywhere simply using their smartphone. Because passengers have pre-registered their payment information with these services, they could skip the payment process after arriving at the destination, greatly saving time, especially for those who are running to a date, an important meeting or event. After each ride, these services will send rider an email bill about how much was charged as well as detailing where the travel starts and ends, total miles and time of the ride… and no need to worry about the tip.

Uber vs. Taxi
Uber vs. Taxi | Source

Most importantly, these services are normally 30% to 50% cheaper than a taxi ride; and if customers would like a luxury ride such as Lincoln or Limo, the riding rates are as low as a taxi ride. Because of its growing popularity powered by smartphone technology, riding sharing services have caught big fire among taxi operators who could not skip the public service regulation fees as well as substantial licensing costs.

The battle is hot. Taxi operators launched various campaigns (e.g. “Who’s driving you?” campaign conducted by Taxicab, Limousine & Paratransit Association) that criticize ridesharing services such as Uber and consider it “a serious threat to public safety.” In addition, critics also disfavor Uber’s “dynamic pricing” policy, which charges riders with double or higher rates during peak-demand period, like New Year’s Eve.

On the other hand, ridesharing services are fighting back with their cost-effective, time-saving, convenient and quality service powered by digital technology that catches on with tech-savvy consumers, especially millennials (also known as Generation Y, who was born between the early 1980s and the early 2000s).

Which is better? Or which one tend to win over the fight eventually? Let’s take a deep look at the strengths and weaknesses existing in the business models of the taxi operators, and see what opportunities and challenges they are facing in the coming years.

1. Taxi operators’ strengths:

Under strict public service regulations, taxi operators won’t be allowed to operate without essential public safety components. Each taxi driver must pass rigorous background checks and extensive training before taking their first customer. Driver insurance must have full coverage of liability (need more research here…)

These components ensured public safety, a customer may not know an individual driver, they know about the taxi company. They know exactly who are driving them and whom to look for if there are any concerns or complaints.

Taxi ride in NYC
Taxi ride in NYC | Source

2. Taxi operators’ weaknesses:

Although each taxi driver was well trained and passed extensive background check, it is widely complained by consumers that the taxi riding experience were among the poorest. Complaints include drivers are not friendly, they drives too fast or too slow, they talk on mobile, they do not obey traffic rules strictly, they take you circling round the city if you are not familiar with your route or do not have a map on hand … Of course, there are friendly nice cab drivers, but it’s like one in a million.

In fact, these weaknesses are exactly the strengths of ridesharing services and the root reason why consumers are embracing Uber while decreasing taxi riding.

Taxi vs. Uber rates (per 3 mile ride)
Taxi vs. Uber rates (per 3 mile ride) | Source

3. Taxi operators’ opportunities:

1) Better Service

Taxi companies need to improve or upgrade its existing driver training agenda, training should not only focus on driving skills but also drivers’ customer service capability as well as digital technology training. For example, many customers complained that credit card payments are not widely accepted and welcomed by drivers. What if customers do not have cash with them? And the most frequently used excuse that drivers cannot accept credit card payment is: the payment machine has malfunction. Imagine if you were the rider under such circumstance, how can you not doubt if the meter has malfunction as well and may not calculate the meters of your ride as well (since it’s connected to the credit card payment in-car device)? Thus, frequent or occurring driver training might help taxi companies to ensure their driver employees, first-party ambassador of the company who has direct contact to consumers, well represent the company’s positive image and reputation.

If a consumer had bad taxi riding experience from the same taxi company for more than 3 times, they may totally give up and never call a cab from this company at all. Not mentioning they could now have better and cheaper choices – Uber, Lyft or sidecar etc.

2) Better Technology

Another strategy that a taxi company should consider is developing its own mobile strategy. The best competitive advantage of ridesharing services lies in their powerful mobile application. Customer could find a driver from anywhere at any time by simply opening their mobile app, tell the app current location (GPS embedded usually could identify the current customer location automatically and accurately) and the destination, then a driver will normally arrive in the next 5-10 minutes. There is currently a mobile app called TaxiMagic (now name changed to “Curb”) for customers to order taxi (including nearly all types of major taxi operators in local areas) on their mobile device, which might be a great start. In fact, each taxi company could also think about developing their own mobile apps in their own brand name.

Curb Mobile App
Curb Mobile App | Source

4. Uber Opportunities

Now let’s take a look at some of opportunities that Uber may consider enhancing and expanding its business.

1) Build stronger brand

Uber has already building a reputable brand name among millions of people, and its name has increasingly grown to be a unique genre in Silicon Valley, which the editor of Fortune Magazine named “Uber-nomics” referring to a phenomenon where there is “Uber” for virtually everything (like Uber for laundry or Uber for messages).

But, still, there’s one thing many people including cab companies are concerned about: that is public safety. And recently there is growing concerns or complaints from Uber’s riders that they got in a wrong car and ended up to deal with a complete mess. For people who are familiar with the Uber mobile app, you know that you could see driver’s last name and his license plate of the car before taking the ride. And it is suggested that riders should double check the car’s license number and the driver match what shows in your app, but most people don’t do so, maybe they don’t have time, or maybe they don’t care. The company is currently putting the safety concern as their first priority and do their best to improve.

I would suggest that Uber consider requiring all Uber cars applying easy readable Uber logo outside or inside their cars, so riders know they get in an Uber’s car instead of somebody else’s car. Maybe they could put a large sticker on the bodies of all Uber car, or on the back of seats inside the car. Also, the drivers’ can wear an Uber-logo uniform, a shirt or T-shirt, so it makes more obvious for riders to read the sign. In addition, before starting every ride, Uber drivers should be required to tell their name or ask passengers their names in order to match the system, so both riders and drivers feel sure that the other is the right person.

Uber Logo Sticker
Uber Logo Sticker | Source

2) Booking by time

Another suggestion for Uber might be providing more flexibilities in terms of time selection for riders. The biggest convenience of Uber is you can order a car just a few minutes before you leave your place, and on average in 5 minutes, the car you ordered will arrive. However, in peak time like rush hour or special situation (such as heavy traffic or extreme weather conditions), you may never know how long you should wait. That creates frustration especially for people who needs to get somewhere on a sharp time. Would it be possible that people could order a car to come at the specific timing, for example “I need a car to arrive at 8am in front of my house”, or “I need a car to come half an hour later”, or even “I need a car to arrive 10am tomorrow morning in front of my office building.” I believe that might help passengers to better control their own time, instead of relying on cross-finger that today is lucky day and wish the traffic is not that heavy on road.

3) Select your own driver feature

This idea comes from one of the very few female Uber drivers based on my hundreds of Uber rides in the past year. There appears to be not many female Uber drivers, but lots of female riders. And there appears to be a growing demand among female riders that it makes them feel better if they could choose female-only Uber drivers. Or maybe most riders might feel better if they could have the option to select their own drivers based on drivers’ ratings.

Conclusion

In general, do we know if Uber will eventually take over all the taxi companies or all the taxi operators will win over Uber? Well, we could hardly tell at this moment what will actually happen, but what we know is that he who wins customers’ hearts laughs the last and the best.

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