In today’s world, not just of technology but even of a common man’s utility, Uber needs no introduction. Uber, as we all know, is a location-based on-demand services company. While it started off with just cabs, it has expanded into various modes of transport and also into other gamuts of services including food delivery. It is not a surprise that the demand for Uber clones is on the rise.

The Changing of the Cab Culture

Before Uber came in, getting your cab was a matter of waving your hands. After the Uber revolution, it has become a matter of swiping your fingers on a smartphone. The fact that people, after getting out of airports, flick out their smartphones and start swiping is a resounding testimony to the change of culture and lifestyle that Uber has influenced. It is interesting to note that the idea of Uber started off as a tweet exchange between the founder and the investor.

Any company has to have a solid and sustainable revenue model, and Uber is not an exception. If we dive deep into how Uber’s revenue works, it does not sound or seem very different from the way the classical taxi industry functioned. As a consumer, you just book a cab, take the ride and pay for the service. It is quite simple and straightforward. So, where exactly does Uber make its revenue?

To understand that, we have to dive deeper into how Uber operates. Uber cracked one of the most basic principles of business – ‘If you can’t innovate, aggregate!’ In today’s world where both demand and supply are in abundance, the way in which aggregation is done could be an innovation! Uber like app development need to be strategized around the basic revenue model of ride-hailing apps and the features they have integrated.

What Uber Actually Did?

Uber took a very specific problem and solved it in the most impeccable fashion. On one side, there are users or end-consumers who are constantly looking for a cab, partly frustrated by the unavailability during non-peak hours, the quality of drivers and the unregulated liberty with which drivers set the prices. On the other hand, there were cab drivers who were eagerly waiting to get their ride and could miss out on a potential customer if they were just a couple of streets away. For all you know, that ride could have been a pretty long and profitable one, and further, could even take the driver closer to their home.

The idea of Uber was to connect these two massive business opportunities with a thin line – a mobile application. Uber understood that technology is quite scalable and it might not make a massive difference in serving a hundred drivers or a million drivers in comparison to the profit they would make if huge numbers were achieved.

Where Did The Profit Lie?

The cost that was paid by a rider was not any different from the classic cabs. It could probably be cheaper than what you normally would have taken. However, the catch was on the side of the driver. Uber adopted a revenue-sharing model where the driver retains a considerable chunk of their profit and gives a small percentage as a commission to Uber. The small percentage is ‘small’ for the driver. However, it is that little drops of commission and the little grains of profit that have made Uber a company worth $70 billion! Uber is operating in more than 650 cities across the globe.

The Expansion

Having tasted success in the field of aggregation for cabs, Uber started to expand into other modes of transport like even helicopters and boats. In third world countries like India, Uber operates auto-rickshaws and is even contemplating the concept of two-wheeler taxis. Taking a lateral route, Uber has launched Uber Eats, a food delivery service that works quite similar to Uber – it is, again, a location-based on-demand service.

Uber can surely be considered a cultural revolution. It has entered into the mainstream conversation of our lives – just like how we say ‘Let’s Google it.’ or “I’ll Instagram this selfie.”, ‘I’ll book an Uber’ is more common than ‘I’ll book a cab.’

It wasn’t always a bed of roses for Uber. Uber has had its fair share of lawsuits and challenges in finding the right drivers. It is quite difficult to find the needle in a huge haystack of a million drivers across the globe. There have been instances of drivers misbehaving with passengers, especially females. However, Uber is effectively dealing with all of these and has established itself to be a global leader when it comes to cab aggregation and on-demand services in general.

The Lessons

When it comes to revenue generation, Uber has taught a lot of valuable lessons.

  • Focus on one problem and solve the problem effectively.
  • See if you can expand the framework of the problem-solving to other areas.
  • Even if the profits are small, big numbers can make big profits.
  • Sometimes, even the greatest innovations can start with a simple conversation.
  • Rather than building a product or platform, focus on solving a problem. The platform will develop by itself!
  • Grow big and grow fast! Even if there is competition around the world, your massive size will not let you fall that easily.

The Opportunity

We have already discussed that Uber has its presence in more than 650 cities. However, with more than 50000 cities present across the globe, the possibility of a business exploring local opportunities is quite high. It might not make business sense to actually create an app like Uber from scratch, especially when there are Uber clone scripts that are available in the market for white labeling. With the pioneer having opened the floodgates to the opportunities of awesomeness, it is up to the local businesses and small players to capitalize on and replicate this model to script their own story of success.

Author Bio

Jennifer Atkinson is a Growth Hacker at AppDupe – which is a pioneer in app development and provide one-stop ready-made solutions for all your ride-hailing business needs. Also a blogger and a growth hacker who loves to find new business ideas and help startup entrepreneurs with business consultation.