What Uber can teach us about competing

What Uber can teach us about competing

I’ve had Uber on my mind of late. The ride sharing service, which offers an alternative to catching taxis, has been operating on the edges of legality in Sydney until the NSW government recently legislated to OK it.

Everyone seems to have something to say about Uber. Some claim that Uber is a prime example of a disruptive innovator (although the people who coined the term disagree). To the extent that I hear people are tiring of hearing endless start-up ideas spruiked as ‘the Uber of [insert miscellaneous product here]’.

Others worry about what the so-called sharing economy (in which Uber is prominent example) is doing to our notions of work and workplace conditions.

I read these articles as they pop up in my Twitter feed, sometimes while riding in Uber cars. But one thing that I don’t think gets mentioned enough, is what a successful competitor Uber has turned out to be.

In Australia’s major capital cities, Uber has captured a significant section of the taxi industry’s market. You only need to stand on any major street in Sydney and watch the empty cabs drive past to see that impact in person.

Whatever its pros and cons, the capture of that market share from what was an oligopoly protected by regulation is a huge task and one that Uber has pulled off by ruthlessly exploiting its competitors’ weaknesses.

Uber competes with taxi companies on a few key elements and beats them hands down nearly every time.

  • Price: Uber rides are generally cheaper than taxi rides, except when their surge pricing kicks in.
  • Cleanliness: I’m yet to get in an Uber car which wasn’t pristine.
  • Customer control: Enabling hirers to see who has accepted their job, and how far they are away is far preferable to the ‘is anyone coming to pick me up’ uncertainty that haunts those who ring for taxis.
  • Ease of payment: no more fumbling for your credit card while the cab is parked illegally and traffic thunders past.

What is interesting about these aspects of a taxi service is that they demonstrate a thorough understanding of the customer experience. Uber understands what customers hate about taxis and have specifically designed a service to counter that.

Uber’s strategy is not to be the perfect taxi ride experience (because it is clearly not – the drivers are not professionally trained, the rides can take some time to arrive). Its strategy is provide an alternative to an existing product, which offers much scope for improvement. Or put more simply, just be better than cabs.

Is Uber a force for good or evil? We’ll find out in time.

But you can apply their strategy to your own business.

  • How does your product or service compare to the competition?
  • What are the things that drive your competitors' customers mad?
  • How well do you understand your customer and what they’re looking for? Can you anticipate what they’ll be looking for in the future?
  • Can you re-design your products and services to give you a competitive advantage?

Want to continue this conversation? So do I. Follow me on Twitter at @sharped or drop me an email. I’m uber keen.

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