David Jinks, head of consumer research and public relations at international courier ParcelHero, explains how the key to Uber running at a profit lies in the global courier market
The Uber taxi app was the most funded start-up in the world, valued at US$50bn, and it has become part of daily life for many of us since it reached the UK in 2012. But the streets where Uber runs are not paved with gold; in fact, the company has run up losses of US$1.2bn in the first half of 2016.
This shouldn’t come as a surprise to anyone. The global taxi industry is scarcely large enough to warrant the investment in technology Uber has made developing its crowdsourcing app. The entire global taxi industry is only worth US$22bn according to many transport exports.
The mystery is why Uber continues to lose such sums when it already has the solution in place: UberRUSH. The taxi market may be only a US$22bn trickle, but the domestic global courier sector generates approximately US$246bn. That’s a much healthier pond to be swimming in.
UberRUSH – essentially an Uber for things instead of people – launched in the US in 2014. Initially it was a courier service operated by people on bikes or on foot; but once it spread beyond its initial launch city of New York, it quickly incorporated car deliveries too. After all, it is crowd-sourced drivers that are at the heart of the Uber concept.
So why hasn’t UberRUSH reached the UK yet? Britain’s £7.1bn (US$9.4bn) courier market is surely a particularly ripe one for Uber to tap into. To be sure Uber has taken a small bite of the delivery market by launching UberEATS, its food delivery service, in London earlier this summer. But with all those drivers just waiting for pick-ups, and a high-tech app system ideally suited for logistics operations, it surely can’t be long before UberRUSH hits the UK.
It is quite likely to achieve the same impact it had on the traditional taxi market, as its crowdsourcing technology overthrows the status quo. With so many drivers and vehicles available in any given urban area, UberRUSH offers the possibility of Amazon Prime style one-hour deliveries, or even less time, to the smallest of businesses. Make no mistake; there will be a significant market. And, without the overheads of full time staff, distribution centers, or even vehicle fleet maintenance; the margins look very tempting for Uber.
It might not be a move existing local couriers will welcome, but the extension of UberRUSH to the UK, and other countries across the world, will open up vital new revenue streams for Uber. Even the fare for going ‘south of the river’ after midnight (south Londoners are all too accustomed to steep cab fares in the small hours) isn’t going to plug a US$1.2bn hole. Uber needs to move into the domestic courier market across Europe in a rush.
Read ParcelHero’s The Uberfication of Deliveries report here.
David Jinks is head of consumer research and public relations at the international courier ParcelHero. He is an award-winning journalist and blogger who specializes in logistics and transport. David was formerly publisher at The Chartered Institute of Logistics & Transport, where he ran the institute’s journals, news bulletins and international newsletter. David was previously a newspaper reporter and has edited magazines on classic cars, railways and commercial vehicles.
September 1, 2016