Table of Contents - Assignment 3 - Uberisation

Table of Contents
Section	Content	Team Members
Section 1	Introduction to team, introduction to topic, what our content will aim to show in relation to topic Intro Project itself Aims and members   Blog development and management	Hanan David
Section 2	Introduction to Uber, History of Uber, leveraging the Uber app/technology advancement- Sarah/David include Mikaela’s timeline image here Section 1 - UBER Overview and business model	Intro and History – Hanan Uber app/technology – Sarah
Section 3	Introduction to the trends including the network, sharing, and attention economies and an overview of what they are – relating them back to Uber The Network, Attention and Sharing Economies	Mikaela and Hanan
Section 4	Why Uber is so successful, challenges, competition in the marketplace – relating all of this back to the trends of network, attention, and sharing UBER has competition	Sarah and team
Section 5	Summarising content	David

Section 1

Introduction

The Team

This project is presented as part of an online assignment 3 for Internet Studies 205/505: Internet Commerce and Consumers though Curtin University/OUA. The team of Sarah, David, Mikaela and Hanan analyse Uber in the context of its contribution and influence of trends in Internet commerce. In this report, we aim to highlight how the Uber ride application, UberX has fast become the world’s most used ride share application, patronised by the young and upwardly mobile. The team examined aspects of Uber from its development, ‘going public’ and the product in order to illustrate how Uber has impacted on both the sharing and networked economy models.

The Project

Online consumers in this day and age are fundamentally drawn to participate in the intricate matrix of trends in commerce, consumer connections and usage platforms. This project will explore some of these dynamics through the lens of the online ride sharing business known as Uber.

We illustrate the rewards and risks of doing business on the Internet and how these change economic models and the way the Internet community reacts to business trends. Ultimately this analysis highlights developments on Internet commerce and how Uber has worked within, and shaped Internet commerce through its business practices.

The Product

Sources for images in Figure 1: Information (Uber.com/rides, 2016) Phone image: (Therideshareguy.com, 2016) Uberlogo: (Logodatabases.com, 2015) Design BY : Hanan Abboud Power Point

• First launched in San Francisco, 2009, Uber Technologies Inc. is an ride sharing business connecting passengers with drivers through a smartphone application (Uber, 2010, para.4)

• Bookings, payment, customer details, and tracking cars are all handled through the Uber application (Uber, 2016)

• Uber provides a unique way of booking accessible, secure and low cost transport. ‎(Uber newsroom, 2016)

According to Ansari (2015), “Increasing the demand for rides-for-services is a continuous or future challenge that requires attention primarily to safety improvements and rates that have a cost/benefit to both passengers and drivers” (p. 9). Currently, a proportion of customers are wary of downloading apps, due to intrusive permissions to personal information and this is perceived by quite a few as a threat to personal privacy.

The Distribution

Sources for images in Figure 2: statistics (Fortune, 2015; Forbes.com, 2014;  Businessinsider.com. 2015; Uberexpansion.com. 2016; Forbes.com. 2015; Quartz, 2015)

Design: By Hanan Abboud using Power point

• Uber operates in 63 countries and 459 cities world-wide.(Businessofapps.com, 2015)

• Uber is worth $51 billion, tying for Facebook's record for a private, venture-backed start-up.(Inc.com, 2015)

• Uber flexibility and constant innovation guarantees success in volatile political and ‎economic ‎environments (Stafford University-Technology Entrepreneurship, 2016)

A Brief History

A proficient and consistent way of booking transport via a smart phone application was the idea for the original UberCabs. In the words of Uber Co-Founder and CEO Travis Kalanick (Growthhackers.com, 2016), the fast-‎paced, “cool” lifestyle of its users formed the genesis and identity of the idea, “In the ‎beginning, it was a lifestyle company. You push a button and a black car comes up. ‎Who's the baller? It was a baller move to get a black car to arrive in 8 minutes." (Mangalindan, 2012) ‎

The 2009 luxury car start up first launched in San Francisco a city infamous for a highly ‎regulated taxi industry that was both expensive and inept (Dong et al., 2014, p. 1). The seeds for this ingenious ‎internet business model was conceived in in Paris at the LeWeb conference—a leading ‎international symposium for Internet start-ups (Dong et al., 2014, p. 1). Here, Garrett Camp met Kalanick, owner ‎of StumbleUpon, and deliberated the idea of a dependable and effective black car ‎service (Dong et al., 2014, p. 1). By March of 2009, Garrett had conceived a basic prototype of the now infamous ‎Uber that started out as an application named Uber Cabs (Dong et al., 2014, p. 1).

In late 2010, and on the same day as Klanick was appointed CEO of the company the ‎San Francisco municipality demanded that Ubercabs shut down operations because of ‎transport regulations. In response, the company simply dropped the ‘cabs’ to become ‎Uber (Techcrunch 2010, para. 1-3). This flexibility in being able to change course within a volatile political and ‎economic environment would prove a key strength for Uber when it launched around the ‎world, and in Australia. ‎

Liebowitz (2002) wrote that the Internet lowered the costs of information but did not, ‎‎“change the laws of economics” (p.9). This was written not long after the tech bust of the ‎early 2000s, an economic event which left consumers and markets wary of putting their ‎trust into intangible, internet businesses. Subsequently, the sharing economy has been ‎analysed closely by users and investors and Uber is no exception. The company has ‎been scrutinised in Australia where its commercial and legal status has been subject of ‎legal action by the Taxi Services Commissioner (Carey, 2016). In fact, it has only been ‎legalised in Victoria in June 2016 after a court precedent and political involvement put an ‎end to a legal stalemate (Taylor, 2016). Liebowitz (2002) may have been right in saying ‎economic laws do not change for an internet economy, however what he didn’t know was ‎how economic laws lack validity in today’s economic ‎age.  ‎

Despite legislation and lobbying from the powerful taxi industry in some states of ‎Australia, Uber’s strength is that it commands credibility for its connectivity, low cost and ‎ease of use. It is such a part of our lexicon to be the generic term for transport these ‎days. ‎

The Market Strategy

Global Expansion

Classifying cities according to their unique characteristics, not location negated the traditional approach of domestic first, international second strategy, which allowed Uber to cater for the local markets from an insider’s perspective (Growthhackers.com, 2016). As Uber expanded internationally strategic partnerships with local firms enabled the company to harness the use of local resources and knowledge in line with local cultures. Uber has partnered with Times Internet in India, Baidu in China, and AmericaMovil in Latin America (Daniels Fund Ethics Initiative University of New Mexico, 2015, p. 3). In the United States it has partnered with American Express (Daniels Fund Ethics Initiative University of New Mexico, 2015, p. 3).

Additionally, Uber’s speed in expanding and establishing presence immediately before clone industries start to elbow in on the global market share, give it the upper hand in establishing a solid share of the ride-sharing market over the competition (Hyder, 2014).A $258 million investment from Google Ventures, allowed Uber to make substantial strides in both international and domestic expansion(Dong et al., 2014, p. 3).

Uber also strategically tackled the Singapore market  in February 2013, and expanded into Taipei and Seoul (two of the high income East Asian cities), then proceeded to claim other East Asian cities (Dong et al., 2014, p. 3). In 2014, Uber targeted Latin American and Middle Eastern cities. (Dong et al., 2014, p. 3).

The Economies

The Shared Economy Model

According to Belk (2013), “The Internet and especially Web 2.0 has brought about many new ways of sharing as well as facilitating older forms of sharing on a larger scale” (p.1596). Innovative software platforms, feature rich web sites, and mobile applications connecting providers to consumers, are all part of Uber’s rapid rise and monopoly on the ride sharing market. Within a framework of technology and online communities, the ‎sharing economy enabled companies like Uber to find consumers willing to share costs rather than ‎shouldering the expense of an asset or the costs of service themselves. In the case of ‎Uber - an asset free organisation - the company connects drivers with people in order to ‎deliver a transportation service. ‎

Another aspect of the sharing economy is experiences over ‎ownership. Shelby Clark, CEO of Peers.org says, “I think the biggest change that we’re seeing here is that people are choosing to buy mobility as opposed to just buying a car” (Consumer Intelligence Series, 2015). Uber has revolutionised the experience of mobility or ‘catching a cab’, making it as simple ‎and efficient as possible. The company tailored a cab hailing ‎application offering ride tracking, confirmation from drivers, driver ‎ratings, choice of standard or luxury cars, no tips, and an “invisible” checkout. Membership of Uber includes uploading your payment details, therefore, no money or bank card ‎information is transferred between user and driver.  ‎

Earlier this year Uber announced the launch of Uber Trip Experiences which connects ‎riders with their preferred apps at the start of a trip when they have some time on their ‎hands (Saad, 2016). Time being scarce, customers are asked to sit back and relax.  With an accept, other apps can connect to Uber and access trip details (Saad, 2016, para. 4). Some of ‎the features offered include entertainment in the form of a 10-minute playlist for a 10-minute trip, a five-minute news update for a five-minute trip, destination related insights and offers, and even the option to Turn on the heating when you’re headed home (Saad, 2016).

Edelman and Geradin (2015) elaborate on the effectiveness of P2P rental markets, such ‎as use of temporary, non-ownership models, in the case of Uber the riders buy the ride or the “experience of the ride’ instead of buying a car. Additionally, this sharing experience which now constitutes a large part of the online economy, is enabled and supported by the Internet and its many services and applications.

Without doubt, opportunities and challenges abound for Uber. The company must both settle its ongoing disputes, and continually innovate to stay ahead of its competitors (Dong et al., 2014, p. 6). Additionally, a clear tension between convenience and affordability persists, while Kalanick refuses to acknowledge Lyft, Sidecar and other ride-sharing apps as serious competition.(Dong et al., 2014, p. 6).

The disruption that the sharing model has instigated, is applicable to most online business models. Innovative technology couples with speed and reach are challenging business to optimise their digital strategies and think outside the box as Uber has (Consumer Intelligence Series, 2015).

Some of the challenges facing Uber are regulation/deregulation from powerful, local authorities, which Uber flouts often garnering the reputation for being a bully. This reflects this disrespect/lack of understanding towards the appropriated markets. According to the University of Chicago Law Review, “In what some have called “Ubergate,”, a senior executive stated that the company might investigate the personal and family lives of its critics—in particular a female journalist who accused it of disregarding female passengers’ and drivers’ safety” (Rogers, 2015).

While a steady stream of growth will go a long way towards alleviating this, Uber will need to adopt a less aggressive stance if it is to survive in the harsher markets. growing number of Uber users may help them through loyalty to the brand however if this does not eventuate Uber stands to experience a fierce backlash.

Long-term Challenges and Sustainability

To optimise on both a commerce and consumer level, Uber faces challenges in some key areas.The battles Uber faces from local governments is impacting on the profit margin of drivers who are faced with higher costs to become operators. Many local authorities are demanding drivers obtain healthcare insurance and coverage as well as training and public liability insurance (Carney, 2015; Carey, 2016).

In addition to the pressure these authorities exert, Uber also faces competition from traditional players like public transport, and mainstream taxi companies, as well as other start-ups like Curb, Lyft, and Sidecar (Ansari, 2015, p. 5). This places increased pressure on the company to stay innovative and expand quickly in order to ensure their grip on the international and local market. Additionally, many customers display a hesitancy towards adopting this new model and granting the intrusive permissions the Uber application demands. Uber allegedly lacks transparency and this has earned the company a reputation for being manipulative and underhanded (Rogers, 2015, p.94). Call logs, installed applications, and even malware vulnerabilities are detected and reported back to base. Moreover, this application also discerns if phones are rooted, and it reads SMS and MMS logs, which it explicitly doesn't have permission to do (Blain, 2014). Security researcher GironSec maintains that the Uber application is extremely intrusive as it systematically works in the background mining and sharing with the base substantial amounts of personal data (Blain, 2014).

Other challenges that Uber is dealing with include securing safe rides for users as well as equitable fares that are fair to both consumer and supplier. Product diversification is another area that Uber has excelled at, offering different services that suit different clientele/consumers. Importantly, the constant fare fluctuations are also a matter for concern as consumers are often hit with price surges at unexpected times.

Section 2

Uber’s growth timeline

Section 3

Network, Attention, and Sharing Economies

Network Economy

The network economy has transformed us as consumers. It has forever changed the way we discover, learn and interact with things in our daily lives from the way it influences our buying decisions, to the ways we spend our money and the nature of our consumption. It has turned traditional business models on its head. Transactions are cashless - process-less in some instances so our upwardly mobile existence is reflected in not being able to take a bankcard from our pocket. The network economy facilitates the need to no longer linger in one spot that second longer. The network economy has changed the products and platforms on which companies sell, communicate, distribute, and connect. It has taken traditional forms of commerce and given power to the users to determine their rules. Is this the perfect model? Fekete (2006) describes the network economy - but argues this model cannot be maintained - as interactions based on, “cooperative, informed and transparent communication.” (p.737, 2006)  

The network economy is, in part, the convergence of online technologies and the conversion of people, social ecology, and products in the 21st century. The difference between it and traditional economies is unlike previous connection technologies such as television and radio, the internet has the “ability to quickly retrieve information stored on computers” (Leibowitz, 2002, p.11). Broadcast media such as television or radio, only allowed for one way communication and messages were largely homogenous. Today, connectivity, inclusion and communication are key - customers define products and services in the new economy and are able to dictate the terms; roaming a virtual world in search of products (Fekete, 2006). From buying dinner, finding a date, to accessing transportation services such as Uber, this new form of networking has changed the way the market connects and consumes.

Consumers are now spending just as much of their income on experiences as they are on buying goods, coining the term of an “experience economy” (Rifkin, 2001). With the realisation of the power of e-commerce, many businesses are selling physical property and shrinking their stockholdings for a place in the online sphere of the network economy (Rifkin, 2001). Ownership of expensive items is transforming into access, where items that were once seen as important to own are now being upgraded so often, that the idea of physically owning them is becoming outdated.  By consumers using the power of access, businesses are able to withhold a relationship with them for the duration of their lease of the item. This relationship differs strongly from the traditional buyer to seller relationship, where buyers would purchase the item from the seller, and that would be the completion of their relationship. According to Rifkin (2001) in twenty five years, more consumers will pay to lease items rather than own them.

For a network economy business to thrive, they must be continually connected. From a customer loyalty perspective, the network economy is already assisting businesses in creating more of a connected, tailored, relationship with their consumers. Uber is currently trialling a loyalty program in LA for consumers who wish to ride with Uberblack. Every Uberblack ride the customer will receive 200 points. Once they reach 3000 points, they will receive a $25 Uber ride. (Tepper, 2016). By implementing such programs, Uber will promote and increase the frequency of UberBlack rides.   

The network economy has allowed businesses to “keep track of customers' orders, their consumption habits, credit history” (Leibowitz, 2002, p.12). This has formed the emergence of data control and ownership, where corporations are selling the consumer’s personal data, thus creating a new business of its own (Fekete, 2006). Although many positives do emerge from the trend of network economies, there are downsides. Whilst the fees for transmission costs are extremely low, the ability for businesses to have any form of a monopoly is also less obtainable (Leibowitz, 2002). Exotic brands online that consumers are unaware of, will have more difficulty finding and connecting with customers without paying for advertising on websites such as Google. Whilst larger known brands will be easily discovered by consumers, they do not have the forcefulness of being the only physical option for a consumer at a shopping mall. With all this in mind, the company Uber is currently holding a fair chunk of monopoly in terms of an online transportation business, as it dominates local areas. Those using online commerce as a consumer still desire the same outcomes that a bricks and mortar shop will provide, such as the best price, customer satisfaction, and reputation. With one the most prominent features of Uber being that is (generally) cheaper than other taxi services, as well as the roll out of a trial loyalty program, it is obvious why consumers would be taking part in this emerging online trend of transportation.   

Although Uber would not be categorised as being an attention economy business, there is one feature available that relates to the attention economy, and the attention of users. The application allows users to see available Uber drivers in their area through a live map that uses GPS on your mobile to find your location. The interactive feature of being able to ‘watch’ the Uber driver attracts the attention of its users to focus on the driver. Although this is only a minimal amount of attention, it is still a beneficial feature that has contributed to the success of the application (Rempel, 2014).

Attention Economy

With internet use in full swing, most users starting a new business have ease of access to a free web design builder, free logo/graphic design builder and access to start up a Facebook page. What is not easy, is to retrieve the attention from other users/consumers. Businesses that are able to retrieve and hold the attention of consumers, are those that will succeed (Davenport & Bec, 2001).  The internet provides an abundant amount of information, yet there is only a certain amount of time that can be contributed towards attention on a daily basis (Terranova, 2012). As discussed by Goldhaber (1997), once ‘real attention’ is no longer required/available, illusory attention commences in the form of books, television, gaming or the web. For businesses to prosper in an attention economy, they must understand how and where users will implement their illusory attention for the sometimes short duration of being online. For businesses in the attention economy, the use of new and original creative content is a must. Reused, unoriginal content will result in no attention from users (Goldhaber, 1997).  

An example of an online business that has grasped the idea behind the attention economy entirely is Snapchat. Snapchat communicates between users via images and videos. Snapchat uses “Ephemeral messaging with disappearing data” (Charteris & Masters, 2014, para.1), permitting users to view the image or video for only ten seconds or less. Therefore, the user’s attention is focused on that image/video and nothing else as they know it will disappear and never come back (Pittman and Reich 2016). As of 2013, 350 million snapchats were shared daily, compared to 20 million in 2012 (Charteris & Masters, 2014). Based on the enormous figures of content sent daily, it is obvious that Snapchat in one of the leading social networking icons within the attention economy.