Uber has been "investing" in expanding the customer base, but, this expansion has been a money giveaway. Also, customers can walk whenever they want to.
Uber is being criticized for having massive losses, which is much worse, because it means that they must make significant changes in the near future that will likely be detrimental to their growth and valuation.
Also, growth is more valuable for Amazon because they have a bigger moat.
The difference with Amazon is that they would make a core business profitable and then use the free cash flow to invest in adjacent businesses. Users core business is not profitable yet.
Books->general merchandise->3p marketplace->prime->AWS->???
Where ??? Will probably be one of logistics, Alexa, or Whole Foods/Go/Fresh.
1) Achieve driverless tech at a safe enough level that they don't carry a huge insurance/legal cost
2) Build out a fleet of cars, maintenance regiment, security team etc.
1 seems to be a huge sticking point for them. And for 2, uber has never had to have large carrying capital costs. They spend on ads, subsidizing rides and legal battles, not purchasing and maintaining vehicles.
Right now they have successfully externalized a lot of costs to their drivers. That will go away. They also still won't have customer lock-in even if they achieve the dream. Others will be hot on their tail and then they'll be back to a race to the bottom where the core competencies are: fleet maintenance, ride optimization and capital costs that far outstrip their current operation.
They have an advantage in ride optimization, not the rest of it.
When driverless tech becomes available, they'll be much better positioned than Uber.
Amazon spent all of its profits over many years improving website infrastructure, logistics, warehousing, shipping, customer support and generally making life easier for its users. Uber did almost none of that, opting to focus on freebies and advertising.
If they raise prices by a dollar everyone will switch to
Lyft or one of the other dozen competitors in an instant.
- I wouldn't even know if Uber raised prices by a dollar.
- I don't price-shop between services.
- Uber is still regarded as "cheap", including vs. taxis.
- Uber's gotten people hooked on on-demand transportation: taxis are dead.
I think there's less price sensitivity than you think. Combine that with the obvious PR move to spin price increases as a way to pay drivers more, and competitors will (have to) follow suit.
If Lyft becomes a better deal, a vanguard of users notice it, they word of mouth it, and the equilibrium shifts somewhat. Not all the way, there are price insensitive users. But there are also price sensitive ones too.
Yes. They never came close to bleeding money at the rate that Uber is, though.
> Can't Uber continue to operate at a loss for a few years until they can switch drivers for self-driving vehicles and significantly reduce cost instantly?
No. They don't have years, at least not without raising more money. And when you start looking like you won't survive, raising more money becomes much harder.
Sure. Uber can survive years/decades through losses if wall street/hedge funds/big boys are determined to carry Uber for years/decades. The big boys were willing to carry amazon because it was continually growing and establishing a monopolistic position. The question is whether the big boys believe Uber can continue to grow and establish a monopoly.
Did we not ask the same questions about Amazon and now they proved they knew what they were doing?
Can't Uber continue to operate at a loss for a few years until they can switch drivers for self-driving vehicles and significantly reduce cost instantly?