Uber Business model: A Deep Dive into the Strategy and Innovation of Uber

Anamika Mahapatra Anamika Mahapatra
Jul 24, 2021 6 min read
Uber Business model: A Deep Dive into the Strategy and Innovation of Uber

Did you know 17% of small businesses fail because they lack a business model? Entrepreneurs now are the time to learn about this amazing business model canvas, which will make that stress go away. Here, I have taken the real-life example of Uber for this business model canvas.

About Uber
Uber statistics in 2021
Uber’s Business model canvas
FAQ

Brief introduction of Business model canvas

A lean canvas and a value proposition are two sorts of business models. These are tools for validating company concepts geared for startups. Both originate from Alexander Osterwalder's 'business model canvas,' which we'll explore today.

The primary distinction between the business model canvas and the lean canvas is that the business model canvas was developed for well-established businesses to track their efficiency and evolution through time. Startups are the most common users of lean Canvas for product launches.

The business model canvas is popular among entrepreneurs. It's a risk-detection tool that's adaptable, intuitive, and value-driven. That's why it's commonly referred to as a one-page business plan. The canvas is divided into nine areas, each of which must be filled with specific company information.

About Uber

In the business realm, Uber is a well-known name. Millions of business owners and entrepreneurs have been motivated by extraordinary success, and the trend is expected to continue. This California-based ride-hailing service, which was founded in 2009, has ushered in a huge change by igniting the on-demand economy.

From its humble beginnings, it has come a long way from a basic idea of allowing customers to hail a cab with a single tap to being the world's largest ride-sharing firm. Uber currently controls over 68% of the total ridesharing market in the United States.

Uber statistics in 2021

According to statistics, Uber undertakes around 1.44 billion rides each quarter. Uber has raised $25.2 billion in fundraising, has over 100 million active customers, 4 million Uber drivers, and a net worth of $95.67 billion. So far, Uber's success has inspired millions of business owners and entrepreneurs.


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Uber’s Business model canvas

The aggregator business model was first introduced to the world by Uber. It operates on a multi-sided platform business strategy that serves as a link between riders and drivers. Simply put, Uber has a two-pronged business model. While it enables clients to hire a taxi with a simple click, it also enables cab drivers to complete their rides on time and safely.

Customer segments

You must determine your most significant customer to whom you are providing value. The persona method aids in the creation of an imaginative portrayal of user categories. There are two types of Uber users: drivers and riders. Each one caters to a specific group of people that are interested in what Uber has to offer.

The first group i.e. drivers are:

  • Full-time job seekers
  • Generate extra income
  • Love to drive
  • Looking for a flexible work environment

The second group i.e. Users are:

  • Don’t own cars
  • Don’t know how to drive
  • Looking for comfort & luxury
  • Looking for cost-effective transportation services
  • Taxi haters
  • Travelers in a foreign place

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Value proposition

Each persona has unique challenges or prerequisites that your product or service can address, and you must specify these in the value proposition section. List as many jobs as feasible that correspond to the needs of your target customer segments.

For drivers, it's the ability to work flexible hours and earn more money, while for passengers, it's the ability to pay with credit cards and cheaper prices. Decompose this part into specific chores to be done, customer pains and gains, and relate them to your product value using the value proposition canvas.

Value proposition or benefits Uber offers are:

To drivers:

  • Ease in getting started
  • Opportunity to earn
  • Ease in accessing more passengers
  • Flexible working schedules
  • Get paid online

To customers:

  • Minimum waiting time
  • Reduced transportation costs
  • Cashless rides
  • Safety & security
  • Upfront pricing

Channel

The communication unit that entrepreneurs use to contact customer segments is referred to as a channel. If you offer your products through a website, that is one of your business model canvas channels. Search engines, social media, and even word-of-mouth marketing are examples of this.

Uber's channels include:

  • Website
  • Smartphone app (android & IOS)
  • Social media
  • Google Adwords
  • Media coverage
  • Word of mouth

Relationship with customers

The way you interact with customers is defined in this section. Customer interactions included follow-up and feedback after the sale. If you connect with users through a call center or a Chabot, specify it here.

Uber maintains its customer relationship through:

  • Social media
  • Customer support
  • Rating, reviews & feedback system

Revenue streams

You must define the methods by which your company obtains funds in the revenue streams section. They're usually derived from customer segmentation and value proposition mapping. Uber passengers, for example, use their credit cards to pay for their rides. Uber makes money by charging a commission for each ride. Other revenue streams could include billable add-ons, subscriptions, premium accounts, and so on.

Uber’s revenue streams are:

  • Car rides per km/mile basis
  • Surge pricing
  • Brands like Uber X, SUV, etc.
  • Divisions like Uber Eats, etc.
  • Advertising & marketing

Key activities

Now comes the difficult part, key activities cover everything you need to do to make your company work with digital products. This entails continuous product development and marketing. Recruiting, advertising and other such activities are part of these operations.

If you provide certain services, this may include information that can help you improve your capabilities. When filling the key activities portion of the business model canvas, keep in mind the other sections you've already completed.

Uber’s key activities are:

  • Platform development & enhancement
  • Marketing & customer acquisition
  • Sales promotion
  • Hiring drivers
  • Customer support
  • Manage driver payouts
  • Communicate with customers, drivers

Key resources

The assets you require to run your organization at max potential are known as key sources. Uber is based on a sophisticated technological platform. It also needs drivers to support its value proposition. Staff and expertise are heavily relied upon by service-oriented businesses.

Uber’s key resources include:

  • Network of drivers & riders
  • Digital platform (website & apps)
  • Technology talent
  • Advanced Algorithms & Data Analysis
  • Brand image

Key partners

You must define any external stakeholders who can contribute to your business in the key partner section. The development of tech platforms can be driven by Uber investors. Drivers can be hired with the help of recruiting partners.

Uber’s key partners are:

  • Drivers
  • Investors & venture capitalists
  • Technology partners
  • Commercial partners
  • Payment processors
  • Map API providers
  • Lobbyists

Cost structures

You should be able to tell what you spend your money on based on your cost structures. If your enterprise grows, you must also mention future costs. This area includes expenses such as hardware procurement, software development, and rental services.

Attributes that make the cost structure of Uber are:

  • Customer acquisition costs
  • Legal & settlement costs
  • Insurance costs
  • Research & development
  • Lobbying & compliance
  • Platform maintenance
  • Infrastructure cost
  • Customer support

After you've created your business model canvas, the next step is to analyze it. You have a comprehensive view of what's going on in your company and can spot bottlenecks. Make sure to share it with stakeholders so that the content may be improved. Also, don’t cling to the canvas's original version as it is a flexible document.


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Final thoughts

Uber, like other successful startups, did not become well-known overnight. Their success may be traced back to greater business model innovation, which provides clients with better services at reduced prices. Almost everyone appreciates the services they provide. Uber has transformed mobility for billions of people across the world by arriving on time, conveniently, and safely.

FAQ

Who is the founder of Uber?

Travis Kalanick and Garrett Camp founded Uber in 2009.

Who is the CEO of Uber?

Dara Khosrowshahi is the current CEO of Uber

What is the revenue of Uber?

The revenue of Uber was 1,113.9 crores USD in 2020.

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