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Ride-sharing economy

The ride-sharing economy

Another sector heavily influenced by the sharing economy is transportation. One of the largest players, Uber, is arguably the single most recognisable player in the sharing economy.

For some the word ‘Uber’ may well be used in place of the sharing economy. How did this ride-sharing app become a $1.5 billion revenue-generating business? Uber simply created an app to allow individuals to rent their cars and drive others who need it. It’s like a taxi, but it’s not your regular commercial taxi service.

Depending on the city, getting a taxi when you need it can be really difficult. You either have to stand by the roadside and hope an empty taxi drives by or wait in line at a taxi rank. Alternately you can call a taxi, but it may take time to arrive, since we cannot always be sure of fast service when and where we need it. On the other hand, you may have a car that you use only a few hours in a week. The car is basically idle during most of the week. So when you do have some spare time you could drive people who need a ride to their destination and make some extra money. Anyone 21 years and older with a car and a licence can join and anyone who needs a ride can call and get one in less than five minutes.

The interesting thing is that Uber does not really own any of these cars. It simply mediates the sharing of rides between ordinary people who have idle cars and time. There is no exchange of money between the passenger and driver. Uber charges the passenger’s credit card and pays the driver once the ride is completed. Uber makes its money by taking a percentage of the fare.

Many businesses compete for marketshare in the ride-sharing space, some offering rates even cheaper than Uber. Companies such as Lyft, BlaBla Car, Karzoo, GoCatch and even Google’s Waze are examples of brands competing with Uber in this space. Needless to say, the sharing economy represents an important force in how we demand and consume transportation.


Activity

Apart from transporting people, many companies use the model of the sharing economy to transport goods, meals or groceries. What are some considerations consumers or business operators might need to consider when using these services?

Post your thoughts to the Comments area below.


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This article is from the free online course:

Business Futures: the Sharing Economy

RMIT University

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