One of the easiest ways to know where a ride is going is to take a look at where the driver has been.
The Wall Street Journal reported Thursday that Uber Technologies UBER 4.96%
has made an agreement to list all New York City cabs in its app. This will not be an isolated partnership: at its investor day last month, Uber announced UBER 4.96%
said his goal is to have every taxi in the world on his app by 2025.
Some are portraying this news as a solution to Uber’s alleged need to expand its driver offering to meet recovering demand. The 14,000 or so taxis that will be added as a result of the deal will certainly help if there is an imbalance. And it will no doubt provide an opportunity to boost car rental offerings in the New York City area. Still, Uber says its driver offering in New York City is “the highest since the pandemic.” Others see it as an attempt to befriend an enemy: In its IPO, Uber lists taxis among its three main competitors, along with car ownership and public transit.
But ultimately, Uber’s move to add taxis is really just the continuation of a larger push, long underway, to build a “super app.” Just as the website boasts, “Uber now lets you go anywhere and get anything.” The downside: the company once known for its sleek, private, on-demand black cars seems increasingly embracing the commercialization of its rides, in order to achieve brand ubiquity.
Uber criticizes the concept of commercialization, but says the idea is to include as many modes of transport as possible in the app so that you never have to go anywhere else. Uber has been working internationally with the taxi industry for years and now also offers public transport with its app.
So you might soon be catching an occasional cab via a traditional Uber in the Uber app, but at least Uber will get a cut if you do. The all-in-one concept is very reminiscent of Chief Executive Officer Dara Khosrowshahi’s previous post as head of Expedia (now Expedia Group), which grew into a one-stop shop for all things online travel.
Shares of Uber rose nearly 5% on Thursday as news of the New York Taxi Deal broke, though the company has indicated it’s moving in that direction for some time. JPMorgan analyst Doug Anmuth said in a note Thursday he was less surprised by Uber’s move to acquire New York City cabs than by the speed at which its goal of capitalizing on the cab industry is being implemented. The agreement also means that if Lyft were to announce a similar deal, Uber would have an advantage in time to market and technology integration, he said.
In its Investor Day presentation, Uber cited $400 million in gross taxi bookings last year with the expectation that it can grow to more than $3 billion in gross taxi bookings by 2024. Evercore ISI analyst Mark Mahaney lists New York City yellow cabs generated about $1.4 billion in fares in 2019, citing data from the New York City Taxi and Limousine Commission.
As of last month, Uber Taxi is active in 27 countries. According to the Journal’s report Thursday, passengers in New York City pay about the same fare for cab rides as they do for rides on Uber X. Last month, Uber said about 90% of its rides are on a version of Uber X (as in, not shared, not planned in advance, not in a taxi or on a motorbike, etc.). While taxis will bring additional trips to Uber, it’s unclear whether they will bring additional profits. Taxi rides generally have lower acceptance rates, but also lower cost structures.
Uber has said that drivers who use Uber for more than just a single Uber X ride spend more and have higher retention than drivers with a single product. Winning for Uber doesn’t mean never taking a cab; simply that you will never flag down your own taxi again.
write to Laura Forman at email@example.com
Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
https://www.wsj.com/articles/uber-looks-a-lot-less-exclusive-11648149759?mod=rss_markets_main Uber looks a lot less exclusive