Will Australians ever give up Uber?
Dr Rohan Miller and Dr David Oliver from the University of Sydney Business School explain Uber's聽growing problems and the possibility of Australians discontinuing their use of the popular ride-sharing service. 聽聽
From the start, the ride-sharing service Uber offered app-based convenience and positioned itself as a saviour to beleaguered taxi customers. But the company, led by one-time chief executive Travis Kalanick, has now found that the line between confidence and disastrous overconfidence can be thin.
After headline after headline about alleged聽,听, and other revelations of bad corporate behaviour, Kalanick has now聽聽under pressure from shareholders. He will remain on Uber鈥檚 board of directors,听.
The company now finds itself without a large swathe of its executive leadership, and聽聽are also said to be jumping ship. Will Australians follow suit and quit the app?
Few alternatives and barriers to entry
Even if Australians did want to avoid Uber, they have few options for similar app-based transportation.
Locally owned competitor GoCatch launched its taxi hailing service in 2011, before聽聽ride-sharing in 2016. It could theoretically have benefited from local knowledge and first-mover market advantage. But it seems to have fallen into Uber鈥檚 shadow while dealing with management turmoil, including the departure of聽.
The taxi industry鈥檚聽聽allows consumers to hail the nearest possible cab, although the jury is still out on whether this collaboration will generate more name recognition than GoCatch with its five-year head start.
Bigger-name competitors such as Lyft haven鈥檛 yet entered Australia, despite聽聽in the United States on the back of Uber鈥檚 PR crises.
The truth is that Uber remains a globally recognised brand. The聽聽is a major advantage, both in attracting a critical mass of drivers and customers into what is still a new industry.
It also has a large and growing market share, not to mention a聽. On the other hand, its adjusted net losses were US$2.8 billion in the same period, so it remains to be seen whether Uber is in a position to fight the costly PR battle ahead.
Australian consumer pragmatism
It is unlikely that Australian consumers will immediately ditch Uber for its bad reputation alone. We have a long history of putting convenience over principle.
The 7-Eleven franchise network, for example, has been聽聽workers, and has been repaying claims to the tune of聽, yet consumers keep shopping there.
Others are still working with products from building materials company James Hardie, now known as Amaca Pty Ltd, even as its deadly聽听蝉迟补测听. The company is聽.
Based on聽聽that suggests customers evaluate their decision to consume or not based on a sense of pragmatism, among other factors, Australians are unlikely to stop using Uber 鈥� especially now the company is taking proactive action to clean up its act.
To consumers, Uber鈥檚 app feels safe due to its rating system, which provides a version of quality assurance. Journeys can be mapped on the app, there are high levels of satisfaction, the costs are pre-estimated, and no cash is needed.
Drivers may be Uber鈥檚 weak link
Uber is an app-based brokering businesses, matching driver availability with consumer needs. But to do this it needs to keep drivers happy. This may be the weakest link in its value chain.
Owner-drivers must jump through several聽聽such as new registrations, insurance and various criminal checks to become accredited for Uber. Once qualified, they may discover that Uber鈥檚 consumer聽聽seems pegged to the marginal cost of running an automobile, with some incentives via聽.
Although often considered part of the 鈥渟haring economy鈥�, there鈥檚 not a lot of profit sharing with drivers. Uber has been聽聽in the US for exaggerating driver wages, although it recently agreed to permit drivers there聽.
Just as many taxi drivers apparently聽, so do Uber drivers, based聽听补苍诲听. The customer鈥檚 interest has driven market penetration, but this often conflicts with the interests of drivers.
Can Uber make a U-turn?
Uber鈥檚 rise proves new technology can rapidly change markets, so it is unlikely that Uber itself will last forever.
聽on Uber鈥檚 board may portend a change in organisational culture 鈥� perhaps similar to how COO Sheryl Sandberg was聽聽to Mark Zuckerberg鈥檚 visionary yet rough edges at Facebook. Still,听聽that major institutional changes are necessary to prevent similar meltdowns in the future.
For now, Uber has considerable Australian market share, as well as a reputation for convenience and cost-effectiveness. Now that it鈥檚 making changes at the corporate leadership level, as long as Uber remains financially viable for drivers, it鈥檚 far from doomed in the short term.
and are senior lecturers at the .听
This article was originally published on .听
