Uber Overcomes Resistance in the German Market by Targeting Mobile Business Users
Last week I had the opportunity to speak with Chris Bates, General Manager of Uber in Frankfurt and Dýsseldorf, about the business orientation and development of Uber in Germany, writes Henning Dransfeld, Managing Advisor, Experton Group.
We talked about the following services for ordering a car and driver via the mobile application:
- Uber Black (premium limousine services): This service is often booked by senior managers in the United States, who now use it instead of running their own limousine with a chauffeur.
- Uber Taxi (taxi service): The classic rival to MyTaxi, which caused an outcry on arrival in Germany, for threatening the existing structure of the taxi business organised via central structures.
- Uber x (economy class): A service characterised by its competitive pricing structure, and availability below classic taxi pricing.
When Uber entered the German market two years ago, it was heavily criticised as opponents claimed that the app does not meet German regulations. That criticism concentrated on the Uber Service UberPop, a car-sharing scheme. Mr Bates stated, "That is in the past. We have learned our lesson. Today we conform to all the rules." He explained that anyone registering with Uber is already running a limousine business or a taxi. "We check the drivers and their cars for proper registration and standard insurance, safety and quality before we sign them up."
Uber offers a central booking to a steadily rising pool of drivers checked in this way, to liquidize the market for people transport in Germany, and to keep the quality of these services up. The ever-increasing number of drivers bookable via the Uber App provides liquidity to the for-hire market, which in-turn reduces waiting times. Driver and passenger have to rate their experience before they can go ahead to book or be booked again.
According to Bates, the rating creates security for both sides, because black sheep can first be reprimanded, and secondly removed from the list. Positive feedback is also passed on to the driver. Bates reports that more and more drivers find their way to Uber as it improves their utilisation rate and thus their income.
Bates claimed he salutes the competitive service MyTaxi, as it helps to create a market for efficient transportation. Competition exists in the form of car-sharing schemes like DriveNow and CarToGo, public transport or the bycicle, or in short, any other means to travel from A to B in urban traffic.
What benefits can German business users draw from the possibility to order a limousine, a taxi or an economy car via a mobile app?
- First, this app increases flexibility. Registered users can order vehicles all over the globe for another person. The personal assistant can bring a car to the airport or train station when the boss is about to arrive.
- Secondly, the traveler can choose whether a limousine, a taxi or a cheaper car is appropriate according to the actual business context.
- Thirdly, Uber provides a transparent pricing structure at known conditions, on all three services, with an advertised minimum price and fixed charges per driven kilometer. Uber is structured in a uniform way across the globe.
One aspect of business transportation cannot be made available with this model: the fixed driver who knows the preferences of his boss and welcomes him with his first name, independent of the time of day. Because fixing a driver permanently to a passenger would, according to Bates, simply be inefficient and take too much load on a single driver. Uber is not accessible to everyone as the primary channel for access is, of course, a smartphone or a tablet. Sure, the service can be booked via m.uber.com, but access to the internet remains a prerequisite.
Nevertheless, Uber brings an interesting dynamic to the market for passenger transportation despite the initial hostile reception. It shows once again what mobile apps can be capable of if you have a solid business model behind them.