TL;DR – Uber is not a taxi company.
Four years ago, it’d have been hard to imagine sitting in someone’s personal car to travel from point A to point B, with the entire journey powered through an app. Let alone, sharing rides with strangers.
Today, one million Singaporeans are active on Uber and are mostly happy commuters.
According to the Public Transport Council (PTC) survey in Feb this year, passengers are more satisfied with private-hire services than taxis. The private-hire services also fared better than taxis in drivers’ knowledge of routes, customer service provided by the driver and safety.
Taxi drivers have been in this business for a long-time with some even touted as driving encyclopedias, but customers still prefer private-hire services.
The lack of taxis available during peak periods and good customer service have been the biggest bugbears for commuters. And nobody knew how to solve these issues. Not without loading upon the system more and more rules and regulations.
Instead of creating innovative solutions, the authorities tried to solve the taxi availability issue by introducing more regulations: requiring cabbies to clock 250km a day for example. It resulted in tired drivers and yet, still insufficient taxi/customer ratio.
Taxi giant ComfortDelGro did try to leverage on technology before Uber and Grab had successfully shaken up the taxi industry – they failed.
Unlike taxi companies, Uber and Grab do not own vehicles, although Uber does own a car rental outfit, Lion City Rental. So, does being resource-light put them in a more advantageous position to manoeuvre the transportation industry?
Instead of acquiring assets to solve the taxi availability issue, they capitalised on existing car owners: retirees whose cars are idling in the carpark, small-time business owners as well as self-employed individuals like insurance and property agents who basically operate on OTOT (own-time-own-target).
These people have their own cars and they have (some) time. All Uber and Grab had to do were to match these drivers to commuters who were looking for rides through an app.
Of course, Singapore also offered the right environment for the tech companies to flourish – the high cost of car ownership probably also propelled these drivers to maximise their earning opportunities and use it to reduce the burden of financing their cars.
We spoke to Warren Tseng, General Manager of Uber Singapore, in a one-to-one session at Uber’s 4th anniversary party on Thursday.
It was an uber interesting conversation and we gleaned much insights from this man who was previously International Launcher for the Southeast Asian market for Uber. Here are the three reasons why we think the disruptor got it right in Singapore, in Warren’s words.
1. On tapping the right market
“Over 50% of our drivers actually are doing less than 10 hours a week. These aren’t the folks that are looking for welfare or Medisave or CPF – that’s not why they are on the platform. They are doing this to complement their existing lifestyle or complement their existing earnings.”
“For instance, there are lots of real estate agents on the Uber platform, they need a car to do their viewings with their customers once or twice a day. In a down market, maybe once a day but they still need to pay for a car and they still would like to have other types of earning opportunities to help at least pay for their car and hopefully have enough to do other things with it. This is like the market that is the perfect fit for the Uber platform, these versatile people that need flexible and part-time work.”
2. On creating new innovative products to reach out to new markets
“There are also other folks that maybe have a 9-5 job but they also want to drive on Uber – maybe during peak hours, 2 hours in the morning, 2 hours in the evening. For these people, it doesn’t make sense for them to rent a car for a month because you’re on the hook for rent, every single week and if you don’t do a certain number of hours, you might not be able to cover rent. It makes sense for them to rent a car on an hourly basis so they can just go do a few trips for a few hours and then return the car.”
“That is the product we built in Singapore, this is an innovative solution to suit part-time drivers that we haven’t really done anywhere else in the world.”
3. On being different from a taxi company and believing that the difference is real
“I think as we move into this new regulatory area, we have been a vital part of educating (LTA) on what it means to be a freelance part-time workforce and educating them on what it means to be an Uber driver, essentially, because this type of industry, this type of workforce, never existed previously. So we need to help differentiate what a taxi driver is interested in, what their motives are versus a real-estate agent who wants to drive a few hours in a day.”
“If you’re looking at it from a traditional angle or too far apart from what’s going on in the business, then you might mistake the two as the same thing – they aren’t the same thing. It’s a personal-operating car, he’s a taxi driver, but it could be more different. We need to make sure that the regulations reflect those differences.“
By now, it’s quite clear that Uber doesn’t see themselves as a taxi company.
If the incumbents do not innovate anytime soon, they will eventually work themselves out of business in this new sharing economy. Just like the print news industry.