Yes, according to our man-on-the-street survey.
In my view, the largest barrier to entry is gaining access to customers. If a company can hold onto its customers despite a rival offering lower prices or government regulation allowing more competition to enter a market, then that firm has a resilient strategy. That may not be the case with Uber, no matter how high its valuation ascends.
Why do I say this? Last week I conducted an informal survey of Uber customers on Boston’s new Rose Kennedy Greenway. I visited 15 groups of people sunning themselves or strolling down this wonderful stretch of newly developed parkland on the edge of Boston’s financial district (this was by no means a statistically significant poll). In all I spoke with roughly 45 people about how they view Uber and its competition.
Uber, customers don’t love you and most have little loyalty!
Here are some of the findings and my opinion of what I heard on that sunny spring day:
- 93% said they use Uber
- Approximately 35% use it for work but a majority, 65%, use it for leisure
- Few were nervous about all the data they provide Uber
- As for other services Uber could provide, the suggestions ranged from wheelchair services to delivery, medical equipment or pharmaceutical delivery, laundry services, and a loyalty program. Some of these or a variation Uber is already developing or offering in select test markets
- Loyalty danger signal: 86% said they had no particular loyalty to Uber and could see other equivalent services, such as current competitor Lyft and others not-yet-created winning them over
That last item is the one that drew the most vocal response from the Greenway crowd. Nearly all would leave Uber for a competing service at the drop of a hat. Many said that if another service could provide a lower price or better service or improved efficiency, they would switch. A handful of individuals said recent news about possible mistreatment or underpayment of employees (at least that is how they conveyed this impression to me) was a turnoff even if Uber beat the competition on price. Still others spoke about drivers not knowing directions to their destination or just rudeness.
More perks. So what?
As for all the new services Uber is about to offer or is already offering, the people I spoke with seemed to know little about them. It seems as if Uber is having to aim its marketing initiatives in so many directions that most of its customers don’t even know they exist. This is not to say that Uber should stop adding these perks, there’s just too much noise and not enough clear signals for the message to reach these particular customers. For instance, Uber does have a VIP loyalty program, as well as a points program with the Starwood hotel chain. Ubers list of new service or product rollouts is long; many just go unnoticed.
Bottom line: These new initiatives do not create any true barrier to entry from competition. They may keep the brand fresh and offer news services an excuse to report on Uber once again, but that may be about all these press releases accomplish. The folks I interviewed seemed to recognize only the essence of Uber, the ride service itself.
Is it hubris or "Uberis"?
Another way to interpret these findings is to ask the question: How many competitors does Uber have and is all this brand building doing much to stave off competition in the first place? It is clear that Uber has grown an entire industry. According to a report by the expense tracking software firm, Certify, rideshare services (that includes Uber) has grown from 15% in Q1 of 2014 of total paid car rides in the US to 46% of all fares in Q1 this year. Meanwhile, taxis, limousines and shuttles have dropped from 85% to 53% during this same period.
Beware hubris, Uber (or is it Uberis). You have attracted competitors, such as Lyft, Curb and Sidecar that could slow your growth. You are also facing lots of regulatory backlash from around the globe. Regulations can either close lots of market opportunities for Uber or allow entrenched rivals, such as the traditional taxi industry, from losing more ground. Government can become a very large growth impediment.
The most important competitive message still comes from those folks sunning themselves on Boston’s Greenway: “We can switch whenever we want to,” they said, “given bad news, higher prices and poor service. There are always options, some with perhaps newer, sexier and easier-to-use tech-based service solutions.” Enough said.