Although rideshare companies are all the rage, the truth is that they’re bleeding money and not successful businesses (yet?). Despite Uber’s IPO valued at $82.4 billion on the street and Lyft tallying up $24.4 billion. Since the IPO, Lyft reported a $1.14 billion loss during its first quarter, and Uber $3 billion in 2018–on top of the $4 billion in 2017. At this point, you might think they would try something new.
- In an attempt to create brand loyalty, Uber has created a bundle service priced at $24.99 a month for Uber’s ride, bike and food delivery services.
- At this point, there is no loyalty among rideshare users, pricking and choosing the service with the lowest cost at the time of travel.
- By becoming a one-stop service for customers, Uber hopes to shore up the balance sheets.
To combat the financial hemorrhage, Uber has come up with a new strategy. It wants to fill all your on-demand needs. With the new Uber subscription plan, the company rolls out Uber Eats, discounted Uber rides and free Uber Bike rentals for one monthly fee of $24.99. This new bundle seems to take the place of Uber’s Ride Pass, which currently costs the same and protects from surge pricing.
Lyft has a similar offering called All-Access for $299 a month that includes 30 rides per month under $15, but if the trip is over $15, customers have to dig into their pockets to pay the difference. Also, no mention of food delivery, bikes or scooters. Compared to Uber’s new plan, Lyft isn’t even close to competitive. In fact, it looks like a ripoff.
Ride Pass seems too good to be true for the (introductory) price of $24.99 per month for all those services. You don’t have to be a math whiz to realize Uber will take a balance sheet hit on this new option for customers too. I would imagine after the Ride Pass reaches critical mass and has a loyal following, prices will go up.
Stopping the Cash Drain
So what’s the strategy behind Uber’s Ride Pass—even if it’s probably at a big loss? Pure and simple, to create brand loyalty. And, that’s where they hope to make money. Right now riders don’t care whether they hail a Lyft or an Uber. Pricing is the determining factor for which one they’ll book. It absolutely is for me. And, there really is not a difference between the services because many drivers work for both companies.
In addition to Ride Pass, Uber runs helicopter flights through its Uber Elevate division, Uber Black Quiet, where you can take your car trip without the driver blabbing or blasting the radio (seriously, this is a problem), and also partnered with Cargo to purchase items while you’re in the car. Cargo works from the curated marketplace model like aha, and even Amazon has one called Canopy.
The advantage to using the Cargo App instead of another site to make your purchases is that you receive 10% back in Uber cash, redeemable for future Cargo purchases or future Uber rides—plus orders are delivered free to your home within 2 to 5 business days. To use the service, Uber drivers must have Cargo consoles in their cars and customers must have the app.
If you want to jump on the Ride Pass deal for that crazy-good price of $24.99 per month, you have to reside in San Francisco or Chicago. Uber plans to roll out the program in other cities as well in the near future. I think Los Angeles would be a good place to go next. I can guarantee, at the very least, one customer who would dig it.