Gone are the days when getting a taxi to a location of your choice was a nightmare. We no longer need to wait on the roadside trying to spot a taxi and fervently waving at it. There is an emerging business economy known as ride sharing. With just the tap of an app, ride sharing users today enjoy a myriad of comforts and convenience.
The wide spread benefits of using ride sharing apps have contributed to a rapid growth of the industry. Take for example Uber, the largest shareholder of the U.S ride sharing market. It accounts to more than 20 million rides taken each day and this number keeps on increasing. Before we can dig deeper into the subject, let’s first develop a good understanding of the fundamentals.
What is Ride Sharing Service
A ride sharing service entails arranging one way transportation on short notice. Some of the most notable and biggest ridesharing companies are Uber and Lyft. The biggest difference between them is their availability. As early as 2022, Uber is found in more than 10,000 cities in 69 countries outperforming Lyft in terms of coverage.
Additionally, Uber has more ride options than Lyft, giving drivers more earning potential. Riders can choose eco-friendly or luxury options on both apps, but Uber has variety. They also offer more services. However, Lyft provides rental cars on its app. Additionally, the app allows riders to tip drivers up to 72 hours after the trip is over.
Despite the fact that there are some big names that dominate the market, there is still room for more, provided you can come up with a good business model that sets you apart from the rest.
Why the Need for Ride Sharing?
The growth of population and urban economy has increased the need for human’s mobility to support their activities. On the other hand, technology is growing more rapidly and becoming affordable. This has facilitated the growth of sharing economy business, formed by using online platforms.
These digital sharing platforms improve the efficiency of an existing business process and model, to facilitate free flow of labor and capital. While matching supply and demand, these platforms drive down the cost for the consumer, and is more transparent in terms of operation.
Why is Ridesharing Important
Sharing a ride has numerous benefits such as reducing traffic congestion and parking demands. Ride sharing also helps in eliminating vehicle emissions and creates less stressful commutes.
Other benefits include;
– Reduction in carbon footprint as ridesharing significantly reduces the number of emissions in the air.
– There is use of HOV lanes which are areas that are less congested than other highways and or parking lanes. This also means your time to commute could greatly be reduced.
– You also get more free time. Riding in carpool, vanpool or on transit allows you more time to check on your email, browse the internet, catch up on social media among other things.
– You also get to save money as ridesharing helps you save money on parking and gas.
– There is reduced traffic congestion because most vehicles are off the road, resulting in less congested roads. As more people take part in ridesharing, the overall traffic congestion could greatly be reduced.
Ride Sharing Business Model
The model allows vehicles owners to freely move from being private owners to public service providers. It provides work flexibility to drivers and allows them to choose when and where to work. There is also transparency by way of trip tracking and driver rating. However, the business model over burdens service providers with exorbitant licenses, registration, fees as well as other tariffs.
These digital shared economy business models are delivering the much-needed change in an industry that is heavily unionized and resistant to change.
How to Get Started with Ride Sharing Business
Most ride sharing companies use aggregator business model. It is a unique business model that involves building partnerships and letting partners work under your brand, rather than building and developing the offerings on your own.
Companies such as Uber and Lyft don’t own cars. They aggregator or collect cab drivers who drive their own cabs but work under the company brand name. While the actual service is provided by the partners, parent riding companies ensure service standards are met. The cabs reach on time, they are clean and take the right route to ensure safety of the customer.
These parent riding companies work on two faceted operating model. On one aspect, the focus is on getting as many cab partners on board as possible to deliver a seamless experience to the end customer. On the other aspect, focus is on marketing the company as a great ride hailing application to customers, that can be used for the purpose of booking a cab with just few steps.
Application is the first touch where customers enter the point of Pick up and drop off. Customers also review and choose ride options for vehicle size, price as well as estimated drop off time. It is important for customers to choose the option that best meets their demands.
The Background Algorithm
There is a background algorithm that informs all nearby available drivers about customer request. They can accept or decline as they wish. However, to ensure there is no biasness, information about destination is not shown to drivers before they can accept the ride. Once accepted, the rider is notified about the driver and the time it takes to be picked up.
How to Get Started with Ride Sharing Apps
Ride sharing apps are increasingly popular way to get about for many, and to earn some extra cash. Uber and Lyft are some of the leading and most used apps. The convenience, choice of luxury vehicles and cheaper prices have made them to be top of the list. Other notable ones include;
In this sector, competition is high and it makes it exciting yet difficult to choose one that works best for you.
The onboarding process varies from one platform to another. The first thing you will need is a valid driver’s license and a car. Beyond that, each platform has it specify requirements. At the minimum, you will need to be aged at least 21 years and above and have at least a year of driving experience.
Th car you have might reflect the tier you join. Generally, it doesn’t have to be flashy. The ride sharing economy can be quite competitive, so newer cars may get more customers. Most important, your car must be in a good working condition and kept clean all the time.
During the onboarding process, most companies have an online form where you fill in your personal and vehicle details. You will often be invited to an in-person session where you will be trained on the basics. Each platform will give you details to be followed.
What are the benefits?
You can keep your regular 9-5 hours or decide to drive throughout the night. This type of job can also work well for people who have unusual or unpredictable working hours or days. It can be a great hustle for those with zero-hour contracts and those who suddenly need extra cash. Once you are registered, you just hop into your car, turn on the app and get going.
Drivers for rides sharing apps are considered on self-employed contracts. This definition might change in the future. You will need to earn enough to cover for your various types of insurance, holidays and leave. It is worth making your projections and calculation on whether the ride sharing gig will work for you or not.
Your Ideal Compensation
Most people would like to know of their typical earning potential with the likes of Uber and Lyft. The short answer is it really depends. Those with newer, higher-end cars and drive full time will earn the most. Uber may claim that in big cities, their drivers earn $15 per hour. Given that you can only have a limit to the number of hours you can drive per day, it’s up to you to do your estimates.
When it comes to earning, there are other factors that will come into play. These include things such as the type of your vehicle, location and the time of the day you will be driving. Peak times with higher fares include morning and evening commute. Monday mornings and Friday evenings for airport runs, dinner time and weekends present the best peak hours.
It is very important that you take into account the expected or potential costs when driving. They will include at least the following;
– The platform’s cut of your earnings
– Cost of fuel
– Congestion charges
– Extra car maintenance
– Car rental fees
– Potential fines when you are driving more
How to stand out as a driver
Ride sharing apps will allow customers to tip their drivers. While it is important to cover the basics such as having good quality car that is always clean, it is also important you drive safely and professionally. There are also other things that will make you stand out.
– Ensure you are comfortable in your vehicle and practice driving it alone, especially if it’s a rental.
– Have a good understanding of your city and stay updated on important and upcoming events, protests among others.
– Make cleanliness your priority. Ensure your car is every clean and smells fresh.
– You need to be upbeat. Many passengers tip extra for good banter. Just keep it cool and nonpolitical. If you get the sense that your passenger wants to ride in silence, then you must respect that.
– Music can keep your ride fun, but keep it at low or recommended levels.
– It can also greatly help to have charging cables especially USB sockets at the bask as this can make your passengers happy.
Is driving for ride sharing apps good for you?
To decide if driving is good for you, you are the only one with an answer to that. You need to take a realistic look at the expenses, the work you will put in, as well as risk to reward ration. Based on those circumstances, you will get a good idea of your earning potential.
It is important you don’t get over-zealous by impressive numbers posted on company websites as they often do not reflect all possible expenses. It may be that the earning potential is too low for you. However, if you are looking for something that can supplement your earning income, having a go at driving for these companies may be a good option
Regulations In Ride Sharing Economy
Regulating a new era of digital sharing economy can be a complex task. Most transport network companies such as Uber and Lyft deliver a valuable service. However, they also disrupt existing transport business models, and this causes social issues.
Those that feel threatened by new business models go to extra lengths to commit the worst crimes. On the other hand, environmentalists class as well. Some argue that cheaper sharing options cause people to shun environmentally friendly public transport in favor of those apps.
Based on these issues, regulators need to understand that most drivers are infused with entrepreneurial spirit and are embracing the gig-economy. From a consumer stand point, this offers more choice for ride hailers. This makes getting a ride and paying it more efficient, a key metric governing success of shared economy business models.
There are other regulators who consider value proposition in shared economy business model. This is especially the case around poorer neighborhoods. Services resulted in shorter wait times and lower fares in below average income areas stand to benefit residents the most.
In anything you do, and your desire to live a live of financial freedom, have a detailed plan in place and be sure to catch any good business opportunity that comes your way.