Riding a New Revenue Highway

In addition to transforming the consumer experience of getting a ride, Uber is changing the way we think about transportation and delivery business models. The technology to expand the transportation industry is increasingly growing and Uber is contributing to how transportation policies are shaped. The market is certainly witnessing the disruption of private transportation in that taxi company monopolies will have to transform the way they do business in order to remain relevant.

But, we are also witnessing the birth of adjacencies as Uber experiments with food delivery. We may soon see the logistically complex transportation industry adopt tools and practices from the Uber model. In a larger sense, we are all contributing to a grander evolution of a freelance economy with a passive more flexible work force.

Has the larger population considered the inverse of the Uber model?

What happens when the independent driver with a flexible schedule can accept a delivery order to transport a shipment of goods from a supplier or distribution center to a retailer’s shelf? This will turn the logistical planning industry on its head. Certainly, he who owns the logistical planning and distribution of commerce between the driver, shipper and recipient (the dispatch engine that runs Uber) is sitting on a larger and more lucrative business venture. It will not be long, if not happening already like with the launch of Convoy, where independent truck drivers are managed with an Uber-like model. Could drivers start accepting jobs on their smart phones to restock a retailer’s shelves? All of this becomes even more interesting with the competitive cost cutting in local delivery and distribution that will appear through the [freelance/shared] economics of this new model. Instead of seeing the larger Coca-Cola distribution truck restocking the shelf at convenience stores, an independent driver on his way home from work, and with a flexible schedule, will be making this delivery to earn a few extra dollars on the side.

Another adjacency in the evolution of transportation and delivery can be envisioned with e-tailers like Amazon. The giant e-commerce industry is already complex and competitive. E-tailors are continuously looking for new ways to expand their delivery mechanisms and drive shipping costs down to make their businesses more profitable. While we are observing the experimentation with drones for home delivery, the giant delivery services, UPS, USPS, FedEx, etc are improving their systems and models. This does not leave much room for smaller, leaner delivery competitors to enter the market unless they can meet the demands on a larger scale. The scale to which Uber and Lyft have grown with users and drivers could help e-tailers expand their home delivery models beyond the delivery giants.

Of course all of this sounds like a capitalistic utopian model for supply and demand where markets regulate themselves. There are still many unknowns as the concepts of shared economic models evolve. What we do know is that the flexible drivers who meet the supply will get the demand, be able to fund their vacation by helping those who need a ride, or who need their groceries delivered. Then again, since Google Ventures recently invested into the company, maybe the need for cars with no drivers is the next chapter in this saga.

Kemal Catalan, PhD

Manager

Share