How to develop your own Uber-like business
When someone's idea is successful, new companies and bold entrepreneurs try to create something similar and repeat their success. But very few businesses cross an imaginable line of popularity, which separates a simple brand awareness from the next startup phenomenon. That's exactly what happened with Uber. The success of Uber's service has provoked the emergence of numerous businesses operating in the on-demand economy. Today, we will shed some light on what makes Uber's way of doing business inspiring for startupers.
How to Create Uber-like Business?
Do you want to create the next Uber for X?
The term, which appeared not so long ago, has become an exciting business opportunity for thousands of startupers -- Uber for X. Any startup idea can now be explained as 'Uber for X', where X is any service you can provide using Uber's business model.
In a nutshell, Uber's business model adheres to three main principles:
- Customers are able to receive the required offline service just after online ordering.
- Service providers are free to choose whether they will provide the service to that particular customer or decline the request.
- Two separate mobile apps (for the service provider and consumer) are supposed to be used.
Everything is pretty simple. And that's why Uber-like services keep appearing. To make things clear, let's find out if any startup idea can follow Uber's business path and, what's more important, achieve success.
First of all, you may wonder if an Uber-like business should provide only offline services. Of course, Uber itself provides physical offline services -- on-demand car services, which now allows not only city rides but also delivery services (including food delivery) and airport transportation. Taking this, you may think that only offline services will benefit from Uber's business model. However, true businessmen think wider: even online services have something to take from Uber's way of doing business, but first things first.
You can know a lot more about on-demand services and how to create one in our recent article: How To Develop an On-Demand Service App?
The services that are involved in Uber for X gold rush can be divided into a few topical categories.
- Uber for Home. One of the widest niches to employ the Uber model -- Cleaning services (including Laundry services, Carpet cleaning, etc.), House Repair Services (minor and major mending) and so on. Except for this, Uber for Babysitting, Tutoring, Dog Walking, Gardening, and so on, always find a market.
- Uber for Delivery. Courier services, Deliveries from shops, restaurants, cafes, Truck services, just to name a few.
- Uber for Repairs. Demand for repairs isn't limited to houses. Just think of the numerous electronic gadgets, cars, clothes, and jewelry people possess.
- Uber for Health is another engrossing on-demand market. Here, various kinds of services will find their consumers, starting from a doctor's visit to remote consultation (by the way, here's your example of the online on-demand service).
- Uber for Accommodation. There's nothing easier than to provide a room, an apartment or a country house for rent applying Uber-like services. Take AirBnb as an example -- sharing services at work.
Apps like AirBnB are unique and worth your attention. So take your time reading about this service at this point. Here's your link: How Much Does It Cost To Create An App Like Airbnb?
- Uber for Other. You may choose from any other service industry.
All in all, summing up the above said, any business, which has a service provider and a customer, can organize an Uber-like business model.
Business Model Canvas for Uber and Uber-like businesses
Let's now explore what business model Uber is grounded on and how all those Uber for X can make use of it. Alex Osterwalder's Business Model Canvas is the best way to represent the company's business model and understand how everything is organized. The canvas originally has nine segments, which can be visually shown as follows:
You can create your own Business Model Canvas for the startup project or document an existing one using our Business Model Canvas template.
We can divide the Business Model Canvas in half -- the left half is responsible for the product, while the right half describes the market. In the middle, we have the value you have in an offer or are going to create.
Uber combined all three to achieve total success: a great product that offers its undeniable value has met a great and, what's more important, appropriate market.
Anyway, we are not going to be confined to this general information. Let's see what questions need to be answered in each table cell to create an effective understanding of business model for Uber and Uber-like businesses.
1. Value Proposition
You don't need to have a master's degree to know that every idea is valuable only in the case of when it offers obvious benefits to the customer segment of a particular business. The Uber-like business model has two separate markets that make it valuable: Service Providers and Service Consumers. They should be looked at differently, seeing as they pursue different goals.
What does Uber do?
Uber has Passengers and Driver-partners.
- Rides search
- Good quality and luxury cars
- Booking (request & match technology)
- Cash-free payment
- Minimum waiting time (ETA & car approach tracking)
- Rating & reviews possibility
- World-wide availability
- Flexibility of working hours and location
- Additional income (payments even without requests if online)
- Aware and engaged clients
Uber's Value Proposition
So, Uber for X should also ensure a two-sided marketplace. That could be Householders and Maids / Repairers; Parents and Babysitters; Patients and Doctors; Customers and Couriers; you've got my point.
The next thing is to define what value you are going to deliver to both. You know that it's never enough to have a cool idea. Your idea should seem useful not only to you but to your customer segment as well.
Short hint from Cleveroad: Don't copy someone's way of thinking, create your own. There is no need to invent something new, old established industries can be modernized and improved. Why not with the help of your product?
2. Customer segment's
To know who you help with your product is even more important than how you can help. Of course, you want to involve as many people as possible, however, the quality outweighs the quantity. Engaged customers are the foundation of any successful business.
So, it's really important to identify who you create value for.
Creating a product for a two-sided market, keep in mind that you deliver different sorts of values for both segments.
Take a look at Uber's users -- Passengers and Driver-partners.
Passengers are those who:
- Need a ride from point A to point B and either don't own the car or don't want to drive themselves
- Look for a cost-efficient solution with sharing option
- Want a luxury ride
Driver-partners are those who:
- Want to earn extra money using their own cars
- Taxi drivers who want to be their own bosses
Short hint from Cleveroad: Think about the reasons why customers may want to use your product. This will help you identify the categories of people that will appreciate your solution.
3. Distribution channels
The next step is to understand how your business is going to link with the customer segment. How to reach, attract and retain them?
With their growth, Uber has brought into a play many methods of spreading the word about their service. Some of them are pretty traditional, such as online presence (website, mobile apps), social media marketing, PR strategies, a partnership with known brands, and, of course, by word of mouth.
The others are more creative, like suggesting their services almost to the point of potential demand (sports events, concerts, etc.) or responding to particular weather conditions (who doesn't know how annoying it can be to receive rejects from ordinary taxi services in nasty weather?)
Short hint from Cleveroad: Remember that not all users are equal, especially when your business is Uber for X one. Service providers and service consumers may require different channels of distribution.
4. Customer relationships
Now after you know the user audience and they know about you, it's time to decide on how you would interact.
We have some useful information for you about user engagement methods. It's a must-read if you are serious about settling long-lasting relationships: 4 Basic Options to Increase Users Engagement
Uber offers an entirely automated way of interaction. Passengers don't communicate with dispatchers to get a ride, cashless payments, a feedback system, and customer support -- all these services are available through the app or website. Driver-partners also have an automated experience.
Short hint from Cleveroad: With the wide spreading of social networks, customer relationship have changed. Now companies can not only get deeper insights from their customers via communities but also involve them in the process of your product's improvement.
5. Revenue stream
Everything is simple: you provide services and of course, you want to get profit. The question is "How much will you make creating an Uber-like business?"
To find the answer, let's see how Uber has organized its revenue strategy. First, Uber charges for miles or kilometers. Second, Uber has separate pricing politics for different levels of service (UberX, Premium Uber Brands) and extra services (Uber Cargo, Uber Foods, etc.). And of course, surge pricing also influences the company's profits. That's it.
Developing the revenue model that will suit your business is an individual thing and there is no universal recipe. So if you need our advice, we'll readily give you a helping hand.
Types of Revenue stream
Short hint from Cleveroad: Leave your strategy some space to give your user some special treats: discounts, events, special offers and so further.
Okay, half of the business is done. You know your market, what values you will offer it and what you will receive back. Now you need to create the product itself. Ready?
6. Key resources
What does your Uber-like business need for a start?
First of all, a platform that will connect the Service Provider and Service Consumers.
Secondly, the base of Service Providers (Drivers with cars, Cleaning staff, Mechanics, etc.)
The next key resources may vary. However, if your want to ensure automation, you should include relevant algorithms. Uber, for example, has Pricing and Routing Algorithms.
Short hint from Cleveroad: Technology is your friend. Whenever you can do without manual operations, do it. The same story with ownership: try to reduce the number of onsite staff or equipment (car park, in Uber's case).
7. Key activities
At this point, Uber's approach of how to make the product work is perfectly well-thought out and, more importantly, suits any Uber for X business.
- Platform development and management. It's the most time and cost intensive process, but it's essential as well.
- Marketing and customer acquisition
- Hiring and managing Service Providers
- Customer support
Short hint from Cleveroad: The workforce you're hiring is important. So treat them like partners, not like employees.
8. Key partners
To get things done, you need to find those who will help you perform your activities and form partnerships.
Services like Uber have to provide:
- Service providers
- Technical support (Map API providers, Payment providers, etc.)
- Local authorities in case you're planning to scale your business outside your local area
Short hint from Cleveroad: Expand gradually. It's not a good idea to take the market by storm. It is true for both service and geographical expansion.
9. Cost structure
The last but not the least thing in the Uber-like business model is what it will cost you.
Here's a list of expenses you should be prepared for (by the way, it contains the same things as Uber).
- Tech infrastructure -- App creation and maintenance
- Salaries for permanent employees
- Marketing expenses
Short hint from Cleveroad: On-demand service is quite an expensive business to build. So, it would be good for you to launch an MVP first in order to verify your idea.
How much does it cost to develop Uber for X?
The price of creating Uber-like apps depends on a number of factors:
- Platforms. To cover a bigger audience, you have to consider creating mobile apps for all mobile platforms: iOS and Android. It's a good idea to create a website or a landing page to ensure the visibility of your service. The cost to develop an app like Uber for iOS differs by 10-20 percent from the Android app's development.
If you have a tight budget, it's a good idea to choose one platform for a start. How to make your choice which one exactly? Read this piece of information: What Is the Best Platform To Start From - iOS or Android?
- Features and functionality. You surely have to know for sure what features your app will provide to estimate the cost of developing an app similar to Uber. Each feature has its required implementation time which depends on the complexity of the provided functionality.
- Your budget. You know, you can control how much your Uber for X would cost. I don't mean, you have to debate the number of hours a developer sets. You can choose the developer with a lower hourly rate. Under no circumstances, does that mean you skimp on the quality of services received (of course, if you choose smartly). Geographical location of the development team plays an important role in the rate formation, so take a look outside your local pool of software developers.
If you want to know how much an Uber for X costs, check out our infographic.
INFOGRAPHICS - How much does it cost to develop an Uber for X app
Post release guide
Our experience in creating and supporting project focused on providing on-demand services like Uber lets us share some advice with you.
- Build an app for one platform first -- web, iOS or Android. The development for another platform will take 10% less time.
- Don't scale too fast. Start locally and then gradually expand your business.
- If the number of users initially is large, think over fast scaling.
- Test your product on a small group of early adopters (Facebook friends, for example).
- Create a pre-launch landing page to generate customer leads for your yet to arrive product.
- Before the official launch, create a press kit to get publicity for your business.
- About a month in advance, gather and work on emails for popular journalists in your industry.
- Develop your strategy of features on such launch platforms as Product Hunt.
- Consider the methods of gathering users' contact data on the launch day.
- Set up a retargeting and email marketing campaigns to increase new customers' loyalty.
I hope the information above was useful for you, and now armed with the knowledge, you can get down to creating your own Uber-like on-demand service. If you need a trusted partner with substantial experience in developing Uber for X apps, drop us a line and let's make something special together!