12 Jun 2019

From Disrupter To Disrupted: Uber Under Pressure From Cheaper Rivals

The rideshare app is facing increased competition in Australia.
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The US rideshare giant has decimated the local taxi industry since it launched in Australia in 2013. Five years on, its Uber who’s under siege, battling cashed up rivals and a sagging reputation.

On the face of it, this was good news for Uber. A two year investigation by the Fair Work Commission had given the company a big win, agreeing that its drivers were independent contractors rather than employees.

However the reaction told a different story. Unions and academics slammed the decision,  with TWU National Secretary Michael Kaine declaring Uber a “billionaire backed bully.”

It’s indicative of how the tables have turned on the U.S rideshare giant, since it arrived in Australia in 2012. Back then it was the young, hip ridesharing start-up who’s cheaper prices and ease of use, quickly undercut the local taxi industry.

Now its Uber whose business and reputation are under assault from rival rideshare operators, led by India’s Ola and China’s DiDi.

While there have long been other rideshare operators in Australia, it’s only with the arrival of Ola in March 2018 and Didi in June 2018, that Uber has faced rivals with the size and scale to take them on.

With Didi so far only operating in Melbourne and Newcastle, it’s the Victorian capital where the battle is at its hottest and according to local driver Jagi, who drove The Motor Report home on Saturday night, and said the two upstarts are having an impact.

“Yep there’s a lot (of competition), last night I got more work from Ola than from Uber,” he said.

It’s an outcome he and an increasing amount of drivers prefer due to Ola and Didi’s lower commissions.

“They (Ola and Didi) take less percentage (of the fare). Uber take 27.5 percent, Ola takes 15 percent and Didi 5.5 or 6 percent.”

With Ola and Didi paying them more, Jagi says drivers like him are happy to promote their cheaper fares.

“If someone is sitting in the Uber, they (drivers) will say try this or try this, you’ll get a cheaper fare. People are out to save money you know.”

So how much cheaper?

“If you are going from Melbourne city to the (Tullamarine) airport, Uber costs you 50 bucks, a taxi costs 55 or 60 bucks. Ola might cost you 42 or 43 so it’s cheaper and they always have promotions all the time, like 30 percent, 20 percent off.”

It’s a great outcome for customers, but with none of these companies currently making a profit, they should enjoy the competition while they can.

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