In the third quarter of 2016 Uber has generated $1.7 billion in net revenues and lost over $800 million at the same time. When you play big you lose big, right? Yet, caution entrepreneurs have already started questioning the ride-sharing economy. Is it a viable niche to pursue? Is it still worth to attempt Uber-like app development and hope that your product will achieve the same success? How to make an app like Uber, but don’t appear as a complete copycat?
This post is aimed at answering those questions and providing actionable tips for your product strategy, along with clearly communicating the likely obstacle you’ll encounter.
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Pro: Sharing Economy Will See a Breakneck Growth in The Next Decade
The sharing economy is currently valued at 15 billion euros globally and it can hit the 335 billion euro threshold by 2025. PwC offers a more detailed breakdown of how the sharing economy has rapidly grown between 2013-2015.
Peer-to-peer transportation is consistently named among the top-5 key sectors of the sharing economy. That’s why we’ve seen more than one Uber clone appearing at the local markets. This sector also generated the most revenues in Europe in 2015, yet has lower per-transaction value compared to peer-to-peer accommodation services:
According to the same report by PwC, transportation will remain the largest sharing economy niche across Europe through 2025.
So it’s safe to say that there’s still room for another app like Uber and the consumer interest in this niche will remain steady for at least 10 more years.
Con: Dealing With The Authorities
Ride-sharing startups, Uber in particular, have faced a series of global protests and severe government opposition in certain countries. As Michael Masserman, senior director of government relations at Lyft, admitted in his panel speech at CES:
“Change is hard, change plus regulation is really hard, change plus regulation plus transportation policies…I mean, some of these policies haven’t been changed in 50, 60 years.” For startups dealing with the red tape and local transportation regulations may become a massive setback in growth.
While certain governments do express active support of peer-to-peer ride sharing e.g. the Copenhagen authorities, the opposition remains steady too. The French and German legislators have previously fined UberPop for a hefty a €800,000 and eventually banned the service altogether with an “illegal” stamp.
The lesson here is – before you hire taxi app developers make sure you know the local regulations regarding the operations of taxi services and follow them.
Pro: Cross-Niche Partnerships
You may merely want to build a mobile app for taxi service. Or you can take a more exciting and possibly profitable route of cross-partnerships like HOP – a new Australian ride-sharing app – did.
Considering all the hype around the industry, a lot of established businesses in close markets decided to take the route of collaboration, instead of competition.
HOP has recently signed a partnership deal with Hertz, the multi-million dollar car rental company, which agreed to provide their drivers with cars. Hertz has also conducted test partnerships with Lyft previously in Denver and Las Vegas. Afterward, the company’s CEO expressed their growing interest in expanding the partnership network further.
Ola – a custom Uber-like app in India has also signed up a partnership deal with the local car rental company to provide cars to the drivers for discounted rates, and hence, lure in more professionals on board.
Con: The Development Timeline & Price
While the cost to develop a taxi app is relatively affordable for most companies, building a product the size of Uber will require considerable investments.
According to The Next Web estimates, Uber had cost $1 to $1.5 million to develop. The kick here is that you’ll have to build two slightly different apps initially – a passenger app and a driver app.
As well, apart from iOS and Android app developers, you’ll have to hire a backend team to code the server-side of the project and create a web admin panel to manage all in-app relationships.
UX design can eat up a significant chunk of your budgets too. After all, you want to create the best possible experience for users to make them choose your app over the competition.
In general, the priciest elements of taxi booking app development are the following ones:
Maps and Geolocation Functionality: Part of Uber’s allure is that you can precisely see the cars available in your area and watch the driver coming to your place in real-time. The app automatically determines the user’s and the driver’s location using GPS tracking. Uber also provides detailed routing instructions to the driver.
In general, it takes between 120-140 hours for developers to code this type of functionality.
Payment integration timeline will depend on the number of factors including the payment integrations you’ll choose to support e.g. credit cards, PayPal and/or Apple/Android Pay; additional features such as split-the-fare, tip driver etc; and whether you’ll want to deploy price surging or not. Again, experienced developers will need up to 150 hours to code this element of your app. And that’s not the place where you should cut corners – payment security should be paramount.
In-app messaging and communication: Integrating a full-fledged chat will significantly increase the taxi app development cost. Hence, you may want to settle on supporting just text and push notification messages. Yet, if you choose to support SMS, mind the costs of using a 3rd party provider for those.
Android or iOS app? Though it depends on required functionality, Android app development typically takes as much time as iOS. You should choose the primary platform for deployment depending on the regional user preferences. Building an iOS app first makes sense if you are targeting the US and Western European markets, through Android devices are becoming almost equally popular these days.
Pro: You Can Improve the Existing Product
While Uber has already proved to be an incredibly popular solution, there’s still room left for improvement.
First of all, instead of building a complete Uber clone, you can take the initial concept and apply it to another market segment, for instance, luxury & vintage car rentals or offer users to instantly find and book a team of movers with a truck, or book a sightseeing car tour with a professional guide on board. Again, think of the different cross-partnerships you can establish to offer more than just a ride.
If you want to stick with a taxi booking service, here are a few product feature ideas based on frequent user requests:
- “Leave a tip” option.
- Preferred driver program, which would allow drivers to create a network of regular passengers and passengers to book their favorite driver whenever he’s available. Win-win for everyone.
- Blocking off passengers. Sadly, a lot of Uber drivers have mentioned rude, highly intoxicated and overall unpleasant peeps they had to deal with. While the app does encourage to leave a rating for both parties, there’s no mechanism in place that would ban/punish passengers for bad conduct.
- “Where are other drivers?” feature could provide the driver with a map overview of other cars. In that case, all of them won’t be concentrated in the same area and address the passenger demands better.
- Waitlist. During peak hours a lot of passengers would be happy to join the waitlist for a guaranteed ride (and pay extra) instead of manually refreshing the app over and over again.
- Voice commands when you just can’t type everything because your hands are full.
- In-app calls another popular request both by drivers and passengers. The feature would help coordinating the pick-ups and finding each other better.
To wrap it up, ride sharing will clearly remain one of the booming sharing economy segments and the demand for services will only rise. While building a great app certainly requires a decent investment, it can massively pay off in terms of revenues and popularity among users. Simpler apps proposing truncated Uber functionality are here to stay as well and remain popular with the consumers!