Not all that long ago, if you wanted to get
around in the city, your two main options were public transportation or hailing a taxi.
But then came Uber. The young company dominates the U.S. ride-sharing industry, with nearly
60% market share, and has expanded its business to 65 countries around the globe. Ride-sharing
is poised to grow into a $133 billion industry by 2023, and Uber is well positioned to benefit.
In this video, we’re going to break down exactly how Uber makes its money by getting millions
of riders to their destinations every day. Uber makes money every time a rider opens
the company’s app, hails a driver, and pays for a ride. And the company has a lot of riders
to make money off of. Uber’s ride-sharing business operates in more than 700 cities
across six continents, and has 91 million monthly active users on its platform. In 2018,
Uber’s bookings, which is the amount the company collects from riders before it has to pay
its drivers and other fees, totaled $50 billion, up 45% from the year before. From those bookings,
the company generated $11.3 billion in revenue, a 43% increase from 2017. But if the company
had $50 billion in bookings, but only brought in $11.3 billion in sales, where did all that
money go? Uber’s business couldn’t exist without its drivers, who work as independent contractors
for the company, and complete 14 million trips every day. Uber pays them, along with other
expenses, to keep its business running across the globe. When all of its expenses are totaled
up, and additional income added in, Uber lost $1.8 billion in 2018.
While Uber isn’t profitable right now, the company’s loss of $1.8 billion in 2018 is
an improvement from its adjusted loss of $2.2 billion in 2017. Additionally, Uber is looking
to other businesses outside of ride-sharing to drive growth. One such business is the
company’s food delivery service, Uber Eats, which accounted for 12% of the company’s total
sales in 2018. The service is available in 500 cities globally, and Uber says it’s the
largest meal delivery platform in the world outside of China, based on its gross bookings.
This small business could be an important one for Uber because it helps the company
diversify its revenue and tap into the fast-growing food delivery market. Uber also runs a business
that pairs shippers and truckers together called Uber Freight. The company is still
working to expand the business, but it’s an early indication that Uber aims to be a transportation
platform and not just a ride-sharing company. Additionally, the company is developing autonomous
vehicle technologies and has a small fleet of self-driving vehicles on the road in Pittsburgh.
Autonomous vehicles could eventually help Uber lower expenses and increase rides, though
the mass rollout of this technology is still years away.
While Uber has built itself into a ride-sharing powerhouse, the company still faces stiff
competition. Lyft, Uber’s rival in the U.S., has about 39% of the market right now. And
while Uber’s entered many international markets, its success abroad is anything but guaranteed.
So, rider fees are how Uber makes most of its money, but keep an eye on how the company
expands Uber Eats and its other businesses as well. Thanks for watching this video!
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