Is Uber a disruptive company that lowers prices for consumers, or a luxury brand? Its expansion of service to Asia suggests that it depends where you live.
In the US, Uber’s marketing approach has been to make car services more accessible to consumers. Their most common black car option is usually slightly more expensive than a taxi, depending on the city, although the UberX option, which arranges for rides in hybrid vehicles, is cheaper than taxi service. They’re even working to integrate their mobile app into some cities’ taxi fleets. Their pitch is that they are a disruptive business, battling the entrenched taxi industry.
But in Asia, the company has a different bent. TechCrunch notes that the company has been setting its prices at a premium. The competition is a little steeper, with more taxis taking advantage of smartphone apps, kiosks in convenience stores and the classic road-side hail. The company is counting on its app design and a supply of posh black cars and roomy SUVs to lure higher-end customers. A viable business strategy, but not exactly what you’d call disruption.
In the US, of course, Uber didn’t start off battling cabs on prices. In its early days, Uber’s demand-responsive pricing system sent fares through the roof at times when everyone in New York City was scrambling for a ride, for instance, in the wee hours of New Year’s morning. But in most cities, where taxi prices are higher and cabs are harder to find, Uber was considered more consumer-friendly. And with the advent of UberX, its services got cheaper.
Uber’s Asia strategy may reflect the region’s outsize appetite for luxury goods. But it may also reflect the fact that, compared with the US, the supply of cabs in other countries is less limited, forcing companies to focus more on competing for riders. In Singapore, for example, regulators are working to put more cabs on the road.
At least for now. In Seoul, the South Korean government is considering a plan to limit the number of taxis in major cities to fight a perceived oversupply, after politicians apparently distributed taxi licenses as a form of patronage. If that trend continues in South Korea and other developing markets, Uber might ultimately bet on disruption rather than luxury after all.