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NEW UBER CEO TARGETS IPO IN 18 TO 36 MONTHS: In an all-hands meeting with company employees, incoming Uber CEO Dara Khosrowshahi said the ride-hailing startup should make its initial public offering (IPO) in the next 18 to 36 months, according to a report from CNBC.
In order to set the ground for a potential IPO, Khosrowshahi said he would make it a priority to “pay the bills,” apparently referencing the company’s continued losses. Those losses totaled $US645 million in Q2 2017, despite $US1.75 billion in adjusted revenue. That was down from $US708 million in losses in Q1 2017, and $US991 million in Q4 2016.
Although Uber’s revenue has been increasing and its losses narrowing, getting in the black will likely be a tall task for the company in the immediate future. Uber is facing increasing competition in multiple markets and its reputation has been severely damaged by a long string of scandals going back to the beginning of the year. Uber’s share of the US ride-hailing market fell from 84% at the beginning of this year to 77% at the end of May, according to Second Measure, which analyses anonymized credit card data. Meanwhile, Lyft has been making impressive gains — it hit the 1 million rides per day mark this past June and grew its gross bookings by 25% sequentially in Q2 to more than $US1 billion. Additionally, Grab, Uber’s biggest rival in Southeast Asia, is expected to close a new $US2.5 billion funding round soon.
Uber will have to prioritise whether to defend market share or cut its losses further. Reaching profitability will mean reducing the new rider discounts and incentives for new drivers that helped Uber grow its global ride-hailing business in the first place. It may also require raising prices on riders, which would likely give Uber’s competitors a boost. Another option for Uber could be taking a bigger share of the revenue from rides, but that would mean paying its drivers less, possibly driving them to work for competitors.
Uber also may consider pulling out of some markets, Quartz reports. It has already pulled out of China, and merged its business in Russia earlier this year with domestic ride-hailing company Yandex Taxi. Uber may look to exit developing markets where it faces intense competition and little chance of making significant margins. Southeast Asia could be one such market, as Grab continues its expansion there, Quartz points out. Other candidates include India, where Uber is battling domestic alternative Ola, and Brazil, where it’s competing with 99. Retrenching from some developing markets could help Uber further cut its losses, but it would still need to figure out a strategy for defending its position in the US, its most important market, and rebuilding its reputation.
DELIV EXPANDS CROWDSOURCED DELIVERY SERVICE TO HELP RETAILERS COMBAT AMAZON: Deliv, a crowdsourced delivery startup, announced it is expanding its service to 33 new markets, nearly doubling its footprint across 23 US states and more than 1,400 cities. Some of those new markets include Denver, Austin, San Antonio, Orlando, Phoenix, and Charlotte. The startup, which was founded in 2012 and is backed by UPS, counts Best Buy, Bloomingdales, and Macy’s among its retail partners.
Deliv aims to help retailers improve their online sales and fend off Amazon by speeding up their deliveries. Customers can select from one-, two-, and three-hour delivery windows when they order from the retailer’s app or website. This gives retailers a same-day delivery option to compete with Amazon’s Prime Now service, which provides free two-hour delivery on more than 25,000 items to Prime members in select cities. Amazon has been steadily expanding Prime Now, bringing it to more markets and adding new product categories — beer and wine products were introduced just this week.
Amazon’s expansion of Prime Now could have a powerful impact on online shoppers’ delivery expectations, and retailers and their logistics partners are working hard to respond. Consumers are already increasingly expecting same-day delivery — 61% of respondents to a UPS survey earlier this year said they expect goods ordered before noon to be eligible for delivery that day. As Prime Now grows, it will likely push more consumers to expect same-day delivery, which could help Amazon steal business from competitors who don’t offer it. Nearly 90% of respondents to a survey released last year by e-commerce fulfillment company Dotcom Distribution said delivery times had influenced their online buying decisions.
Several retailers and logistics companies have recently announced expanded same-day delivery options. FedEx brought its same-day delivery service to new cities last week, while Walmart expanded its same-day grocery delivery offering with UberRUSH. Crowdsourced delivery companies — including Deliv and UberRUSH — can help retailers provide same-day delivery in urban areas by quickly connecting them with nearby couriers available for immediate deliveries. As Amazon continues to push consumers’ expectations for faster deliveries, more retailers will likely turn to crowdsourced delivery options as a countermeasure to the e-commerce giant’s fulfillment capabilities.
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TOYOTA TO TRACK GRAB DRIVERS TO EXPLORE FINANCIAL SERVICES: Japanese auto giant Toyota will install tracking devices on the vehicles belonging to 100 drivers who work for Southeast Asian ride-hailing service Grab, The Wall Street Journal reports. Toyota is one of the major investors, along with Softbank and Chinese ride-hailing giant Didi Chuxing, set to put $US2.5 billion in new funding in Grab.
Toyota plans to use the tracking data it gathers to develop new usage-based insurance, auto financing, and other mobility services, according to the WSJ. Toyota has been very active in exploring new services. In addition to its Grab investment, it has a deal to test self-driving taxis with Uber, and partnered with car-sharing startup Getaround to test some of Toyota’s technology in its cars.
The rise of alternative mobility services is opening up new revenue opportunities for traditional automakers. Besides launching their own ride-hailing and car-sharing service, automakers can also supply cars and repairs for other companies operating such services. GM’s Maven car-sharing service, for example, lets Uber and Lyft drivers rent its cars for $US229 per week. Its vehicles have provided 17.5 million rides for those ride-hailing services. Toyota’s interest in offering financing and insurance could be another extension of this trend. As ride-hailing services grow in emerging markets, like those where Grab operates, recruiting drivers will likely require helping them attain financing for new cars and insurance to protect them in case of accidents. Many automakers, including Toyota, already have financial services arms that specialize in auto finance, so extending these arms to offer services that cater to ride-hailing drivers would be a natural fit for these businesses.
In other news…
- Apple lost 17 engineers from its flailing self-driving car project to self-driving startup Zoox. The engineers reportedly left because of Apple’s decision to turn the project’s focus to self-driving software, rather than actually building a self-driving car. The engineers who left all specialised in traditional auto systems, including braking and steering. Apple’s car project has failed to make much progress since its founding in 2014, and it remains far behind other players, including Google’s Waymo, in deploying test cars with its self-driving technology. Meanwhile, Zoox plans to build a fleet of self-driving vehicles to provide rides in urban areas.
- Swiss Post is testing delivery robots in downtown Zurich, in partnership with robotics startup Starship Technologies and department store Jelmoli. Customers can select the delivery robots as a fulfillment option during the checkout process on Jelmoli’s website, along with their preferred delivery slot. When the robot is close to the delivery location, the customer receives a code by SMS text message that allows them to unlock the robot’s locker to retrieve their items. Swiss Post previously ran a trial in October 2016 with Starship Technologies, which is one of the early leaders in the emerging delivery robots space. Swiss Post said that it is planning further tests with Starship Technologies to use its robots for food deliveries and sending medical products.
- Daimler unveiled the new Smart Vision EQ fortwo Concept car, an autonomous car designed for shared mobility services. The concept features no driver controls such as a steering wheel or pedals, and an LED display on the front of the car that can display messages as the car pulls up to pick up passengers. The concept might well never make into production, but shows how automakers are thinking ahead to how the designs and functionality of their vehicles will need to change with the advent of autonomous cars that don’t require a driver.
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