Uber needs to juggle both the needs of its employees and those of e-commerce companies if it wants to expand into a logistics company that delivers goods in addition to people, according to a recent report by The Wall Street Journal.
This week has been a rocky road for Uber, whose ride-hailing services may never be the same again. Its business model could dramatically change due to the recent ruling of the California Labour Commission on Wednesday that an Uber driver who brought the suit to court was an employee instead of an independent contractor.
Uber is trying to upend other services the way they did with people-delivery. Last year, they toyed around with courier services like UberRush, which has bike messengers bring items from point A to B. The taxi-like service also put in a $US3 billion bid to buy Google rival Nokia mapping unit called Here. Uber’s one-day pilot program, UberHealth, delivered flu prevention packs and vaccinations for users at no cost.
Uber might have some kinks to work out with UberEats, their food delivery experiment which launched last fall. Even with a delivery time of 10 minutes or less, the $US4 delivery fee could be a turn-off to potential customers.
In addition, luxury goods are often shipped in small amounts to keep packages below the maximum insured value, but Uber was unable to meet the insurance of high-price items of clients like online retailer Gilt Groupe. Since Uber only covers merchandise up to $US1000, possible partnerships with a lot of other high-end retailers are coming up blank.
Now investors are talking about a new round of funding which might give the company a $US50 billion valuation, the same mammoth size as FedEx Corp, but they don’t know if Uber can deliver. Considering the climbing market of luxury goods, Uber needs to take cues from UPS, which recently acquired Parcel Pro, a firm which provides insurance coverage for expensive goods.
Kevin Sterling, an analyst for BB&T Capital Markets thought this tie-up made UPS ahead of the curve. He told WSJ, “this is a much quicker way for them to get scale in the insurance of jewellery business, rather than starting from scratch. Parcel Pro is already in all the major jewellery markets.”