"Most customers who love Uber don’t realize that the company subsidizes the cost of many rides"
Amazon used this technique for over a decade and is now one of the largest companies in the world. I think it's also telling that the author admits that users love Uber, but he doesn't, so things need to change. Guess what, people are happy with the service. If you're not, stop using it (and I guess publish negative articles in mass media publications).
As a massive Uber customer I'm really glad that nothing changed with the new leadership. The service does what I want and doesn't need massive tweaking. I'd also happily pay more for Uber when the subsidies end. The user experience and value for me is far too great to switch.
There's a bit of a difference between those two examples. Amazon was making a per unit profit but taking losses overall due to fixed costs, Uber is taking a per unit loss. Amazon was able to eventually overcome those fixed costs with volume, but by taking a per-ride loss, Uber can't ever outgrow that subsidy without raising prices or lowering per-ride costs (and drivers are already not exactly flush with cash).
Good point. As a consumer, I'd be willing to pay higher prices so I could see how once you get "hooked" this strategy works. I also would love to see the self-driving dream come to fruition which would presumably lower costs.
You're correct that both those strategies differ from Amazon though.
Amazon used this technique for over a decade and is now one of the largest companies in the world. I think it's also telling that the author admits that users love Uber, but he doesn't, so things need to change. Guess what, people are happy with the service. If you're not, stop using it (and I guess publish negative articles in mass media publications).
As a massive Uber customer I'm really glad that nothing changed with the new leadership. The service does what I want and doesn't need massive tweaking. I'd also happily pay more for Uber when the subsidies end. The user experience and value for me is far too great to switch.