How Uber tries to create ‘stickiness’ for its app

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Ride hailing is back. But Uber wants to become more than a one-stop shop for ride bookings.

Growth — through products and expanded consumer groups — was the common thread at Uber’s Go-Get event this Wednesday in New York City, where the company announced a slew of new additions to its platform that, in many cases, have nothing to do with stopping a car, actually. For example, Uber launched a privately chartered boat service in Mykonos, Greece. Uber also rolled out group ordering for Uber Eats and opened its app to teens, a gamble to hook a whole new generation of users.

The drivers behind those movements are not necessarily the same. But they both point to the continued pressure on Uber to find ways to acquire new users and retain old users.

“We want to be able to be a platform for all mobility needs,” Camiel Irving, chief of rides at Uber, told AapkaDost in an interview.

She emphasized that features aimed at families – be it overseas boat trips or group orders – are a logical step for a company focused on organic growth. After all, families are have control over a lot of expenses around the world, so it makes sense to cater to their needs.

“Our goal is for people to go anywhere and get anything,” Irving said.

That seems like a winning strategy. In the first quarter, Uber beat analysts’ expectations as both gross bookings and revenues increased.

However, as AapkaDost reporter Rebecca Bellan recently pointed out, iUber’s balance sheet doesn’t show how much the company invests in the myriad of products resulting from the Go-Get launches, nor how successful they are in generating revenue. The updates and new app features probably cost the company a lot less than the many moonshots it’s since left.

On a boat

So why boats, I asked Jen You, Uber’s lead product for rides? Uber is not new to boat transport – it operates a fleet of ferries in London on the Thames in partnership with a third party. But the London service is mainly aimed at commuters; Uber’s new Mykonos venture is purely for private bookings.

Post-pandemic travel trends played a role, you said.

“Our thought was, since there are so many travelers going to Greece this year, why not leave a product?” she said. “It is one of the most popular holiday destinations.”

She’s not wrong. Greece is expecting more than a million travelers this year, thanks in large part to more direct flights from the United States.

It’s a low-risk pilot for Uber, as it partners with local boat operators rather than running its own operations. You characterized it as a way of directing demand to local businesses – while making money, of course.

“We want to make sure we’re innovating in terms of mobility,” U said, “and being able to switch rides is something that only we can do — be able to help manage travel experiences across different modes.”

Group messages

What about group grocery orders? Where does that fit into Uber’s broader growth strategy? In prepared remarks at Wednesday’s event, CEO Dara Khosrowshahi characterized the feature as a “more elegant,” simpler way to tackle one of life’s more predictable tasks: restocking the fridge.

Uber CEO Dara Khosrowshahi

Image Credits: Kyle Wiggers/AapkaDost

“[With group ordering, you] you don’t have to go through the whole tricky phase of figuring out who owes what and if you’re going to get paid for it,” he said. “We make it incredibly easy.”

Ease of use and “stickiness” are important in a business like grocery delivery, which is costly to run and full of competition. Uber has spent billions of dollars on acquisitions such as Careem, Cornershop, Postmates and Drizly, but rival Instacart retains the lion’s share of the market. According to Insider Intelligence, it will account for 73% of US digital grocery sales by 2023.

That said, things are starting to look up for Uber’s various forays into delivery. Uber’s delivery unit first turned profitable in February 2022, and Insider Intelligence estimates that Uber’s share of digital grocery sales will grow 0.7% from 7.2% to 7.9% next year.

In addition to (optionally recurring) group orders, Uber is introducing nice-to-haves like custom order options and suggested substitutions — allowing customers to specify items not on the menu and recommend substitutes for out-of-stock items. Competitors like Instacart have been offering options in that direction for a while now. But Uber plays for loyalty – not opportunity.

“It’s very important to us that consumers feel they can find what they want to find,” said Irving. “At the end of the day, this is just something that we hope is helpful and helpful to people who need to use it.”

Looking for teens

Uber also wants to grow its customer base by reaching out to a younger generation.

At the event, the company launched teen accounts, allowing users ages 13 to 17 to create accounts for ride-hailing and delivery in more than a dozen cities in the US and Canada. Teen users are matched only with “highly rated, experienced” drivers, and parents can monitor trip progress live, Uber says, or contact Uber’s support team on their teen’s behalf.

In 2017, Uber tried some early teen account creation pilots. But they weren’t a priority – perhaps because the company was under less pressure to find new avenues for growth.

Will teens prove to be a profitable new pool of customers? Time will tell. However, according to one source, transportation accounts for 4.6% of all teen spending, making it a meaningful but not excessive line item.

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