The Amazonization of Uber

It’s been six months since Uber hosted Go get ita global buffet of product reveals and features that span everything from booking party buses and voice ordering for Uber Eats to connecting travel plans with Gmail and skipping food lines at sports stadiums.

Product launches aren’t just about creating new revenue streams or attracting users—although those are certainly goals. Uber has a bigger end game: Create a closed business loop, with each product feeding customers back into other Uber channels. And this chain is growing.

On Monday, buoyed by strong momentum in user engagement and prepared for the upcoming holiday season, Uber rolled out another set of product updates and new features. This time the products were launched under the marketing banner of Go, take, give. Now, Uber customers can do things like make reservations with OpenTable and Viator through the Uber app, search merchants for the right bottle of booze to deliver, and even schedule Uber gift cards to send on Christmas Day.

Amazonization

Uber is built on a scale-at-any-cost strategy. As Uber struggled to crack the elusive nut of profitability through ride-hailing, it added its food delivery pillar Uber Eats. Uber now seems to have taken a page out of Amazon’s book on customer loyalty to attract new users and get existing customers to spend more money on the platform.

Just as Alexa, Amazon’s voice assistant, drives secondary revenue to Amazon every time a customer says “Alexa, buy more shampoo and conditioner,” Uber also increases its ride revenue when a customer books an event through Uber’s partnership with Viator and then booked an Uber to take them there.

Uber CEO Dara Khosrowshahi touched on this during the company’s third-quarter earnings call on Nov. 1.

“We’re actively selling to food delivery customers in grocery, grocery consumers in alcohol and actually now back to mobility,” Khosrowshahi said. “All the cross-selling we have on the platform continues to grow, bringing in new customers and driving retention as well.”

There is evidence to suggest that, at least in the short term, there are fruits from these efforts. In the third quarter, Uber’s gross bookings reached $29 billion, a 26% increase over the previous year. The company’s monthly active platform users (MAPC) grew 14% year over year from 109 million users in the quarter to 124 million. If gross bookings are growing at a rate faster than MAPC, we can conclude that each customer is spending more on the platform than they would have.

“As far as consumers — high-frequency, low-frequency consumers — it’s absolutely true that if we can move our consumer consumption from lower to higher frequency, we’re going to see very significant growth,” Khosrowshahi said during the earnings call at Uber for the third quarter.

It’s not out of the realm of possibility for Uber to expand beyond the mobility space and into other revenue channels. The company recently launched a new advertising department which monitors in-app ads while driving. To grow this business, we may one day see Uber hire advertising staff and use its vast amounts of passenger data to provide external marketing services for brands. Who knows?

While near-term reports suggest that Uber’s product depth may attract customers, the company should be careful about biting off more than it can chew. Uber posted revenue gains in the third quarter, but still lost $1.2 billion, nearly half of which can be attributed to operating losses. Both tech giants and upstarts are cutting costs — measures that include job cuts — as growth becomes more difficult in the current economy. Not even Amazon is immune.

There is rumbling that Amazon plans to lay off 10,000 people this week and there is speculation that the company’s device group, which includes the Echo, Fire tablets and Kindles, could be on list to receive abbreviations. With an operating loss of $5 billion a year, it’s not hard to see why.

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