An introduction to the ridesharing market
The ridesharing industry organizations utilize recent technological advances to match drivers with passengers through a customer-to-customer (C2C) business model. Consequently, these type of firms operates rather as a platform to enable those owning a car to operate as a taxi whenever they wish. Through the usage of this platform, well-advanced algorithms match drivers and customers such that social welfare can bet better maximized. In this respect, ridesharing operates similar to a taxi service. However, there is an important difference in that ridesharing companies do not fall under the regulatory and licensing requirements which traditional taxi companies are subject to. This generally grants ridesharing companies a price advantage over taxi companies, which is why ridesharing is generally considered a ‘disruptive’ technology. As of November 2019, Uber, DiDi Chuxing, and Lyft were the market leaders in ride-hailing operations across the world. DiDi Chuxing is an active service provider in China; whereas Lyft and Uber in North America and Europe.Economic performance of the ridesharing market
The market creating activity of the sharing economy enables the ridesharing market to tap into the readily existing dormant supply of services and challenges the status quo of taxi businesses. Over recent years, the ridesharing market has seen significant growth in potential and real economic performance. A survey of almost 11,000 people in the U.S. indicated that 36 percent of people used ridesharing services in 2018, an increase from 15 percent in 2015. Uber and Lyft are the largest two companies in the U.S. ridesharing market, which reported net revenue in 2019 of 14.1 billion U.S. dollars and 3.62 billion U.S. dollars respectively.Market dynamics between Uber and Lyft
Lyft’s strategy was mostly to imitate Uber’s business model at first by making use of drawbacks Uber exhibited. For instance, driver satisfaction with Lyft in the U.S. was much higher than that of Uber. Nevertheless, there seems to be a reversing trend, where Uber starts to regain some improvement while Lyft’s driver satisfaction deteriorates. In terms of ridership, Uber has a larger share in the U.S. than Lyft, 69 percent of the market. However, during the coronavirus (COVID-19) pandemic, market dynamics between these two rivals can immensely change. This is mostly because the ridesharing market size is expected to grow by 60 percent in 2021 compared to 2020, reaching over 117 billion U.S. dollars in economic worth.
