The on-demand transportation space is crowded

Lyft Sidecar uber

The number of options for the local transportation in SF has been on the steady rise. If you are in no mood to drive, you can choose from the old school cabs (run by multiple companies), plush and lavish Uber, pink-mustache bearing vehicles from Lyft and Sidecar. If you don’t own a car and either have an urge to enjoy (or grapple with) the slopes of SF or need the car for a few hours of the day, you can rent from companies such as Zipcar or wheelz or rent from individuals using platforms such as Relayrides or Getaround . What was interesting till a few days ago was that each of the players had differentiated value propositions reflected by their price points. Things changed when Uber launched Uber X in July 2012 at 35% discounted price, comparable to the prices for Lyft and SideCar. And then yesterday, Uber made its intentions clearer by announcing that its deal with California Public Utilities Commission will allow the company to start ride-sharing service in California in the near future and to slash Uber X prices further down.

The competition is of course beneficial to the consumer as it offers multiple options at an affordable price. The companies and its investors on the other hand face new challenges. Although Avis’ acquisition of Zipcar for around $500M and Hertz’s offering of Hertz-on-Demand have confirmed the rise of the shared economy in the rental car market, on-demand local transportation companies are yet to show the scale. Launching these services in other cities is one way to scale the business. The other way is to form strategic local partnerships.

Uber’s partnership with Trulia demonstrates its clever ability to dissect the process of apartment hunting and solve an unmet need in that experience. Recently, it announced similar partnership with Grouper, a blind dating site. I believe there are still a plenty of partnerships opportunities for Uber and Lyft. E.g. it would be cool if Zipcar offers me a ride through Uber in case my desired vehicle isn’t available at the nearest location to me. Or Uber can have a monthly tiered pricing model for corporate clients and enable their executives to visit customers/vendors in style while cutting the costs. For Lyft or Sidercar, the partnerships have to leverage the social interaction aspect. Meetup and Eventbrite are two possibilities. The members of these two sites are more likely to engage in and enjoy conversations with Lyft/SideCar drivers.

It will be interesting to see what avenues these vehicles take to grow their market shares.

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