Your Next Company Car Might Be an Uber
You can’t eat at San Francisco’s Pythagoras Pizza: Each $20 pie is available for delivery only. The model keeps costs down, but when the shop’s popularity skyrocketed in 2015, founder Evan Kuo had a problem. “How do you staff to endure waves of two- to three-times-demand spikes?” he says. After all, he needs way more drivers (and cars) for lunch and dinner, but he can’t afford to own a huge fleet that goes unused during most hours.
His solution: Uber.
In 2015, the car giant launched UberRush, which is essentially a messenger service that uses Uber drivers. It partnered with e-commerce platform Shopify and is available in San Francisco, New York and Chicago, and has become a favorite tool of businesses that deliver. Today, half of Kuo’s pizzas arrive via UberRush. “Even if your forecasting model is 80 percent accurate, you’re still either overstaffing by 20 percent or underserving by 20 percent,” Kuo says. “That volatility can be frustrating and really costly.”
In using Uber this way, Kuo is joining an entrepreneurial crowd: Like cord cutters who stop buying cable, a movement of car cutters are exploring life without auto ownership. Many services are helping this along. ReachNow is in beta testing in the Seattle area; it’s like Zipcar, in that members can rent cars in small chunks of time rather than being forced to pay for the whole day. (Bonus: ReachNow loans only BMWs and Minis, so your makeshift fleet has a built-in air of success.) Similarly, Silvercar rents on-demand Audis for just $59 a day, proving that business folks are still willing to drive themselves as long as they can do it in style.
Automakers themselves are exploring how to capitalize on the car-sharing game: Toyota recently invested in Uber and made a deal to offer drivers special lease rates on their cars; Volkswagen sunk $300 million into Gett, a New York City-focused Uber rival; and GM bought a $500 million chunk of Lyft and will pilot test autonomous-driving Chevy Bolt taxis in 2017. Not to be outdone, FCA inked a deal with Google parent Alphabet to be a supplier of vehicles to Google’s well-publicized driverless system.
In the face of this competition, Uber is doubling down. In September, the brand launched UberCentral, which allows businesses to act as dispatchers, scheduling car services for clients and ordering multiple rides days in advance to multiple pickup locations at once. Entrepreneurs can even build UberRush into their own software, so they can allow vendors to access delivery services themselves. “It just takes a couple of lines of code and then you have access to Uber’s logistics network, and that’s the same whether it’s a person or a delivery,” says Uber spokesman Sarah Maxwell.
All of this is changing the way some businesses operate, encouraging them to add services they previously couldn’t afford. San Francisco-based Dijital Fix Design + Electronics, for example, sells everything from audiophile-level speakers to floor lamps and candles, and now it can get products to customers within an hour via UberRush. Shopify merchants can have the system up and running in three minutes, according to Niko Downie, partnerships lead at Shopify. He says that 1,500 of their customers (including Dijital Fix) use UberRush, and can choose how much of the cost of delivery they want to pass along to customers.
The end of ownership may mean potential big bucks for car-sharing services, but the real benefit seems to fall to small-business owners. “One of the toughest things about having a real-time delivery business is anticipating demand,” says Pythagoras’ Kuo. “But now we can basically understaff by 20 percent for downside protection and still meet our demand fully, at almost no extra cost.”