from the blog.

uber-amazon-dilema

The Uber dilema

An article published in The New York Times last week analyzes how Uber is losing more money and growing more slowly than ever. Entitled “How Uber Got Lost,” the article shows that “in August, Uber posted its largest-ever quarterly loss, about $5.2 billion, as its revenue growth hit a record low.” Creating a business model based on loss is not something new or worrisome per se: Amazon pioneered it and educated its investors on the benefits of quarterly losses versus long-term profit. The essential difference between Amazon and Uber, however, is in the customer.

Amazon learned to change customer attitude towards e-commerce. It became an essential part of customers’ daily lives by advertising and proclaiming the practical aspect of its logistics and inventory as “the everything store.” Changing customer attitude towards its business was fundamental for Amazon to change customer buying behavior and to beat its competitors, eventually turning losses into profit.

Changing customer attitude involves challenging their beliefs and habits. It is not just a matter of persuasion. No change in attitude means no change in the frame of mind, feeling, and perceptions of the customer. This is where Uber fails. Unlike Amazon, Uber did not become inevitable. It merely became one more option among the multitude of options for car rides. Uber could not reach a change in customer behavior that would put it ahead of its competitors. So, its losses are only losses.

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