So after a few years of teasing, Uber has finally taken its first step into the logistics industry, where it has long said it has ambitions. UberRUSH is… a bike courier service in New York.
So. Okay. I’m a little confused.
Bike courier services have existed forever. There is clearly a certain level of demand for them. But to the best of my knowledge, they have never become gigantic enterprises, and I’ve never met anyone who said, “Man, I would love to use a bike courier service, but it’s just so cumbersome to call up the dispatch.” Are we to believe that there is huge pent-up consumer demand for bike couriers that is stymied because of high friction for ordering up a rider? Really?
And what does Uber bring to the table here? I mean, sure, an existing userbase, and a lower-friction user experience, and I’m sure that’s all to the good. But what else? They aren’t bringing their extensive driver fleet. I can’t imagine any of their gigantic store of data is particularly useful here. If I’m an existing user of a bike courier service, why would I use Uber instead of my existing service? Is there anything they’ll be able to do with the service qua service that will be higher quality? I can’t see what.
Uber has deep pockets, and they seem really, really interested in getting into logistics. They’ll probably be able to price compete (though this article says that a rival service starts at $5 instead of $15). But the only strength that they obviously have is a large userbase. I suppose the success of the service will probably depend on whether there is pent-up regular-consumer demand for the service.
In discussions with my coworkers, a couple of arguments for UberRUSH have come up, and I want to dispense with them.
Last mile delivery — it is clearly the case that there’s a lot of money in the business of last-mile delivery. Amazon wants to solve it, stores that compete with Amazon want to solve it, Google wants to solve it, Grubhub/Seamless/Eat24 want to solve it, etc. But going beyond the ultra-pithy phrase, let’s be clear on what they want to solve: they want to solve it cheaply. It has always, always, seriously-back-in-the-1960’s-always been possible to get last-mile delivery as long as you were willing to pay a hefty surcharge for it. But, it turns out, people don’t want to. I use the various food delivery services a lot. Do you know how much it costs me? $0 to $1 per meal. Uber’s pricing starts at $15.
Market making — the idea is that we’ll provide this service, and someone will figure out how to use it. But, again, why haven’t they figured it out with the generations-old existing bicycle courier services? Can it really all be due to customer friction? Are we genuinely saying that the only reason people haven’t been using bicycle courier services all the time is because it’s such a pain in the ass to call one up and talk to the dispatcher? I mean, I’m sure that’s part of it. I don’t like talking to people on the phone any more than you do. I use the Grubhub-style services instead of calling the pizza place in part because I don’t have to get on the phone. But, crucially, before Grubhub was available, I called on the phone. And, in Uber’s home base, before Uber was available, I flagged cabs down on the street. If the demand is big enough, people will suck it up and deal with talking on the phone. The fact that I and probably you have never used a courier service in my life suggests that our demand for these services was never very high. I suspect that the taxi business and the delivered-food-business were each at least 10x as big as the courier services were, in the traditional world.
What was the last item that you would have had delivered in an UberRUSH-like experience? Suppose that, in your locality, you could get something delivered to you in an hour or so, for about $20, from a distance of not more than, I don’t know, a few miles. What would you have used that for? I’m sure that sometime in my life, I would have been grateful for such an experience, but damned if I can think of when.
In many ways, the bread-and-butter business of old-style bike couriers is in danger. My understanding is that bike couriers mainly trafficked in legal documents — things that needed to move from company A to company B and collect signatures. It seems like that’s in the process of going the way of the dodo. When I bought my house recently, most of my signatures were via DocuSign and involved no physical presence. Does anyone doubt that eventually that’s going to get pervasive?
Finally, again, suppose that UberRUSH does prove cool. Let’s say that people really get on board with it. Where’s the synergy with the rest of Uber’s business? What is it that prevents them from being savaged by competitors? They have deep pockets and a big user base, but they have shallower pockets and a much smaller user base than Amazon.