How data-driven Uber is driving change & challenging regulations

What Airbnb is doing to the hotel industry, Uber is doing to the taxi industry: disrupting it! A good thing for consumers but a tough time for the now - all of a sudden - traditional industries.

In Uber’s opinion, the situation in Belgium is unhealthy with regulations in place not for the citizens but for a limited group of people that dominate the market, with the government in control of pricing and supply in the taxi industry. Uber claims that the market needs to be liberated.

Uber’s dream: no more private cars needed

Like all start-ups (though the app can of course no longer be called a start-up) Uber has a clear mission statement: to make private cars redundant. In the end, Uber dreams of eliminating the need to own a car. And they want to use data to achieve this. From ownership to on-demand, just like the successful players in other markets like Netflix, Spotify, etc.

Using data & technology to drive efficiency

In Belgium, there are 5,3 million cars that aren’t being used 96% (!) of the time. In every car, there’s on average 1,1 person. The yearly cost of congestion in Belgium is estimated at no less than 8,5 billion euros. By making the Uber service cheaper and extremely reliable, Uber wants to make private cars superfluous.

One of the biggest challenges for Uber is: scaling out their network. The more Uber cars on the road, the smaller the waiting time for riders, the better the customer experience ánd the more opportunities for drivers to make money. It’s evident that in order to keep this business model sustainable, both passengers and drivers need to be happy. Thanks to analytics, Uber can determine which trips are most beneficial. If, for example, a driver is done and a new trip pops up 2 kilometers away, Uber tries to determine - based on analytics - whether it’s a good idea to take that trip (quite far away) or wait for another one closer-by.

Another way in which Uber is using analytics, is surge pricing (dynamic pricing) based on supply- demand, a model that is also being used in the hotel and airline industry. Based on how many cars are available in a certain zone + what type of zone it is (using a predictive model to determine how demand will evolve, based on historical data) a higher price is set to get more cars to the area and fix the shortage.

Already available in cities like San Francisco or Paris is UberPOOL, ‘the future of ridesharing’. Based on algorithms, several passengers are picked up and dropped off by one and the same car. It’s really tricky to get this real-time challenge right but once you reach the required scale, you can really reap the benefits of technology. UberPOOL will reduce the amount of cars on the road and reduce congestion.

Some hiccups: Belgian regulations

Belgium, similar to other countries like France and The Netherlands, has recently banned UberPOP from its streets. UberPOP is the cheapest and most accessible Uber model in which everyone can become an Uber driver. Uber did not mourn for very long because they already installed a different, more regulated model in Brussels in the meantime: UberX. It’s s more expensive but also more regulated since UberX drivers need a professional license, contrary to UberPOP.

Content source: SAS Forum, presentation by Joost Verdiesen, Operations & Logistics Manager at Uber

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