The only reason Amazon retail is still doing well, at least in those geographical areas where there are stores like Walmart present is:
Great & wide selection
Competition is not that good yet - Walmart “ship to store” or “hold at store” & go and pick up is not prime time. Twice, I bought things from Walmart.com, which showed it was available at local store. However, when I went to pick up it was not at store.
On the downside - Pricewise Amazon just matches it to others. I don’t need to buy from them anymore, there are better deals everywhere.
Retail margins are slim as a percentage of sales. All their new profits are coming from AWS & not retail, but people assume the market size of AWS(cloud computing) is as big as retail leading to outsized share price & very high P/E. Plus competitors such as Google, Msft are hot on their tail.
Coming to Uber, unlike Amazon, Uber is not creating any fixed assets such as automated distribution systems, & warehouses which they can use to improve/differentiate their product/service from competition in the future. Their app is not that difficult to replicate. Uber’s bet that they can create a working automated car(which requires road driving data from in house driving) before Google, which has been on this for at least a decade & has collected millions of miles in data & has probably the best engineers is laughable at best.
Btw, anyone on this forum who works for Amazon, don’t take my post seriously. This is just an opinion from a guy who’s just a layman.
If that was true, then Uber would only have to discount the first few fares to get people to try it. They wouldn’t be offering 10 rides/mo at a fixed price where they clearly lose money on the each ride. I fully understand having a loss due to heavy R&D spend or when fixed costs are high without enough volume yet. I’ve done plenty of analysis on both types of businesses. You can plot out the volume that achieves profitability.
Neither of those are Uber’s problem though. They price their product below their COGS. It’s literally the same as me paying $5 for an item then selling it for $3 and bragging about my revenue growth. Unless I can magically raise my price to $10 or lower my cost to $1.50, then it’s physically impossible to solve the equation for profitability. They are betting they can use self-driving cars to significantly lower their costs. That’s why they said without self-driving cars there’s a serious risk to their ability to remain in business. Considering they suspended that program due to how frequently humans had to intervene, I wouldn’t bet they’ll figure it out fast enough. Their other option is to significantly increase price and hope volume doesn’t tank.
I don’t think Uber will be broke without self driving AI. If Uber charged the same as regular old taxis they will still do brisk business because their service is better than taxi. I think they can easily charge 20% more and still beat taxi’s. The low price is temporary. They do it to beat Lyft into submission, and even more importantly, to lure people into forming a habit of using Uber.
Clearly they are winning people over. Some people are even factoring Uber into their biggest purchase in life: their houses.
I don’t know if their software is easy to copy or not. But you can’t just have the software. You have to build operations around it to make it a business. Taxi companies have their own apps, and they aren’t setting the world on fire.
Finally I think Uber will beat Google on self driving for one simple reason. Uber’s future depends on it, and Google’s doesn’t. Uber is highly motivated, while Google is just doing a science project.
I dont see how self driving cars benefit Uber…They already have a bunch of idiots willing to work for close to free and they don’t have to buy any cars… uber has to buy millions of self driving cars in the future…where is the benefit? Maintenance? Where will they keep them?
I agree with this point of view. When amazon had to include sales tax, I was also personally skeptical about their continuing competitiveness. But the ease of use and ‘habit’ worked for them. I think the same about Uber/Lyft today. It’s all about getting the user to install the app and use it a couple of times. Once people fall into a convenient consumption pattern, esp something that doesn’t involve immediate parting with physical cash, they continue with it. I have seen it in my own personal shopping habits, esp as it pertains to amazon and uber usage.
Two days in a row, Uber picking up neighbors over here. They keep going, you keep negating them. They don’t give a damn.
Be positive guys, negative, loser people shouldn’t be giving an opinion. They put companies in regress, not forward, they divide, not unite. They don’t last at work. That’s why you see them looking for a job in other states, not in CA.
Amazon was bleeding money, but that money went into fixed costs like distribution infrastructure, warehouses, etc. They reaped the benefits of that investment later. Uber has ZERO to show for their losses.
Uber is like eBay. It operates a two-sided marketplace. it has the drivers, and the passengers. Drivers want to be on Uber because it has the most passengers, and passengers want to use Uber because it has the most drivers. Network effect will go towards a one-company monopoly.
Uber is spending all its cash to hasten that process.
Uber’s bet is that after they outspend all rivals and put them out of business, they can “normalize” prices and get to profitability.
People often forget Amazon tried to muscle into eBay’s auction market and failed. The network effect was that strong. I don’t think Uber’s bet is a bad bet. Uber’s problem is its toxic culture. But it looks like their CEO is getting shitcanned.
I’d argue Amazon did it smarter with fulfillment by Amazon and allowing third party sellers. 47% of unit volume is from third parties. I bet that dwarfs eBay’s unit volume.
