Uber-ization of E-commerce

Uber-ization of E-commerce

Background

Uber is a technology company and an e-commerce giant founded in March 2009 by Travis Kalanic. It is headed by Dara Khosrowshahi as the Chief Executive Officer (CEO) and is headquartered in San Francisco. The technology company offers a variety of services, including food delivery, vehicles for hire, package delivery, and transport services. It offers more effective and cheaper transport services as compared to regular “taxis” since a customer uses a mobile application to apply for services (Laudon & Traver, 2019). The customer can see the average wait time and prices, which makes it convenient and reliable. Also, Uber allows customers to rate their drivers, which acts as a basis for Uber to evaluate its drivers. Drivers can also rate customers, where stubborn or rude customers can get banned from using the company’s services.

Uber claims its costs are 40% lower than a traditional taxi. UberPool ride-sharing services, for example, allow customers heading in the same direction to share a ride and pay only 50% of the total amount (Laudon & Traver, 2019). This makes traditional taxi services and private cars competitive since the company’s services are cheap and affordable. Uber calls its drivers “independent contractors”. This means that Uber avoid costs like training their drivers, commercial licensing, and worker’s compensation since the drivers are not considered “employees” of the company. As per Clara Green (2017), Uber drivers are unhappy with some feeling like “slaves” to the company. This is because they work for the company but do not receive employee benefits as they should. The California Labor Commission in 2015 ruled that an Uber driver was an employee of the company since he or she is under supervision and control of the Uber management. The company has also been battling traffic cases like the violation of transport laws and regulations. However, it continues to attract investors and thrive in the transport and e-commerce sectors.

Issues

Uber’s business model considers all its drivers as “independent contractors” rather than employees. This means that the company is not entitled to pay its drivers employee benefits, comply with minimum wages, or pay their drivers’ health insurance. The company has over 1 million drivers. Quality control is mandatory for all Uber drivers since customers can rate their drivers after a ride. Uber then collects information from the ratings to determine the best and the worst drivers. Customers are also rated based on the customer’s experience. The company needs to rate customers since stubborn and rude customers may fail to pay after a ride. These types of customers are rated low and eventually banned from the company. Uber uses a mobile application and also provides internet-based services to customers wishing to access any of their services. Prices are automatically calculated based on the travel distance and the type of car ordered, making it more efficient, cheap, and reliable than traditional taxis.

Traditional taxi services require a customer to wait for the next available car and order it manually. The driver could exaggerate prices since there was no application to automatically calculate prices (Pan et al., 2020). Uber’s business model is much safer and more convenient since a customer can order a ride wherever they are, and the prices are also calculated automatically based on the distance of travel. Uber collects personal information about its drivers, which guarantees that a passenger is safe when using Uber services, unlike traditional taxis.

The disruption strategy helps make innovations a reality. Technological advancements made over the years have allowed companies like Uber to dominate the e-commerce market since most people have smartphones (Xiao et al., 2019). Disruptions in the e-commerce and technology sector have allowed Uber to establish an e-commerce brand where both the customers and drivers can be rated. These disruptions are important since they increase security and effectiveness through tracking and user rating.

The ‘gig’ economy concept of Uber is not so good since it denies drivers employee benefits, minimum wage, and collective bargaining rights. Uber’s drivers work directly with the company under their supervision, which means that Uber is their employer. Like any other employee, Uber drivers need employee benefits, minimum wage benefits, and health insurance to help them support themselves. Uber drivers also work all day for the company, qualifying them as employees.

Summary

Uber is one of the dominating e-commerce firms in the world, with over 1 million drivers across the world. As discussed by Clara Green (2017), Uber drivers feel like they are treated unfairly since the company does not consider them as employees. The company considers them “independent contractors”, but they have dedicated their lives and time to work for the company. Uber is a good company for the customers, but their employees are suffering. Drivers, who Uber manages, should be considered Uber employees and receive employee benefits, just like other employees.

References

Green, C. (2017). Outside in America: learn more about our ongoing homelessness project. The Guardian. Retrieved 17 October 2020, https://www.theguardian.com/us-news/2017/feb/16/outside-in-america-homeless-project.

Laudon, K., & Traver, C. (2019). E-Commerce 2019: Business, Technology and Society (15th ed., pp. 3-6). Pearson.

Pan, R., Yang, H., Xie, K., & Wen, Y. (2020). Exploring the Equity of Traditional and Ride-Hailing Taxi Services during Peak Hours. Transportation Research Record: Journal Of The Transportation Research Board, 2674(9), 266-278. https://doi.org/10.1177/0361198120928338

Xiao, J., Wu, Y., Xie, K., & Hu, Q. (2019). Managing the e-commerce disruption with IT-based innovations: Insights from strategic renewal perspectives. Information & Management, 56(1), 122-139. https://doi.org/10.1016/j.im.2018.07.006

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Case Study: The Uber-ization of E-commerce

The case method is an excellent learning tool as well as an important assessment instrument. It helps develop your ability to synthesize textbook material and various situational factors. With this case study, you will be meeting the following learning outcomes:

Uber-ization of E-commerce

• Define e-commerce concepts and describe how e-commerce differs from commerce in general.
• Describe the evolution of e-commerce technology and its business significance.

Assignment:

• Read the case study “The Uber-ization of E-commerce” on pages 3-6 of Chapter 1 of the textbook.
• Read the following article: Homeless, assaulted, broke: drivers left behind as Uber promises change at the top.

Write a paper discussing the following:

1. Describe Uber’s business model.
2. Compare this business model with traditional taxi services.
3. Discuss the strategy of ‘disruption’ with respect to both Uber and e-commerce in general.
4. Pick a side on the ‘gig’ economy epitomized by Uber. Is it good, or not so good? Explain your position.

Organize your paper in the following sections:

• Background – Summarize the case study.
• Issues – Address the assignment questions.
• Summary – Summarize the relevant conclusions and findings.
• Resources – List the case study and at least two other sources researched for this paper. Ensure that the resources are also properly cited in the body of the work.

Your work should be submitted in a Word document, 2-3 pages in length (not including cover sheet), typed in double-space, in 10- or 12-point Arial or Times New Roman font. The page margins on the top, bottom, left side, and right side should be 1 inch each. Use the APA guidelines for writing and citations. Resources listed in the Resources section without an accompanying citation in the body of the work will not be accepted.