revenues of both drivers and ride sharing companies by allowing selling goods and services by using the network of ride sharing companies
Market Definition for Product Sales on Ride Sharing Platform
Between the most significant ridesharing services across the world, there are over 5 million drivers, out of which Uber and Didi Chuxing hold about 70% of the market share and the rest 30% is distributed among the other ride-sharing services like Ola, Lyft, etc. There are other notable mentions like Careem from UAE and Cabify from Spain which have recently started gaining traction in specific geographies. Uber completes about 6 million rides a day in comparison to Lyft which does about a million rides. This means that there are about more than 7 million customer touch points available every day for companies to sell their goods or market their services, and as the big ride-sharing companies scale up across geographies, it is easier for companies to create new marketing channels or campaigns to engage new customers by integrating Product Sales on Ride Sharing Platform.
Competitor Analysis for Product Sales on Ride Sharing Platform
Cargo is a tech startup that provides rideshare drivers with a free mini vending machine that passengers can buy from during their ride. There are even a few complimentary products, depending on your cab. Cargo’s currently operating just in New York, Chicago, and Boston has gotten requests from 49 states. The drivers get paid a small commission based on each sale as an incentive apart from bonuses. It has raised a total of about $9M till now in funding. They are one of the first start-ups to get access to UBER API’s.
Pain Point and Target Audience for Product Sales on Ride Sharing Platform
The target audience for this startup idea from YoStartups would be both the drivers and riders of a ridesharing service like Uber and Lyft. The drivers because as the ride-sharing market is getting saturated and consolidated, their earnings are getting stagnated too. Passengers often traveling at odd times of the day and stuck in traffic, often find themselves hungry or crave for that snack to satisfy their hunger pangs.
Passengers often find themselves with a dead or a dying phone, or without basic medication on long rides in traffic at the end of the day. They also spend time on a ride, stuck in traffic basically doing not much. This time can be utilized to order groceries, medication or any other necessary items.
Value Proposition for Product Sales on Ride Sharing Platform
This kind of onboard vending/selling service gives the drivers an additional source of revenue, without incurring any additional cost of setup. Companies like cargo are also offering free snacks for the drivers to make their rides better.
The passengers get benefitted too as they can get access to snacks, basic medication, headphones or mobile chargers when stuck in traffic or at times when there is no access to food or refreshments. All this can be done real time in the car without downloading an additional app.
This idle time on the transit on ridesharing cabs can be utilized to finish some chores like ordering basic supplies, groceries on the ride without downloading an extra app, so that they find themselves stocked up at the end of the ride.
Business Model for Product Sales on Ride Sharing Platform
The start-up can tie up with local companies willing to sell their goods on the local ridesharing network, the startup can charge a commission on every transaction made through the app for these companies, the startup can do a revenue sharing on the commission charged with the drivers, ride-sharing service companies. The startup will have to incentivize the drivers well to encourage selling.
Way to Market for Product Sales on Ride Sharing Platform
The start-up will have to tie-up with ride-sharing services like Uber or Lyft to get access to their network and onboard drivers. Simultaneously, the start-up can onboard local companies offering products or services that can be sold through the app through vending boxes on the car or delivered to the customer’s doorstep. The startup will have to generate a unique code for each driver to avoid any confusions in the future
Key Milestones for Product Sales on Ride Sharing Platform
The designing of the platform, onboarding of drivers, and onboarding of companies providing product and services on the ride-sharing network have to be completed in the first 2 quarters. The startup will then have to focus on perfecting the product offering and its services based on continuous feedback from the customers and drivers. The company can continue its testing and improvement phase for the next 2 quarters in one or two cities which are closer to the start-up location. After the product is refined based on customer preferences, payment options etc. The startup can approach the funding houses for a full scale-up.
Investment needed for Prototyping for Product Sales on Ride Sharing Platform
The start-up can raise upto $125 k for prototyping the software from accelerators like TechStars, YCombinator. The startup can use the existing API’s to connect with the ride-sharing services and integrate payment gateway on the same platform. The startup will have to utilize all the money raised for developing the prototype, driver acquisition, and marketing only.
Team Capability for Product Sales on Ride Sharing Platform
The proposed startup will need co-founders who have extensive experience in retail sales, marketing, and promotional activities preferably from the FMCG industry. Other preferred team members should be from the ridesharing industry who have experience of onboarding drivers in the local territories. The third team member will be a full stack developer who will be designing, upgrade and test the online platform.
Investors/Expert Take for Product Sales on Ride Sharing Platform
Ride-sharing service Lyft has grown 100 percent YoY from 2013, and launched itself in 160 cities in 2016 alone, expanding its reach to 360 communities and 80% of US population. Similarly, Uber operates in 450 cities with more than 7 million drivers providing services to more than 50 million riders every day.
Uber has on-boarded 40,000 restaurants by the end of 2017. Companies like Uber, Lyft will leverage their networks by providing more value-add services to its riders, improving the overall quality of the ride, and getting maximum revenue per user. Even with the self-driving cars anticipated in the future, this model of selling or vending goods in the car can be scaled to provide more revenues to the ride-sharing companies. In future, this model can be used to add services like magazine subscriptions, podcasts, music streaming services etc.
Investors love scalable business models, and a business which can scale-up on large networks of ridesharing companies is a win-win for all, the investors, ride-sharing companies, drivers, and riders.
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