Numerous companies have taken a hit, and are facing drastic losses due to the ongoing pandemic. One such company is Uber, who has reported a whopping loss of $2.9 billion in the first quarter of the year itself. While UberEats’ revenue has skyrocketed, it may not be enough to make up for the losses.
The statistics beg the questions:
Will the pandemic leave a permanent dent that can’t be recovered from? What is the future for Uber after the pandemic?
The fear of infection may forever change the future of rideshares. Around 58% of the drivers are not driving anymore due to the pandemic, and customers are choosing to use their own vehicles.
The transit systems across the US have suffered considerably, with a 90% drop in ridership. The inconsistent and possible re-opening of various states may help pick up the business. However, chances are, the results will fluctuate drastically due to an incoming second wave of the virus.
Even though Uber incurred huge losses in the first quarter, that was only a preview because the full effect of the virus only took form in the second quarter. Passenger volume in airlines dropped by 90%, and hotel occupancy rate plummeted below 30%. Restaurants, clubs, any public place that usually entertained large crowds were shut down and restrictions were put in place. Academic institutions and offices adapted a work from home model.
Uber announced that 6700 employees would be laid off, and CEO Dara Khosrowshahi would waive a base salary of $1 million. Its rival company, Lyft, saw a similar decline in revenue and had to lay off 17% of its team members and further furloughed 300. They became obligated to pause driver onboarding, giving way to a list of new drivers after the notable reduction in rides.
With the world coming to a strange standstill, fear took a new root against the viruses, compelling everyone to be quarantined, safe in their homes. Naturally, commute decreased, especially through public means such as Uber. Uber’s revenues may have plunged to a new low, but all hope wasn’t lost for the company as UberEats’ revenue has soared.
In the first quarter of 2020, UberEats reported a revenue increase of more than 50% while Uber Freight saw an increase of 57%. Uber also launched a grocery delivery service with its newly acquired subsidiary Cornershop. Take-out isn’t sufficient to keep your immunity up during a global pandemic, and it is not humanly possible to fight cravings forever. Uber also plans to expand within the delivery business, branching out to prescribed medication and pet supplies.
Before partnering with Cornershop, Uber CEO Dara Khosrowshahi sought to acquire GrubHub, a delivery service. However, the companies could not agree on the terms and struggled to deal with potential antitrust scrutiny. Uber then proceeded to acquire Postmates for $2.65 billion in an all-stock deal.
In the wake of this, Uber could have challenged DoorDash, the leading delivery service, which was estimated to have a 45 percent market share. The mixed resulted instilled doubt in investors, who continued to place their confidence in UberEats.
Despite the consistent losses, the company has reported a possible increase in its rides business internationally. Hong Kong, New Zealand, and Sweden have been showing growth in rides from the pre-pandemic era. Even though 70% of Uber’s business recovered in France, in one of Uber’s largest markets, the USA, rides are down 50% to 80% still.
Uber has come under fire regarding passenger safety. With uncertainty plaguing the company and the industry, it’s safest for drivers to cover all their bases.
Safety Measures for Uber Drivers During COVID
When your work involves the possibility of catching the virus, it’s only natural to protect yourself and your passengers from the disease.
Maintain Good Hygiene
The first step to keep the virus away is maintaining good personal hygiene. The virus is sensitive to heat and soap, so it’s critical to use an alcohol-based sanitizer frequently. Avoid touching your face and wear a mask.
Keep Inside Surfaces Clean
It is crucial to disinfect every nook and corner of your car, especially the frequently touched surfaces.
Have Sanitizer and Tissues for Your Passengers
Asking passengers to disinfect their hands while entering your car could help prevent the spread of the virus.
Request Passengers to Sit at the Back
Since coronavirus spreads through close contact, request the passengers to sit at the back and handle their luggage to keep everyone involved safe.
After the announcement of COVID, there have been records of dangerous behaviors displayed by people; and so you must keep your calm.
Now more than ever, your car documents and Uber insurance are needed to financially protect yourself, your passengers, and your vehicle in case of an accident.
Cheap taxi insurance might come in handy; moreover, one crafted for Uber i.e., Private hire insurance Uber.
The state of California and Massachusetts have also sued Uber for violating labor law. According to the states, drivers in both states should be able to reap full employment benefits, which is not possible through the current contract that classifies drivers as independent contractors. However, polls found that around 71% of the drivers wanted to remain independent contractors.
In light of this, rivals, Lyft and Uber initiated a new proposition, called the “App-Based Drivers as Contractors and Labor Policies Initiative”, wherein drivers remain independent contractors and can adopt labor policies, already in place for app-based transport. Uber and Lyft have come together to commence this project. Till now, the project has managed to raise more than $110 million through investments.
In conclusion, the future of Uber after the pandemic is not set in stone, but it has become evident that policy changes will be required before Uber can get back on track to profitable revenues along with several other companies. As cities re-open, Uber may revive if the company can adapt to the new reality efficiently.