There’s no arguing that Uber is the undeniable champion of rideshare in the United States. Regardless of which metric you use to define success, Uber is at the top and it’s not because of a lack of competition either. Even rapidly-growing Lyft still has a ways to go to catch up, despite technically being in second place.
But outside of the US, it’s a decidedly different story. Uber is now available in over 50 countries worldwide but they haven’t experienced the same rapid rate of growth as they have in the US. In fact, Uber has faced bans in Germany, driver attacks in Amsterdam and raids in China just to name a few of its most recent international headlines.
In the US, Uber can attribute a lot of its success to doing a great job at everything that taxis did poorly. They released an on-demand smartphone app that would let you hail a ride, pay with a credit card and even let you rate your driver. None of which was possible before Uber. And by skirting traditional regulations and licensing, they were able to offer a superior product at a much lower price point than conventional taxis.
The UberX model is the one that we all know and love and it uses every day drivers (like myself) to transport people around for next to nothing. But while Uber may technically be in over 50 countries worldwide, this model of using unlicensed hobbyists does not have the same prevalence abroad. In fact, Uber has tried this model and failed more often than not because of entrenched taxi unions and stifling government regulation. The “innovate first, regulate later” strategy in places like Europe has frankly not worked very well.
I recently took a trip to Dublin, Ireland to experience the transportation situation first-hand and in-between all the pints of Guinness, I managed to talk to a handful of local Uber drivers or should I say taxi drivers. In Dublin, UberX drivers are actually taxi drivers with an Uber app. One driver I talked to told me that, “Hailo is actually the dominant rideshare app here in Europe. I’d say about 90% of drivers here use Hailo but only 10% use Uber (in addition to Hailo). And most of my Uber pick-ups are American tourists or other Europeans, locals use Hailo”.
For those not familiar with European rideshare options, Hailo is actually a very similar to Uber smartphone app that allows you to call, pay for and rate taxi drivers. So in Europe, Uber is competing with a product that as I discovered, works pretty well. Every time I needed a Hailo ride, there was a taxi cab within 1-3 minutes around the downtown area of Dublin.
Another challenge that Uber faces in places like Ireland is competing against very strong labor unions. In Great Britain, nearly 26 percent of all workers are members of a trade union, compared to just 11 percent in the US. Europe has traditionally been known for its strong labor force and that’s one of the reasons why US travelers often encounter things like airline and metro strikes when traveling abroad. Unions like these present a much greater challenge to companies like Uber trying to disrupt traditional markets.
(I actually encountered a 2 day bus strike while in Dublin.)
The cost of an UberX in Dublin was just 10% less than that of a taxi and Uber’s commission was only 2%. Hailo also takes a 12% commission but offers no discount to the passenger. Most drivers I talked to seemed happy with the current arrangement but things could change if/when Uber tries to enlist unlicensed drivers on the UberX platform. Cab drivers in Dublin already independently own and operate their cars (unlike in the US where drivers generally pay a weekly fee to a fleet owner regardless of whether they work or not) so there’s not a whole lot of incentive for them to ever undercut their own pricing scheme.
The only way Uber can experience US-like growth in these markets abroad is to use unlicensed drivers who are able to bypass traditional licensing and regulations. These are the types of drivers that Uber has built its business on but the challenges abroad could be too much to overcome.
About Harry Campbell, The RideShare Guy
Hello TFF Readers, my name is Harry Campbell and I run a blog for rideshare drivers called The Rideshare Guy and I also write about the on demand economy for Forbes. I’ll be sharing articles from time to time on what’s going on in the world of rideshare and what you need to know as a passenger whether you enjoy taxis, rideshare or all of the above!
This post was originally posted on Forbes.com
