Many entrepreneurs fear that rideshare bubble is going to burst soon. They reason out that the number of services currently operating is already way too high to create room for another rideshare software app. However, the statistics from past two years indicate that rideshare boom is not going to end any sooner. In fact, such business will continue to emerge and sustain for decades.
This article shares market analysis and consumer behavior as studied by credible firms in the past two years. It also reveals some of the rideshare services which emerged in the past two years or less and are on their way to glory.
Consumer Behavior toward Carpool apps
Unlike the widespread belief, average fare is not the only significant factor that drives passengers’ perception about a rideshare company. A number of studies and surveys conducted in the past couple of years indicate a number of factors that rule consumers’ minds while choosing one service over another.
- Public reputation. The percentage of Uber riders dropped significantly when the company faced scandalous allegations regarding sexual assault. Besides, the mistreatment of drivers allowed Lyft and other rideshare companies to jump in and build a narrative around ensuring ethical practices in employing drivers. Many companies capitalize on climate change to market their electric car or scooter rideshare services.
- Socioeconomic conditions. There is a good proportion of rideshare consumers who would prefer economy over luxury and reputation. Although major rideshare companies have more or less same fares, yet many new startups offer promotional discounts. Uber also heavily subsidized its rides every time when it was hit by allegations. The strategy worked for them as they won back a considerable market share.
- Regional Dynamics. The consumer behavior also varies depending on geographical location of a rideshare service. You should not expect bike-pooling or scooter sharing idea to impress in areas where temperatures are relatively high. Texas, New Mexico, Arizona, and Southern California are some of the examples. Besides temperature, population density also leaves huge impact. Carpooling service would most likely incur losses when each of the riders is kilometers apart. It would only be helpful if your business offers long distance ride sharing app.
Market Analysis for Rideshare Software Apps
Private ownership of vehicles is rapidly declining as commuters are adopting rideshare model. Carpooling is not only successful for services with a small geofence. The startups offering interstate rideshare are also incredibly successful.
Reuters reports that global rideshare industry would grow at over 20% between 2019 and 2025 to reach a market size of $220.5 billion. It is notable that this figure does not include ride-hailing market. Despite the introduction of a number of ride sharing services, the gap between demand and supply is growing.
One cause of this increase is the lack of sustainable startups. Thus, the entrepreneurs with carefully crafted business model and efficient set of technology have the opportunity to acquire a part of growing market.
Recent Success Stories
Rideshare companies which started years back are not the only ones generating money. Scores of startups launched in less than two years back are raising millions. Following is a list of some startups which successfully acquired funding. It is notable that these are only a fraction of instances.
Launched in late 2018, Dott managed to raise $56.6 million across two funding rounds in less than a year. The startup provides an app for dockless electric scooters. It is notable that the company is based in Amsterdam – the city known for excessive use of bikes.
The success of bike highlights the significance of location. This startup might not be as successful as it is in The Netherlands. Young entrepreneurs need to ensure that they perform demographic analysis to identify interests of local population.
Many bikeshare startups tried to win a strong consumer-base in Texas but each of those were unwise investments. In the scorching Texas heat, passengers would rarely use bikes. Hitch is providing carpooling for relatively large distances in Texas. The startup offers intercity and inter-county travels.
The first and only funding round raised $0.84 million for the startup since its inception in 2018. This initial success of Hitch rises from its business model which enables passengers to travel between Austin and Houston for $25.
It is highly rare to find a startup that attains unicorn valuation in less than a year. Electric scooter rideshare startup Bird has done it across four funding rounds. The service was launched in Santa Monica in 2017 and quickly gained a considerable passenger-base. By June 2018, it valued at $2 billion.
One of the top reasons for Bird’s success is its environment friendly narrative. The company has become an apple of regulator’s eyes in California. Its push for biodiversity preservation is selling successfully. Recently, Bird wholly acquired Scoot Networks.
In a short span of less a year, this Dallas -based on-demand startup raised $14.5 million funding including a Series A round. The company started operations shortly after Uber and Lyft returned from a ban. It was widely believed that the startup would not be able to survive in presence of rideshare giants. However, it did survive and managed to gain a decent proportion of market share as well.
One factor that helped Alto was its dedicated fleet of vehicles and full-time employment. While other ride-hailing companies face criticism for mistreatment of gig workers, Alto’s fulltime employment boosted its reputation. Moreover, the riders in Alto can customize traveling vehicle experience with multiple options.
How to Start a Rideshare Program?
Following factors are most crucial to start a successful rideshare startup.
- Market and consumer analysis for intended region.
- A comprehensive business model.
- User-friendly interfaces of driver and passenger apps.
- Highly fault-tolerant system with unparalleled speeds.
- Effective digital marketing with special emphasis to mobile marketing.
- The ability of platform to scale up with time for more features and capacity.
- Efficient quality assurance teams for occasional audits.
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