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Six years ago, Uber officially started as a taxi service in San Francisco, currently it is used in more than 200 cities in dozens of countries by more than milions of people. For the first time, Uber has broken a product out into its own standalone app. A few months ago, the company launched its long-awaited UberEats app in the US. Now, it’s Amsterdam’s turn to prove its success. Because of the low switchting costs in the food delivery market, UberEats Amsterdam is determined to steal market share from the popular Thuisbezorgd.nl (owned by Takeaway.com) which currently serves 80% of the Dutch food delivery market. (fd.nl 2016) In order to do so, UberEats created some advantages compared to their competitors.

First, UberEats delivery service charges no minimum order amount and additional delivery fee. If people just want to order a simple ice cream or a sandwich from across town, then UberEats does not charge the customer anything extra. Another advantage UberEats is likely to profit from is its’ current database of customers who are already using the regular Uber app. These customers are only one ‘click’ away from UberEats and therefore even the most loyal Takeaway customers become a prey for UberEats. Another advantage UberEats is likely to accomplish is the amount of time needed for delivery. Because they are already familiar with efficient fast tracks and ways to move through the city, the delivery time can be reduced to a minimum amount of time.

However, apart from Takeaway.com, earlier this year two other food delivery services entered the market. Deliveroo and Foodora, two fast growing key players, should not be ignored. They might be the future of food delivery because of the strong partnership with different high-end restaurants and their focus on healthy and nutritious take-away food. However, because of this partnership with high-end restaurants they charge the customer 2,50 euro commission on top of their order, which is a 30% margin. It is up to Uber if they can realize the same service in a less expensive way.

Uber might be a latecomer in the race to deliver food, but by watching other companies’ stumbles, the UberEats team believes it’s learned what it takes to be the winner. What do you think?

 

Source:

https://fd.nl/ondernemen/1169051/ubereats-is-vastbesloten-de-bezorgmarkt-op-te-schudden

http://www.businessinsider.com/why-uber-launched-uber-eats-2016-3?international=true&r=US&IR=T

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Booking hotels via online travel agencies (OTA) has become insanely popular the past decade. While I was travelling through South-East Asia I have used the Booking.com mobile application a lot to ensure a stay in a great accommodation in every place I have visited. OTAs are year on year increasing their customer base as much as their volume of business. Customers do not even think about booking directly on a hotel’s website and just use the services of OTAs. However, it is important to highlight that this trend is not experienced by all OTAs in equal measure, as Booking.com customer base overshadows that of other OTAs.

What are OTAs doing better than hoteliers in order to get more sales?

The main tactic that OTAs have adopted to achieve their success over hotels are: winning new customers and maintain them. To obtain new customers, OTAs have to take three key factors into account.

First, is the factor of family and friends recommendations (positive Word of Mouth). A study by the New York Times examines the motivation that push people to recommend online services and the main reason behind this is to maintain, improve and nurture our relationships. Even if people do not feel the tendency to share their positive experiences, OTAs can introduce a so-called ‘social proof’, for example ‘’91% customers rate Expedia with 5 stars’’, that serves as a reference for potential users.

Second, personalized offers are tailored by the OTA. The ultimate goal is to provide a minimum amount of offers to the proposed customer, and at the same time, increase their relevancy. Therefore it is not only necessary to collect and analyse huge amount of data but also to collect users’ private information in order to feed the algorithms that are becoming more and more sophisticated.

Lastly, first time buyer offers via mobile application or desktop. In this way OTAs try to encourage new customers to purchase their offer. However, OTAs have to take into account that these offers have usually a limited ‘loyalty effect’ due to the fact that customers are not likely to repeatedly buy trips within a short time-frame.

But what does Booking.com differently than other OTAs?

With a million bookings per day Booking.com is one of the largest OTAs worldwide. With Expedia, Trivago and Hotels.com as major competition considered, what does Booking.com differently that it is able to improve their customerbase? First, Booking.com was the first OTA to apply the agency model unlike the merchant model most of the OTAs use. The set up most of us are familiar with is the merchant model, in this model OTAs contract with accommodations to get a block of rooms at a negotiated wholesale rate. Then they mark the price back up and resell it to customers, whom have to pay for that room upfront. But, Booking.com uses the agency model, in this model Booking.com simply gets a commission from the hotel, and does not charge the customer anything in advance, the customer can pay for the room when checking out and  they even give you the chance to cancel for free.

This model is much more appreciated due to the fact that customers do not feel ‘binded’ by paying in advance. Second, Booking.com heavily engage in Search Engine Marketing. Consider that Booking.com’s AdWords sponsored links ofter appear at the top of Google pages because of their bid prices and quality scores, and then there are all kinds of features on its hotel pages to entice conversions. You will recognize all the different messages Booking.com is showing you to trigger conversion on their page, for example: ‘’It’s busy in Paris on the selected dates, so prices might be higher than normal’’ or ‘’Latest booking 35 minutes ago’’. You can go on and on considering the ways Booking.com turns lookers into bookers on its hotel pages, all over the web and mobile you will see OTAs imitating Booking.com conversion techniques.

The only question is whether it’s too little, too late? What do you think?

 

Sources:

http://www.nytimes.com/2012/01/12/fashion/aggressive-salesclerks-push-shoppers-to-the-web.html?_r=0

https://www.tnooz.com/article/consumers-prefer-online-travel-agencies/

https://skift.com/2012/06/25/how-booking-com-conquered-world/