Car Services: How Do You Stay Competitive When Uber Comes to Your City?

Many people have questions about Uber, the online transportation network that lets you order a ride—as well as food and even, occasionally, puppies—from your smartphone.

For most of us, the question usually is, “When is the car getting here?”

But for car service companies, the question is more existential: How can they compete and survive in this new era of transportation services?

Uber has a lot going for it:

The app is easy to download and use. Since it’s a multinational network, users don’t have to look up a new cab company or service in every city they visit. The app’s geolocation technology lets customers track their ride’s exact location and route, adding a layer of accountability that traditional cab services never matched. (How common is the “I called a cab, but it never came, or came late” complaint?)

As a result, though only 15% of Americans have actually used a ride-sharing app like Uber (or Lyft, Uber’s main competitor), it’s popular among younger people, urban dwellers, and college graduates—which means that there’s still room for growth. The company has cemented itself in a population that will help make ride-sharing apps the preferred choice for catching a ride in the future.

This leaves old-school cab companies—many of which served their communities and cities for years, if not decades—out in the cold.

Competing with Uber

One such company dealing with this powerful and seemingly unstoppable new competitor is Eastern, a Brooklyn, NY car service that’s family-run—and familiar to many of the borough’s residents, if only as a vestige of the past.

But Eastern isn’t fading away in the face of Uber’s rise.

Instead, they’re looking to compete head-on, according to Marvin Aleman, the general manager and senior developer for the company.

“We’re a family-owned business, and my family is old-school,” says Aleman. “But I’ll admit, Uber was right. We have to adapt and evolve.”

To that end, Aleman has helped set Eastern on a path towards IT modernization, updating the company’s website to make on-demand and reservation booking easier than ever, and creating an app that just released for iPhone and will soon be available on Android.

Aleman does this with an eye on the present-situation —Uber and its app-based competitors like Lyft are moving in on their customers—as well as the future.

“Even today the bulk of our business, 90% maybe, is still old-fashioned ‘call it in’ orders,” he says. “We’re trying to move away from that—not 100%, but we want people to use the app and the website to book their cars. That’s the future for us.”

A traditional Brooklyn car service

Aleman’s stepfather has owned Eastern since 1988, when the business was a regular livery cab service with radio dispatch and a modest fleet of 10 cars.

Aleman, who has a background in programming and web development, came aboard about a decade ago, and that’s when the company’s shift towards embracing technology began.

“I set up a website for the company where jobs would come in, and that’s what we used for a while,” says Aleman. “It allowed us to take orders from people coming in from all over the world and helped us develop the corporate accounts with companies—in film production, for example—that we’ve had for years and have helped keep us afloat.”

In the years since Aleman joined the business, Eastern has slowly shifted from a more traditional car service company—with similarly traditional, old-school drivers who were perhaps a bit resistant to change—to one that banked on younger drivers who could adapt to newer technology. That has served the company well for the changes that took place in the wake of Uber’s rise.

The Uber effect—on the city and the company

Uber came to New York City in May 2011, and has seen a steady increase in ridership every year since—at the expense of the city’s yellow taxis and cab services.

According to the NYC Taxi & Limousine Commission, in January 2016, yellow taxis made 60,000 fewer trips than in January 2015. A similar comparison for Uber shows an increase of 70,000 trips.

Eastern expanded to about 300 drivers in its fleet at its peak, and Aleman says business had increased year-over-year since he came on.

But the company has seen its business decline in the years after Uber’s arrival in New York.

“We’re down to about 270 drivers in our fleet, but job-wise, we’ve lost maybe 20% of our usual business since Uber came on the scene,” Aleman says. “This past year was the first negative year we’ve had in a long time.”

Aleman says the increased competition has forced the company to “tweak” their prices, reducing them by 5-10%. But overall, Aleman doesn’t consider lower prices to be a part of the long-term strategy.

“Our pricing has always been fairly competitive throughout the years, so we couldn’t go too far down,” he says. “We’re hoping we can stop our decline with our new campaigns and tools, and we’re optimistic.”

The company responds to Uber in kind

The truth is, Aleman saw this coming.

“I had a very strong feeling—my brother is a business major and we always brainstorm about this sort of thing—and we were talking about something similar right before Uber came along. The technology was there and application use was becoming more common. I actually created a similar dispatching service at the time, where drivers could contract jobs directly with the system, which at the time was pretty neat.”

So why do we use Uber all around the country, and not Eastern?

Eastern is a family-owned business, and Aleman says his parents’ resistance to change was a big roadblock to overcome. The company also rejected overtures from Uber, which offered to provide Eastern drivers with their software and service.

Instead, Aleman and Eastern embarked on updating and revolutionizing their system for contracting jobs, bit by bit.

“We developed a new auto-dispatch system, which we launched last year, where drivers have iPads and everything is dispatched to them directly,” says Aleman. “Customers can now pay with credit cards through our Square devices. And we recently put out our new website, where customers can order a car or make a future reservation.”

According to Aleman, however, these updates were just stepping stones for what he wanted to do… Which was to take on Uber directly with an app of the company’s own—something unique to them that he wouldn’t have to share with other services.

Other Brooklyn car services had begun leasing “Limosys” software to compete, but he found the program generic and knew he could design something better at an affordable cost.

“Last month we launched the first version of our iPhone app, which lets customers book in real-time,” he says. “It’s on-demand only for now, but we’re planning on bringing in reservations and other features that we’ve offered for many years. The Android application will be submitted soon, and the second version will be out in a month with the reservation features.”

Though Eastern’s main business is still taking orders over the phone, Aleman has already received positive feedback on the app and the website, which offers more detailed ways to book than before.

“We’ve seen a spike in business through our new website. Compared to our older HTML version of the site, the one now is much better for booking with specific details. And the app’s been a success: Without doing any marketing, just from word of mouth from our friends in the neighborhood, we’ve gotten a few thousand downloads already. The overall feedback on the design has been positive, people have emailed to let me know,” Aleman says.

Aleman also noted that, in classic Eastern style, customers have even called directly to tell him how much they like the app.

The long-term outlook

Trying to beat Uber—a Silicon Valley-funded behemoth that has its sights set on altering the way we think about ride-sharing and transportation all over the world—at its own game might seem like an impossible goal.

But Aleman has the perspective that many small business owners have maintained over the years in the face of corporate competition.

“There’s a lot of business to go around,” he says. “You know, Domino’s is Domino’s Pizza, they’ve got franchises everywhere, you can order from them all over the world, but people still know that the local places make pizza that tastes better. Especially in Brooklyn.”

“A lot of our customers want to use us specifically, or don’t want to use Uber, or don’t want to pay surge pricing during peak hours,” he explains. “So we just have to offer our service and the customers will decide which they prefer. I can’t say for sure what’s going to happen in 5 years, but if we do our homework, I expect us to at least be able to pay our bills.”

People want everything in real-time, seamless and easy, Aleman says. And he plans to keep that in mind as the industry continues to evolve.

“We’re monitoring the situation,” he says. “Everything is changing, and we’ll adapt with it.”

The post Car Services: How Do You Stay Competitive When Uber Comes to Your City? appeared first on Fundera Ledger.

from Fundera Ledger https://www.fundera.com/blog/2016/06/16/car-services-uber/