Ride-Hailing Industry 2020: Opportunities and Challenges

Ride-Hailing Industry 2020: Opportunities and Challenges

MobyteLab News   •   Jan 07, 2020

Make the app may be a pain if you have no experience

Ever since the introduction of a structured transportation system, several changes have been made in the transportation industry. A few years ago, commuters shifted from the use of regular taxis to ride-hailing with the introduction of the first ride-hailing app. In 2009, Uber launched UberCab. However, there were several complaints regarding the charges and operating system. Thus, the company rebranded its ride-hailing system and the quite popular Uber was birthed.

Since the introduction of Uber as the first modern ride-hailing system, several other ride-hailing companies have emerged, giving rise to stiff competition in the industry. Each year, the ride-hailing industry rakes in millions of dollars, making it the next big thing in the transportation sector as a whole.

Why is the Ride-Hailing Industry the Next Big Thing?

Ever since the introduction of the first ride-hailing company, commuters are gradually gaining a preference for this modern system of transportation. By 2020, it is expected that even more commuters will shift from regular taxis to the ride-hailing app. Statistics have also shown that more car owners will delve into ride-hailing as an extra means of income. This gives rise to concerns regarding the popularity of the ride-hailing app. Why is the ride-hailing industry the next big thing in the transportation sector? Its rising popularity can be tied to a few factors such as:

  1. Convenience: The ride-hailing app offers a more seamless and convenient mode of transportation than regular taxis. With these apps, drivers and commuters alike can enjoy rides without hassle or stress. The introduction of the ride-hailing app abolished the need for commuters to stand at bus stops, waiting for the next available taxi. Rather, they can use their smartphones to simply order a ride from the comfort of their homes. In the same vein, drivers do not have to scour the streets and bus stops in search of passengers. All they have to do is sit tight and wait for a passenger to locate them using the app;
  2. Professionalism/ professional services: Before the introduction of the ride-hailing app, the transportation sector faced one huge problem: unprofessionalism. Drivers could attack commuters and vice-versa. However, ride-hailing companies offer a more professional and efficient system of transportation. Individuals can now commute to and from their desired locations without fear or dissatisfaction. For commuters who value experiences and professional services, this industry is the most suitable. Passengers can easily track drivers’ locations and routes to gauge the time of pickup. In the same vein, lack of professionalism amongst drivers can be curbed as passengers can rate drivers after each ride. Hence, the system can easily identify and weed out unprofessional drivers with low ratings
  3. Safer for both drivers and commuters: The ride-hailing system has proven to be much safer for drivers and commuters alike. Drivers can avoid commuters with records of violence towards drivers. Commuters who constantly show acts of violence towards drivers may eventually have their accounts deleted or deactivated. In the same vein, the ride-hailing industry offers more flexible schedules to drivers. They can easily choose their working hours and log out whenever they like or in cases of emergencies. Thus, many drivers and passengers have shown a preference for these ride-hailing app and as such, have delved into the industry;
  4. Cashless: In today’s world, cashless modes of transactions are seamless and reliable. Hence, ride-hailing apps have utilized this system of payments. After each trip, the commuter’s account will deduct the amount equal to the payment amount. Thus, drivers do not have to worry about fraudsters or commuters who may refuse to pay. In the same vein, commuters do not have to worry about misplaced or forgotten cash. They can leave their homes and reach their destinations even without cash;
  5. A source of extra income: Ride-hailing has become a major source of income for drivers and private car owners. Individuals who already have a job but need an extra source of income can venture into the lift hailing industry. Here, the hours are flexible so he/she can fix working hours and still work a full-time job without any form of clashing. So far, a large number of private car owners have either ventured or considered venturing into lift hailing;
  6. On-demand commuting: Unlike regular transportation, the ride-hailing industry offers on-demand transportation. Thus, commuters can easily request for a ride even in the middle of the night or early hours of the morning. This makes this mode of transportation more convenient and seamless.

With the aforementioned factors, it is easy to see why the ride-hailing industry has gained so much popularity. Experts even predict that by the year 2020, ride-hailing companies may completely dominate the transportation sector. Hence, it is safe to say that this system and industry is the next big thing in the transportation sector as a whole.

Find out more about the benefit of dispatch software affect transportation industry, click here What is a Dispatch Software, and How Does it Help the Transport Company?

The Ride-Hailing Industry in 2020: Opportunities

Ride-hailing Industry, Taxi Dispatch Software, Taxi App Solution

Experts have predicted that by 2020, the ride-sharing/hailing company could be even bigger than it currently is. However, for this prediction to hold sway, ride-hailing apps and companies would need to diversify and expand, thereby creating more room for growth. Here are some opportunities which ride-hailing companies can delve into and take advantage of in 2020:

  • Delivery services: Ride-hailing companies can diversify and delve into offering delivery services. So far, a few companies have taken this bold step and are currently taking giant strides in the delivery industry. However, if more ride-hailing companies delve into this industry, they can generate more revenue and increase their ROIs. Similarly, the ride-hailing industry will grow exponentially and equally be diverse;
  • Financial services: Although this may be risky, ride-hailing companies can decide to offer financial services to commuters as well. To do this, they would need to partner or collaborate with credit companies to offer loans and auto-financial services at a fixed interest rate;
  • Autonomous ride-hailing: This is another aspect that ride-hailing companies can look into. Autonomous ride-hailing will completely eliminate the idea of a driver and offer cost-effective commuting services to individuals. This concept is even more seamless and cost-effective. Here, commuters can easily be transported to their various destinations without a driver. So far, several ride-hailing companies have already considered utilizing this opportunity. John Zimmer, the CEO of Lyft has predicted that within the next five years, autonomous cars would make up a large percentage of the company’s rides. The introduction of autonomous ride-hailing will not only cause a dramatic change but give the industry a complete facelift as well. Thus, all ride-hailing companies should take the necessary steps towards utilizing this profitable opportunity;
  • Ride-hailing app development: Companies can look into developing and updating ride-hailing apps. This would make the booking process easier and stress-free. They can equally create a taxi booking management system or a taxi fleet management software in order to build a well-structured booking system.

For company and industry growth to occur, certain changes need to take place. Growth can not take place in the presence of stagnancy. Hence, ride-hailing companies need to diversify and take advantage of the available opportunities in 2020.

The Ride-Hailing Industry in 2020: Challenges

Although the ride-hailing industry is expected to grow massively by next year, there are still several challenges that are yet to be addressed. These challenges could serve as stumbling blocks to the potential growth of the industry. Hence, in order to fully reach potential growth by next year, these challenges need to be addressed and gotten rid of. Here are some challenges which ride-hailing companies are currently facing or may encounter:

  • Price wars: With the current surge of new ride-hailing companies, there is a perpetual war to fix competitive rates. Commuters are more likely to switch to cheaper companies or apps. Thus, existing ride-hailing companies may be under constant pressure to lower price rates in order to stay on top of the competition;
  • Government restrictions and bans: Today, many ride-hailing companies are spreading their tentacles to several countries. Initially, these companies were situated in only a few countries such as the USA and the UK. However, diversity has set in and ride-hailing companies can now be found in different parts of the world. Although this is advantageous, this venture poses a lot of risks and challenges. In some countries, government policies and restrictions could make it difficult for ride-hailing companies to thrive. These countries may impose heavy taxes on the companies, thus making it difficult to achieve ROI;
  • Building lasting customer loyalty: Over the past few years, new ride-hailing companies have emerged and more are yet to emerge. Thus, commuters have a wide range of apps to choose from. Most individuals are more likely to stick to cheaper or more comfortable companies. However, judging by statistics, low prices and comfort are simply not enough to retain customer loyalty. 

Challenges of Ride-Hailing Industry, Taxi Dispatch System

A large percentage of commuters have more than one ride-hailing app on their smartphones. Thus, they switch between these apps without sticking to one. With the current number of ride-hailing apps at the disposal of commuters and individuals, building lasting loyalty has become increasingly difficult. Hence, the growth of these companies could be slowed down or hindered by the lack of customer loyalty;

  • Economic disadvantages and limitations: Inasmuch as several ride-hailing companies are making efforts to reduce their prices, ride-hailing still remains more expensive than regular transportation. A large number of individuals, especially in rural areas, can not afford to use this mode of transportation. 

Thus, only about one-third of commuters actually use ride-hailing apps. This economic disadvantage poses a huge threat to the growth of the company. So far, the goal of these ride-hailing companies is to completely dominate and overtake the transportation sector? But how can this be achieved when a majority of the population does not even use the apps? Thus, in order to achieve growth in 2020, ride-hailing companies need to work in conjunction with the government so as to breach the economic barrier.

Conclusion

The ride-hailing industry is gradually expanding and dominating the transportation sector. Experts have predicted even more growth in 2020. However, in order to achieve this growth, companies need to utilize the available opportunities and overcome existing challenges.

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