Lyft And Uber Ramp Up Competition As Ridesharing Rebounds

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Having survived the worst of COVID-19’s economic upheaval so far, top U.S. ridesharing companies Uber and Lyft have shifted from survival mode to being competitive rivals once again. Both are rolling out new initiatives aimed at swiping customers from each other.

The two San Francisco-based transportation companies — whose headquarters are only about a mile apart — both reported sharply improved earnings in the past week. Both also saw rebounds in revenue and rider numbers for the third quarter — benefiting from the slow rebound of public transportation, which many consumers continue to avoid over COVID-19 fears.

And lastly, both companies are using the improved results as a springboard to mark the next phase of their recoveries.

Here are the latest developments:

Lyft’s New Delivery Service

In the case of Lyft, that means ramping up a new delivery business apparently designed to take on Uber Eats.

Lyft President John Zimmer blasted Uber Eats’ high prices in an interview with CNBC. He said Lyft aims to be more of a B2B partner with restaurants and retailers, rather than taking the 20 percent to 30 percent of revenues that Uber charges for meals ordered on its platform.

Zimmer said earlier on the company’s earnings call that retailers have “told us that current delivery models, with their expensive commissions, are not working for them. And they’ve emphasized that the overall incentives are not aligned between delivery platforms and individual retailers.”

Uber’s New ‘Uber Reserve’

Uber CEO Dara Khosrowshahi last week told investors during the company’s earnings call that in places like New York City, rider engagement was up by double-digit percentages year on year. He said that’s particularly during non-peak hours, which Khosrowshahi said “suggested the emergence of new use cases.”

In addition, he said Uber’s delivery business was benefiting from a massive structural shift in consumer behavior.

“Consumers are quickly becoming accustomed to the magic of having anything delivered to their door in half an hour, much like the magic of having a car show up in a few minutes,” he said. “It’s my belief that the tailwinds behind [delivery] are so strong that we can continue to deliver exceptional growth while also improving profitability.”

Uber is also rolling out new products. On Tuesday (Nov. 10), the company announced plans for “Uber Reserve,” a new feature that will allow riders to book a trip up to 30 days in advance, and also let them choose a driver they like and trust.

Implementing Prop 22

One area of change and challenge that both Uber and Lyft face is how to implement new benefits and hourly pay requirements for their independent contractor drivers in the wake of California’s Proposition 22.

Voters approved Prop 22 last week, replacing California’s AB 5 law — which classified ridesharing drivers as employees rather than independent contractors — with a lesser requirement.

Had Prop 22 failed, Uber and Lyft and other gig economy companies would have had to classify their huge workforces as employees, a prospect they spent heavily to lobby against as similar laws could have spread nationwide.

Still, Prop 22 guarantees ridesharing drivers some benefits and pay minimums. Lyft CEO Logan Green said his company is continuing to engage with policymakers across the country, and feels Prop 22 could provide a model for other states.

For its part, Uber said it was focused on making sure it does everything it can to get the benefits that Prop 22 promises delivered to drivers as quickly as possible.

Up Next: Driverless Ridesharing?

While the current battle between Lyft and Uber is largely focused on riders and delivery, longer term the fight is expected to be around autonomous vehicles (or AV).

“I think AV is absolutely going to be the biggest thing that happens to our industry eventually,” Lyft CEO Green said — calling it fundamental to the future of transportation.

“No matter what the timeline is, [autonomous driving] is incredibly important,” he said. “It’s something that we spend a lot of time and energy thinking about.”

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