The term "ride-sharing" has seen incremental relevance since the dawn of this decade, as services like Uber and Lyft expand robustly across the U.S., trying to cater to the common man with services that range from cab-hailing and carpooling to on-demand electric scooter hailing. However, when the pulse of ride-hailing across the U.S. is gauged, results that are thrown up are not exactly rosy to the vertical's prospects.
Pew Research Center came out with a survey on the spread of ride-hailing services into mainstream transportation in the U.S., and the findings laid bare a scenario that could – in theory – do a lot better.
Though the overall percentage of Americans who have tried a ride-hailing service keeps rising steadily, the increase in the percentage of regular adopters remains shaky. Today, 36 percent of U.S. adults have used a ride-hailing service at least once in their lifetime – up from around 15 percent in late 2015, with one-third of the populace not having heard of such a service before.
However, diving deeper into the numbers gives more clarity on what could be done to bolster the vertical. Parameters that will affect the future of ride-hailing include socio-economic status, demography, age, and education, with every factor fundamentally affecting the chances of a person adopting ride-hailing as his primary means of transport.
Demography sways the percentages considerably, with 45 percent of urban residents and 40 percent of suburban residents claiming to have used a ride-hailing app, while only 19 percent of rural residents have had such an experience. This is due to service availability, which is quite strong in the urban regions, ebbing significantly in rural areas.
The scarcity of ride-hailing services in rural areas is a positive feedback loop – population density is much less than in urban spaces, leading to fewer people who would be interested in taking a cab, which further leads to lower on-demand cab availability. Businesses like Uber and Lyft have yet to comprehensively cover rural regions.
Demographics has enough bearing on the ride-hailing numbers that urban residents are more than twice as likely to have used this service compared with high-income individuals living in rural communities – 71 percent versus 32 percent. The Pew Research survey also highlighted that rural residents were more likely to complain about a dysfunctional public transportation system than urban residents, which could further the divide in the ride-sharing market reach.
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The most significant cause for worry for companies like Uber and Lyft is the stagnation in the percentage increase of people who are daily patrons of on-demand cab hiring. "Only one-in-ten users of ride-hailing services say they use these apps at least weekly, including just two percent who say they use them every day or almost every day. Another 22 percent are monthly users, while a majority of users (67 percent) utilize these services less than once a month," said Pew Research in a statement. "Put differently, a mere four percent of the U.S. adult population today uses ride-hailing apps on a weekly basis – a share that is largely unchanged from 2015, when three percent of Americans reported being weekly riders."
What could be interesting to note is that people between the age of 18-29 years are more responsive to technology in general, and are noticeably greater users of the ride-hailing segment, compared to other age groups. Businesses would do well to target this audience to improve their numbers and conceivably establish a frequently returning customer base.
Nonetheless, to sustain in the market is to innovate and branch out to different transportation ecosystems like the electric scooter vertical, on-demand trucking and even autonomous driving technology. The idea of carpooling is also quickly gaining steam among several mobility-as-a- service (MaaS) solutions. Incidentally at the Consumer Electronics Show today, Uber has unveiled a full-scale flying taxi solution that can vertically take-off and land, which could be the answer to clogged and densely populated urban streets.
The market is gearing up this year to witness the IPOs of both Uber and Lyft in quick succession, making them the first on-demand ride-hailing companies to go public and issue stock. This may possibly redefine and streamline the on-demand ride-sharing market and the companies may expand services and service areas with the much-required cash.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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