5 ways to configure your ride sharing service
How do new ride sharing entrepreneurs make their mark without overextending themselves? It comes down to a simple idea: work smarter and find what service model generates the most revenue.
According to market research firm Technavio, the ride sharing market is expected to grow by $47 billion from 2020 to 2024. That means there’s lots of opportunity for ride sharing providers — not just for established players like Uber and Lyft, but also smaller entrepreneurs. Most would-be ride sharing start-ups might look at the industry giants and think they need to emulate their everywhere, anytime service model. In most cases, that’s simply not sustainable or even desirable. So how do new entrants make their mark without overextending themselves? It comes down to a simple idea: work smarter.
In this blog post we share five service models that can help you generate more revenue and thrive in the ride sharing market as a small business.
Hit the road when demand swells
The Ubers of the world might be available anytime of day but their model is predicated on drivers who use their own vehicles to transport riders. If you want to hire your own drivers and use your fleet, you simply might not have the resources to be available around the clock — and that is OK. Instead, look for times during the day where there is a lack of transit like early mornings or late at night and ramp up your availability to fill in this gap. This means you’re only working when it’s most profitable to you.
Weekend service can be particularly lucrative. After a night out, people just want to get home and not all cities have late-night transit options. Spare partner Earth Rides in Nashville, TN capitalizes on this demand by operating 24/7 on the weekend, when they receive as many trip requests as during the workweek.
Other times to ramp up availability: after a big sporting event, during summer party season or other holidays like Independence Day in the United States. While these might start off single-ride clients, by being introduced to your service during these one-off events, you’ll have the opportunity to convert them into repeat business.
Go the distance
It’s important that you know your market. Are you operating in a city with sprawled out suburbs, or are there areas in your city that are underserved by transit? Consider specializing in first-mile-last-mile transportation and become the missing link that connects riders from their home to the train station, for instance. Chances are, you’ll be able to pick up repeat business and these short rides will add up to big revenue.
Alternatively, you can also be available to cover longer distances that traditional taxi or transit operators might not accommodate like travel to two neighbouring cities or the airport. Earth Rides has set up an airport shuttle in both Austin and Nashville, which has two benefits. It represents steady demand and introduces the ride sharing provider to visitors who might go on to use its services during their stay.
Specialize in key demographics
Find out who most needs your services in your community and tailor your ride sharing business to their needs. Do you operate in an area with poor or inefficient transit options for low-mobility populations? Think seniors who have trouble walking to a bus stop and who don’t qualify for paratransit. You can become the go-to for these individuals who will come to rely on you as a trusted way to access essential services like groceries and healthcare.
To find success in this service type, however, you might need to take an old-school approach. Check-in with local senior centers and see if you can put up flyers to advertise your business for instance. Also, while the 65+ crowd is increasingly becoming technology savvy, some might still prefer to book trips over the phone.
Become public transit’s partner
Transit and ride sharing aren’t enemies — there is room for both. In fact, transit agencies can be your best client. Find out how your local agency brokers trips to third-party operators and try to get in on the action. For instance, transit agencies that offer microtransit and paratransit will often use taxis or ride sharing providers to handle excess demand. That’s the case in Durham Region just outside the Greater Toronto area. It’s on-demand microtransit service is made up of only four vehicles for the entire 2500 square kilometers service area. When there's a bump in ridership, it automatically dispatches trips to other local transportation providers through its on-demand platform, Spare.
You can also partner with local event organizers to provide service during conferences, sporting events and festivals. While you might have to go up against the industry giants, you can also negotiate preferential rates with organizers to help encourage their patrons to use your services. If major events are outside of your scope, think micro. Earth Rides for instance markets their service for weddings, giving newlyweds and their guests the opportunity to ride in a luxury, emission-free Tesla at a fraction of the cost of renting a traditional limousine.
Finally, you can partner with local resorts and tourist destinations, like Whistle! in Whistler and Tofino, British Columbia has to have some marketing visibility on their platforms and with their concierge. That way, when someone from out-of-town needs a ride, you are top of mind. A good strategy is to identify times of the day when these destinations are particularly busy. For example, if your resort is popular with Europeans and you know that flights to Europe depart in the evening, be available nearby to bring tourists to the airport. And if using your own fleet, bring extra value to the table by ensuring your vehicles are luggage and family-friendly.
Get in on the delivery game
Transporting people is not the only way to generate revenue as a ride sharing business. The global food delivery sector alone grew 10.3% between 2020 and 2021 and is expected to maintain a similar upward trajectory. Capitalizing on integrated delivery services can boost your productivity and become an important secondary revenue stream for your business. But it’s not an either-or-situation. You can load your trunk with groceries and packages while also driving people from point A to B. Just make sure to put the customer experience first. In other words, you might not want to accept restaurant orders at the same time as passengers in case they are sensitive to smells, or transport packages that don’t fit neatly in your storage space. Spare Partner Just Call Terry in Squamish, British Columbia focuses solely on food delivery, whereas Whistle!, does both people and goods.
The bottom line
As ride sharing supply and demand increases, you will undoubtedly face more competition as a ride sharing entrepreneur. Don’t let this discourage you. Check-in with your goals, evaluate your resources, use technology that supports your ambitions and be strategic about how you run your service. With proper planning, you can carve out your own niche and thrive.
With Spare’s flexible and data-driven on-demand mobility platform, you can make the right decisions to maximize your profits. To find out more, get in touch at [email protected] or get more details on our products for ride-hailing on our website.