The sharing economy is becoming the norm as many people struggle to make ends meet, which is why companies such as Lyft and Uber are flourishing. Uber has rocked the boat in the ridesharing industry, but Lyft is a rising star that poses the greatest threat. Uber is a company founded in 2009 that allows everyday people to hail a ride by way of smartphone app, and users can track the driver en route to their location. Lyft started in 2012, originally growing from ridesharing company Zimride which was founded in 2007, which provides the same type of service as Uber. Both companies provide a convenient way of getting around town, but which company is the best solution for consumers in terms of service and cost?
Uber Customer Service Phone Number: N/A; Email – firstname.lastname@example.org
Lyft Customer Service Phone Number: N/A ; Email – email@example.com
It should be noted that the quality of customer service has gone downhill for both companies, as a typical email response from Uber and Lyft takes two to five days. This actually has more to do with the growing number of responses due to rising popularity, therefore customer service could improve in the future as each company grows. Lyft also maintains a 24-hour emergency call service center, including a separate email for non-emergencies, whereas Uber has an online support forum that allows customers to submit questions or comments.
In terms of arrival times, Uber cars tend to arrive faster than Lyft cars, but the wait times between companies are small. For example, a typical wait in the afternoon in New York City is usually five minutes for Uber and eight minutes for Lyft, while the evening entails three minutes for Uber and six minutes for Lyft. Busy spots such as New York’s financial district would take one minute for both companies, but only in the morning. While wait times are virtually the same, the riding experience for each company is a stark contrast.
If clients are looking for a fun and engaging experience, Lyft would be a more suited option since drivers are usually casual in their demeanor and will treat customers as a newfound friend. Drivers usually greet passengers with a friendly fist-bump before the ride, and riders are encouraged to sit in the front seat rather than the back. Further, Lyft stands out with its large pink mustache symbol plastered on the front of each vehicle, and employees provide riders with a fun riding experience laced with lively conversation and entertaining themes and activities, such as Harry Potter themes, Trivia or Karaoke.
On the other hand, Uber drivers are more professional, opening doors for passengers, and they are usually dressed more formal. If customers wish to ride in a modern vehicle, Uber is the best choice because the company encourages drivers to use new cars. The apparent differences stem from the culture of each company, as Lyft believes in a fun-filled party atmosphere, while Uber adheres to a more traditional form of transportation. People who are averse to conversations with drivers and would rather keep to themselves would generally better off with Uber, but for those who are open to a bit of adventure and interesting conversation, Lyft is the ideal company.
The services for either company usually starts at $1, with $1.50 per mile and $0.25 per minute, a price scale which undercuts traditional taxi cab fare of a $2 beginning rate and mileage rates that are 20 percent more than ridesharing companies. However, users stand a higher chance of getting a cheaper rate with Lyft because drivers are not required to ride in new cars, and Lyft offers better deals as a way of competing against Uber. In the grand scheme of things, rates may change based on the city, and riders are usually charged higher rates during peak times, with prices surging higher in more populous cities such as San Francisco or Los Angeles, and herein lies a noticeable difference between each company.
For example, a Lyft ride during peak hours could shoot a rate as high as 200 percent, but it would never be anything over since the company imposes a cap. Uber does not have a limit and may increase rates as high as seven or eight times, but they will cut rates during emergencies or extreme circumstances such as natural disasters. The best way to dodge the price surge is to avoid peak hours altogether, but Uber is better at informing riders about how much they will pay during busy times before they place an order.
The season is another factor that must be taken into account, especially as the two companies compete for customers. Lyft recently announced a price cut in 33 cities during the winter season, but not in New York City, while Uber announced a price slash of 10 percent in 100 cities throughout North America, including NYC. Uber has gained significant headway in NYC, and the two companies have especially been at odds in other major cities such as San Francisco. In order to counter Uber’s foothold in NYC, Lyft has partnered with the medical industry for the purpose of transporting patients to their doctors, but only time will tell if such a partnership will lead to a greater portion of market-share. The bottom line is that the rivalry has less to do with territory and more to do with attracting as many customers as possible, and another way they are doing this is through various coupon deals.
Passengers looking for the best deal are better off with Lyft because of the intense competition with Uber. One example is a $50 credit reward for first-time drivers that applies to their first ride, meaning that each first-time passenger gets a free ride, and remaining credits can be used on future rides. Currently, Uber only offers a $20 credit, but this is to be expected as the company is more established and less incentivized to offer extra perks.
Both app services are very similar since they were developed around the same time, and both apps allow users to punch in the destination address before they are picked up. Customers can also track the route in real time as the driver heads to the location, but many users have stated that the Lyft app is more accessible and user-friendly. Also, Lyft’s in-app tip provides more convenience than the Uber app, which does not have a tip function whatsoever.
When it comes to service, both companies offer numerous options. Uber in particular has UberEats for food delivery, Uber XL, accepting rides of six people or more, UberPlus, which offers rides for 4 people or more in a plush vehicle, and Uberblack for limo rides. Lyft has three levels of service, with Lyft Plus offering rides for six people in a larger vehicle, and Lyft Line allows strangers to share a ride while saving money in the process, including the standard fare as the third option. To ensure repeated business, Lyft customers can rate their driving experience, and if their rating falls below three stars, the customer is never pared with that driver again, but the driver can rate the passenger as well.
In terms of presence, Uber has a wider expansion, with operations in 300 cities in 60 nations worldwide. Lyft only operates in 60 U.S. cities and has no international presence. Both companies generally operate in the same cities, but pedestrians can find a ride much faster with Uber because it is a more established ridesharing brand and has more cars on the streets.
To make matters worse for Lyft, management is dealing with the issue of company poaching, as Uber offers free lunches and a $500 bonus to join the company. However, Lyft applies the same tactics as it secures additional funding, offering the same signing bonuses and other perks. Lyft got ahead of the game by not taking any commissions from drivers and cutting rates by 10 percent, while Uber retained its full commission system. However, Lyft later restored its commission policy but reduced commissions based on the amount of hours a driver works. Not to be outdone, Uber has resorted to questionable tactics, such as ordering 5,000 Lyft rides and cancelling the orders at the last minute. While not illegal, critics have derided such an unethical practice, but this isn’t the first time Uber has been accused of shady activity.
In a push to get drivers to own nicer cars, Uber is accused of pushing them to apply for sub-prime auto loans, the very same types of loans that caused the Great Recession in 2008. The sub-prime scam has taken a different form through auto loans, and to make matters worse, the Justice Department issued subpoenas to two of Uber’s financing partners: Santander Consumer USA and General Motors. Uber is tied to the investigation because some of the loan applications directly link with allegations of falsified income and employment status, and whether lenders fully disclosed such information to investors.
This type of fraud is one reason why the U.S. economy suffered immensely eight years ago, and Uber’s name stands a high chance of being dragged in the mud if its contractors are forced into risky loans that they could never pay back. On the flip side, Lyft is making less risky investments, partnering with GM in establishing nationwide rental hubs which allow employees to rent cars instead of owning them. If more of these hubs are established, it could attract more workers who may want to avoid taking out auto loans, and it could be a perfect tool for poaching Uber drivers.
Uber pushes drivers into newer vehicles to maintain its clean, professional image, but this could only end up backfiring as it forces workers into needless debt, while potentially dealing a blow to the company’s overall image, especially when the auto sub-prime bubble eventually bursts. Uber has also been accused of wishing to dig into the personal lives of friends and family members of journalists who write critical pieces of the company, and this will inevitably hurt the brand image of the company as many moral-minded consumers would refuse to do business with a company that resorts to unscrupulous tactics.
Overall, Uber and Lyft support drivers in times of emergency, such as reimbursing drivers for ticket violations at airports, or when passengers damage vehicles. Uber and Lyft employees are treated decently, but when it comes to a choice between Uber and Lyft, 9 out of 10 workers would choose to work for Lyft due to the company’s less rigid ratings policy, most notably the addition of a tipping app feature. Uber’s ratings system is noteworthy because it does not give drivers the chance to counter any claims or negative reviews from the customer, especially for circumstances beyond the driver’s control, such as language barriers with foreign drivers or heavy traffic. Those who have worked for Uber claim that drivers cannot get a rating below 4.7 and face the risk of being fired as a result. Lyft is less stringent if drivers get bad ratings, and workers who wish to avoid the fear of potentially being fired for low ratings would be better off at Lyft.
To be fair, Uber accepts far more passengers and would naturally receive more negative complaints from customers, but the issue of letting drivers go based on a number of negative reviews does not make the company a safe place in terms of job security. However, many workers remain with Uber simply because they are more likely to get work than through Lyft, and Uber is better established and well-known nationally and internationally. To maximize their income stream, some workers contract for Uber and Lyft at the same time, since they are free to do so as employee contractors, and workers who drive for both companies simultaneously notice Uber’s lack of in-app tip functionality.
This may not seem like a big deal on the surface, but it hurts drivers over time as many passengers do not carry enough cash on-hand to give drivers an appropriate tip. Lyft’s app is different because it gives users certain gratuity choices, including a custom amount. This puts Uber drivers at a disadvantage because they are forced to rely on cash-only tips from customers, and the lack of tipping feature prompted a petition to the company to add a tipping option, but Uber is unwilling to budge on the issue and shows no sign of changing anytime soon.
This is because tipping goes against Uber’s core philosophy, but a change in worldview is long overdue as drivers continuously lose a vital revenue stream. Times are changing as less people have physical cash in their pockets, and Uber will have no choice but to upgrade its app to include a tipping function, especially if the rideshare company wishes to retain employees and satisfy customers. The no-tipping philosophy is a major problem for Uber, as it could be a determinant factor in whether potential drivers will work for the company, and it could be another issue that Lyft could use to poach more drivers away from the company.
When it comes to annual income for both companies, this is based on how many hours a driver commits per week, mileage and city location. For full-time UberX drivers, Uber reportedly pays its employees $90,000 a year in New York and $74,000 in San Francisco, which on the surface is not a bad chunk of change in cities with high living standards, until such expenses as fees and fuel costs are factored in. Drivers may spend over $14,000 a year on various expenses, but the take-home pay is still decent compared to other professions. Some Uber drivers do not make enough money to earn a decent a living, while others make over $15 an hour.
The same type of salary applies to Lyft, but drivers can make anywhere from $75K-$110K on a yearly basis in major cities. Drivers of both companies are paid handsomely for their work, but Lyft is more likely to offer higher salaries as a poaching tool against its rival. Employees for Uber and Lyft do not receive benefits because they are independent contractors, and prominent economists such as Robert Reich has leveled criticism at ridesharing companies like Uber for encouraging unstable job positions as the norm in society. However, a majority of taxi jobs offer contract employment, with the average Uber/Lyft driver being paid more than the average taxi driver, and ridesharing drivers usually work less hours. It is safe to say that Uber and Lyft treat their employees fairly in terms of pay, and workers have a chance to make a substantial yearly sum in many locations.
However, the restoration of the commission system shows that Lyft still has plenty of work to do in catching up to Uber and cannot afford substantial losses in revenue. Lyft achieved great success with $250 million in financing in 2014, but was towered by the $1.2 billion Uber raised in June 2014, and Uber continues to outperform the newer company in financing. Currently, Lyft is faring against its competitor and has major backing from investors as well, but the money keeps rolling in as Uber plans to raise $2.1 billion in funds to expand operations. The money would go to widening food delivery service, including driverless cars, and the company is expanding in Asia, spending $1 billion alone in China.
At this juncture, it is imperative for Lyft to meet its funding goals in the future, as the company lost $127 million in the first half of 2015, while Uber’s gross revenue expanded 200 percent that same year. Lyft still remains strong as it announced a closing of one billion dollars on a $500 million investment from General Motors, and the company is valued at $5.5 billion, as of 2016. Lyft may be behind of Uber in terms of value, but it is the fastest-growing ridesharing company in the United States, and the company shows promise with regard to expansion and innovation. With that, the key is achieving the latest algorithms that logistically allow drivers to get to a certain pick-up point much faster, and the companies keep building on top of each other to gain new customers. For instance, both companies debuted a new carpool sharing service that is cheaper than standard prices, but Lyft has a slight edge overall because management hired a former Netflix chief of analytics. Each company runs neck and neck in terms of technology, but the main battle lies not only between Lyft and Uber, but ridesharing companies and taxi cab companies.
Many taxi drivers and local officials have complained of the ridesharing business model, as drivers do not have to go through the same regulations and fee structure as standard taxi cab companies would. On the other hand, no one can stop a person from sharing a ride with another person, and companies like Uber countered by criticizing the taxi cab industry for its repeated practice of refusing to offer minorities cab rides, and has used that as part of a marketing campaign. Bottom line, the government and taxi cab industry will be the biggest losers because the ridesharing economy is popular, and the free market has spoken regardless of what the law says.
Times are tough in an economy where too many people are not making enough money, and they are looking for new ways to maximize their dollars wherever possible. Uber and Lyft are competing for more customers, and passengers and drivers will be the ultimate winners as both companies offer incentives and price reductions. Regardless of a customer’s preference, Uber and Lyft offer the same level of service, with some extra perks along the way that will appeal to different customers from all walks of life. At the end of the day, both companies achieve the same result for their customers, getting from Point A to Point B.