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Uber Express POOL: Take an Uber for the Price of a Bus!

Uber Express POOL is the newest lineup in the suite of products offered by the world’s largest rideshare giant. The service is similar to uberPOOL but even cheaper.  Ridester thought it would be a good idea to take a closer look at this new service and explore how it will affect drivers, riders and Uber.

But first, there’s actually a noteworthy development in all this that shouldn’t get lost in the news.

For Express POOL, Uber has built a brand new back end that calculates and comes up with the best route.  This is not a part of the regular Uber routing system, but rather a brand new and separate part, which indicates it must be far more advanced than their ‘Generation 1’ system.

Uber expects to create far more precise matches with this new system.

How It Works

When a passenger calls for an Express POOL pickup, Uber tells them upfront that it will take “a few extra moments” so they can find other riders that will match up with your trip. The question is though, just what do they mean exactly by “moments”?

Normally, a company would only want to keep its customers waiting for a few seconds.  But in this case, where customers will be getting a ride so cheaply, Uber may not mind making them wait for up to a few minutes for a match.  And the customers may not mind waiting that long either, in exchange for a car ride for the price of a bus.

Graphic from Uber, explaining how Express POOL works | Uber

It also apparently means that Uber will be putting these routes together on-the-fly before the trip begins.

No more (at least in theory) of uberPOOL’s annoying trips, where a passenger who calls in after the trip has begun, may be added to a trip already in progress, causing the route to go wildly off its original course.

This time it looks like Uber is going to try and match riders before the first rider is picked up.  But what will happen if a third rider calls in and just happens to be in the perfect spot for your driver to pick up?  Will Uber turn that trip down?  If the past is any guide, probably not.

But as they currently have it planned, it means that you’re going to have to have at least two people, who are in close proximity to each other, call in at nearly the exact same moment in order for these trips to be put together.

This also means Express POOL is going to work best in crowded urban areas.  And it’s probably not going to work much at all in less crowded suburban areas.  Unless Uber is contemplating making passengers wait 5-10 minutes before they can complete the order.

What Does it Mean for Riders?

For passengers, Express POOL first means, that they will have a new, very cheap transportation option. As experienced riders know, the service is already cheaper than most alternatives, but now it’s getting even cheaper.

In a screenshot that Uber provided of how Express POOL will look on the passenger app (below), they’re showing a price for Express POOL that’s 3.5x less than the already super cheap, much less than a taxi uberX!

But passengers will have to earn the lower rate.  They’ll pay for it in lost time and more walking. Let me explain.

When a passenger puts in a call for an Express POOL, they will first have to wait – no telling how long – for another passenger who is nearby to put in a call for a trip going in the same direction.  Instead of matching passengers to drivers instantly like is done with all the other classes of Uber services, it’s possible that Uber might make Express POOL passengers wait for a few extra minutes before being matched with a trip.

Then, there’s the question of how many different people you might share your trip with.  Will just one additional passenger be added?  Or two?  Or will it be unlimited – like it is with uberPOOL?

Then, there’s the walking.  No more front-door pickups.  These are going to be more like down the block and around the corner.

Screenshot of Uber Express POOL on the rider app | Uber

Whatever the end result may be, it’s clear that it won’t be sustainable for Uber to continuously offer this service at these prices unless they can actually match passengers up with other passengers.

So just in thinking about the realities of the business, it seems apparent that passengers in many cases will have to wait several minutes before Uber is able to match them up with another rider.  Once passengers get used to that though, they probably won’t care.  After all, they now walk to and wait on buses for up to 15 or 20 minutes at a time.

In light of these considerations it looks like Uber is going after bus and public transit passengers.  The question is, will it make enough to be able to pay drivers enough to keep them on the road?

If Uber wants to stop the massive losses they’ve incurred every year since their inception, they’re going to have to figure out a way to make it work.

Is Uber Express POOL Good for Drivers?

A few years ago, it cost me around $75 to take an Uber from my house to the airport.  Today on uberX that same trip costs $30.  With ExpressPOOL, that same trip would now cost about $8.00!

I give that as an example to illustrate that lower prices will never ultimately result in higher pay for drivers.

The uberX driver who now takes one passenger to the airport for a fare of $30 – while, by the way, leaving other passengers behind who will become passengers for other drivers – will now make a fare of $16 if he’s lucky enough to match up with two passengers.  If he has insanely good luck and can get matched with three passengers all going to the airport – his total fare will be $24.

Uber will say, no problem – they’ll pay drivers at the regular uberX rate no matter how many or how few passengers they end up with.  But, it is a problem.  Because Uber can’t sustain that kind of subsidy.

Until Uber realizes it has to charge passengers what the trip is really worth, figuring in enough to pay the driver for his full operating expenses while leaving him with enough profit to motivate him to keep working, as well as a little more left over for Uber’s expenses and profit, they’re never going to win this game.

Drivers will be fine as long as Uber’s subsidies last.  But the subsidies can’t last forever.  And they shouldn’t have to subsidize drivers’ already meager pay.  It’s amazing they can’t get passengers to pony up and pay what they very happily paid just a few years ago!

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The new uberXL

The photo above very neatly captures what’s really going on.  Uber claims drivers earn more with every rate drop because they stay busier.  But drivers tell a different story.  And it’s not just the stories they tell – it’s the reality you see every now and then in a photo like this one.

In a driver forum, a driver was excited to post the above photo of a new vehicle he got to drive for uberXL.  uberXL is a little higher-priced than uberX so he was excited to have a vehicle that he could use for both uberX and the higher-priced uberXL.  But even with the slightly higher XL rates, he knew he shouldn’t spend too much on the vehicle.  Even higher-paid XL drivers are having to get by in older and cheaper cars – as is evidenced by the photo.

Despite the fact Uber has promised drivers great improvements for this new service over XL – comments we’ve seen from drivers indicate that so far, those promises have not played out (big surprise)!

One driver posted online:

“The rates are like uberPOOL, but on steroids.  They’re pretty much the same as taking a bus!” 

Another driver told recode:

“It’s much more effort, many of the intersections Uber chooses as a good Express pickup location are very dangerous, and there is no good spot to safely pull over and pick up the passenger,” Thad, a Boston driver who has been working on the Uber platform since September 2017, told Recode. “It’s more effort, more headache, more potential for complications and a bad rating over things the driver has no control of.”

To us, that sounds pretty much exactly like uberPOOL.

What’s in it for Uber?

Uber obviously sees an upside, probably several upsides, or they wouldn’t be launching this new service.

One upside is that the more passengers a driver picks up on a single trip, the fewer drivers they need.  If a driver picks up three passengers instead of only one, then Uber has just eliminated the need for two additional drivers as they were able to handle the three passengers with one driver.

As another upside is similar to uberPOOL.

The total amount Uber charges all customers on a single trip, comes to more than that same trip would have cost had there only been one passenger.  But they pay the driver the same as they would have, had there only been one passenger.

Uber may make 20% extra on pool trips, but they don’t pay the drivers 20% more.  In fact, they don’t pay them any more – except for a paltry one-time fee for each pickup that amounts to about 40 cents (net) for a large portion of American drivers.  So Uber gets to pocket a windfall on Pool trips.

It’s hard to see that playing out with the prices they’re advertising for Pool EXPRESS though.  These prices are so low that a typical Express POOL trip won’t even bring in as much as the equivalent uberX trip would have.

For instance, in the screenshot above, the uberX price is showing at $10.24.  The Express POOL price is at $2.95.  It would take four passenger pickups on Express POOL to equal or exceed $10.24.  And that’s just not realisitic.  They’re simply not going to get four match ups on most routes.  Two match ups are possible.  Three are much less likely and four nearly impossible.

In this scenario, if they got three match ups for this trip, they total fare would only come to $8.85 (instead of $10.24).  That’s some 14% less that they would bring in over a regular uberX trip.  So, why they’re looking at a scheme that appears to have significant potential to bring in less money is a mystery.

Although, it is well known that Uber believes if they can just keep drivers constantly busy then everyone will make money.  However, drivers will tell you – they always make less money when Uber comes up with these ideas.

Right now, Uber subsidizes a lot of the uberPOOL trips.  Trips where they charge the first passenger based on their hope that a second passenger will be added, but in the end, there is no second passenger.  They’ve in essence just taken Passenger A to her destination for a substantially reduced price.  Yet they must pay the driver the same uberX rate as always.

With even lower rates on Express POOL, it seems the subsidies would only widen.  On the trip in the above-screenshot, Uber would have to pay the driver at the $10.24 rate.  But if they only get one match up (i.e. just two passengers), the gross fare would only be $5.90.  But they’d have to pay the driver $7.68.  So, it’s hard to see how this could possibly pull them out of their money-losing spiral.

You would think that what would really make sense would be to raise uberX rates by about 50% (back to where they originally were).  Drop all these cheap and cheaper services like uberPOOL, Uber Eats and Express POOL and get passengers paying a sustainable rate.

To keep cutting the rates and putting more and more burdens on the drivers has not proven to be a money-making strategy so far.  Since Uber has lost billions of dollars since their inception, you would think they would have learned that lower rates are less sustainable than higher rates.

Uber Wants to Replace your City Bus System

Uber CEO Dara Khosrowshahi recently said that he wants Uber to run city bus systems.  While he was negotiating the huge investment last year from Softbank, he said,

“I want to run the bus systems for a city.  I want you to be able to take an Uber and get into the subway — if the trains are running on time, you’ve got real-time data — get in the subway, get out and have an Uber waiting for you for right now. Or know that there’s a bike right there for you that gets you where you’re going in the fastest manner.”

I won’t pretend to be smart enough to understand what all of that means, but as a person of just regular intelligence, it seems like a lot of gobbledygook!  I do understand the first sentence – that he wants to run your city’s bus system.  But the rest of it is some kind of corporate-speak I don’t understand!

It also doesn’t seem as if he’s noticed that no major city bus system in the country has ever been a profitable enterprise!  And how they think they can run a bus system more efficiently with thousands of 4-passenger cars rather than a few hundred city buses that can carry 50-100 people – is beyond me!

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