Changing Customer Behaviors Cut Both Ways

Hail cabTechnology educates.  Uber has taught millions of people to dip their hands in their pockets, as opposed to raising it up in the air, when they need a ride. has taught people to consider to the flexibility of their travel plans, when booking a hotel room.  They have influenced behavior, made things easier, and created a lot of value by gaining lots of customers.

On the supplier side, they  have become the platform of choice, primarily because they had aggregated the greatest slice of demand, in the shape of the customers mentioned above.  They then capitalized on their aggregated supply and demand, by commanding very high take rates (commissions) from the transactions they enable, leading to their unicorn status.  In the case of Uber,  a recent leak indicates that the take rate is ~20%, and at, the take rate estimate is ~%16.

One question that comes to mind is whether these high take rates will survive? The pressure is on the platform, especially as it grows, allowing it to benefit from economies of scale, and as competition emerges, to lower its take rate.  We have seen this in numerous marketplace businesses in our portfolio.  In addition, the education process I describe above, is also benefiting the incumbents who are utilizing these platforms to reach customers.  A case in point is the case of Hilton's own booking app.  According to the NY Times: 

Hilton has introduced a number of services for guests who book directly, including a digital check-in option that eliminates waiting in line. Quickly adopted by its customers, the app is now used by over one million people each month, according to Geraldine Calpin, who oversees Hilton’s worldwide digital efforts.

A million people each month is a huge number, and should be an alarm for  A company called Arrow will soon make NY yellow cabs as easily hail-able as Uber cabs.  Technology, while educating users on more efficient new behaviors, is also lowering the cost of incumbents to battle marketplaces.

My prediction is that marketplaces will ultimately earn their permanent place in their respective markets (note the pun :)), but I would not count on the high take rates to continue.


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