# Uber and Lyft’s Growth Is Slowing in Most Major U.S. Cities



## KevinH (Jul 13, 2014)

https://skift.com/2016/10/12/uber-and-lyfts-growth-is-slowing-in-most-major-u-s-cities/
​*SKIFT TAKE*
Ridesharing growth in the U.S. is slowing but it's not stopping. If Uber, Lyft and other relevant players can stick to the markets and consumer segments that matter they'll continue to capture them.

- Dan Peltier

Some 13 to 15 million Americans will actively use ride-sharing services by the end of this year and that's close to the ceiling of the total U.S. market that Uber and Lyft, the two largest U.S. ride-sharing companies, can capture.

That's according to a report from 7Park Data, an NYC-based data intelligence company, which found that 20 to 25 percent of U.S. smartphone users have the Uber app installed and about three percent of them use it every week to order rides. The average ride is less than 15 miles. Ridership between Uber and Lyft has fallen about nine percent from the second quarter 2015 to the second quarter 2016, though.

While installs on only 20 to 25 percent of devices sounds like Uber has a lot of room to grow, a lot is likely an overstatement. Uber's largest markets are major U.S. cities where ride-sharing is more useful than using personal vehicles or public transportation. The rest of the U.S. market lives in areas where most people own their own vehicles and the hurdles for ride-sharing are higher. "While the ride-sharing industry is expected to continue growing, the rate of growth is expected to slow," the report states. "Uber, particularly, may be close to saturating at least its major U.S. markets, especially given lower fares and increased competition."

The report's data was drawn from panels that cover more than 50 million mobile devices across more than 75 countries. 7 Park analyzed anonymous mobile app usage statistics, device and network data and receipt data from millions of active U.S. and global consumers that use Uber and Lyft, including those of their competitors. It focused on active activity per user, or users who regularly use the Uber app each month rather than having it installed without ordering any rides.

The data doesn't segregate travelers living in one U.S. city and using Uber and Lyft in another. If, for example, a traveler lives in a suburb of Kansas City, Missouri where they don't use ride-sharing but travel to New York City for business or leisure where they do - that's not considered in the report. While Uber and Lyft may be close to saturating their largest U.S. markets with residents, they both have potential to gain market share among travelers.

Byrne Hobart, an analyst for 7 Park, said the data show that rental car companies have been impacted in the largest U.S. ride-sharing markets that are some of the most visited U.S. destinations. "Uber and Lyft really need to go after commuters to increase their market shares and that's exactly what they've been doing this year," said Hobart. "But it's still too early to know how that push has played out and if they've had success."

*THE UBER-LYFT U.S. RIVALRY*
In 2014 there was a significant spending gap with new users between Uber and Lyft but now that's converged a bit, said Hobart. "At this time we don't really know what the lifetime value of an Uber user is&#8230;Uber's expected revenue per user is higher for a year after a new user starts they start than right after they start," said Hobart.

During the past two years the average cost of an Uber or Lyft ride has gradually gone down as both companies are spending more per user this year than they were in 2014. "When we look at first-time users from 2014, they would typically spend a bit more than new users would spend right now in 2016," said Hobart. "In 2014 a new Uber user would typically spend about $70 in their first month and then spend more than that per month in their first year. But now the average Uber user spends about $55 during their first month which is pretty similar to what the average Lyft user spends."

The report found 12 percent of Uber rides in its five largest U.S. markets contained surge pricing with an average surge fare of $9.13 and an average multiplier of 1.67 in August. In the same markets, 14 percent of Lyft rides contained surge pricing with an average surge fare of $5.90. "We see a lot of surge riding with Lyft in a lot of locations and that's mostly a case of where supply and demand are imbalanced."

It's evident in the map below that not only is Uber the dominant U.S. player but Lyft is also stronger on the west coast. "Uber and Lyft both started in San Francisco and for Lyft, it probably made more sense for them to focus on west coast markets where ride-sharing wasn't originally a perfect fit versus east coast cities like New York City where it was," said Hobart. "Government regulations also play into it."
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There's also plenty of overlap with Uber and Lyft users. "We find that seven percent of Uber riders also rode on Lyft at the beginning of 2014, which began to increase at a faster rate in 2015," the report states. "The figure more than doubled to 15 percent in August 2016 demonstrating that fungible consumer valuations of ride-sharing operators do lead to platform crossover, especially given the ease of accessing new apps and their respective services."










_Source: 7 Park Data_

The U.S. is clearly ride-sharing's most mature market and U.S. companies like Uber have had trouble expanding overseas in places like China, India, and much of Europe. Then again, 7 Park's report found Uber is installed on nine percent of smartphone devices in UK versus 0.6 percent installs for Hailo, one of Uber's largest UK competitors.

Tags: lyft, uber

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## Brooklyn (Jul 29, 2014)

Yea no shit it was gonna slow down eventually.. didn't need a data company to tell us that. All this sounds like is when Google releases their Waze thing or whatever Uber is gonna drop their rates a bit more. 

Makes sense why they bailed on china.. they faked millions of rides out there to show growth which was probably propped up by their US market and now that that slowed a tad bit they needed to invest their money into growing it again probably to set up their fight in India.


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## ginseng41 (Nov 30, 2014)

I think the set pricing thing is really going to hurt growth. While we don't have it here, I hear from passengers that have it home that they hate it as they're convinced it's overcharging and take lyft more instead


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## Brooklyn (Jul 29, 2014)

ginseng41 said:


> I think the set pricing thing is really going to hurt growth. While we don't have it here, I hear from passengers that have it home that they hate it as they're convinced it's overcharging and take lyft more instead


It does overcharge... but Uber isn't worried about that fully right now.. they're probably strapped for cash after a bunch of losses and looking to generate as much money as possible this way.


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## ginseng41 (Nov 30, 2014)

And passengers no it so they aren't using it


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## Brooklyn (Jul 29, 2014)

ginseng41 said:


> And passengers no it so they aren't using it


Yea I'm sure at a dollar a mile or whatever in your city they're paying I'm sure no one's using it.


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## ginseng41 (Nov 30, 2014)

Well we don't have it. We do get a ton down here from DC where they say they've switched to lyft which we also don't have. 1.35 a mile here though


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## TwoFiddyMile (Mar 13, 2015)

Brooklyn said:


> Yea no shit it was gonna slow down eventually.. didn't need a data company to tell us that. All this sounds like is when Google releases their Waze thing or whatever Uber is gonna drop their rates a bit more.
> 
> Makes sense why they bailed on china.. they faked millions of rides out there to show growth which was probably propped up by their US market and now that that slowed a tad bit they needed to invest their money into growing it again probably to set up their fight in India.


No one ever wins India.
Ask Alexander The Great, Great Britain, and Pakistan.


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## Brooklyn (Jul 29, 2014)

TwoFiddyMile said:


> No one ever wins India.
> Ask Alexander The Great, Great Britain, and Pakistan.


Maybe their end game isn't to actually win in India.. maybe just show they put up the good fight and cut a deal like they did in China to get investors off their backs.


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## Flarpy (Apr 17, 2016)

You're thinking of Afghanistan. Alexander of Macedon could never consolidate power in Afghanistan. Nor could the Russians. Because of the horrendous terrain coupled with the unyielding willpower of the hardy people of the region.

Anyway, Uber first realized that demand for its service is extremely elastic ( https://newsroom.uber.com/guest-post-a-deeper-look-at-ubers-dynamic-pricing-model ): "Uber's analysis and research has shown that both the supply curve and the demand curve are highly elastic."

This means that if rates are raised, ridership drops rather quickly. So Uber dropped rates to try to get more riders. Then it started seeing drivers drop out due to the low rates so it had to start subsidizing them and constantly advertise for new ones. Then it realized that it was losing money this way so it introduced Pool to try to cram more butts into cars and slightly increase its profits. Drivers hated Pool so Uber had to incentivize, manipulate and threaten them into taking Pools and even this wasn't enough. So Uber started throwing money at self-driving cars which could fill up a car entirely with passengers and would take whatever rides were thrown at it without rebelling (and without filing lawsuits). This is going to take years so in the meantime they had to think up another way to try to generate a profit and this "upfront pricing" is it. Now they're willing to decrease demand in order to cash in _now_.

Taxis and livery have always been a low-margin enterprise and always will. Simply because, yes, demand is extremely elastic. There are many ways of getting around including using one's own two feet, and people will do so if prices aren't rock-bottom.

Uber has realized that the only way to drop prices to bus-fare rates is to pack cars to the gills much like.... wait for it.... buses.

Uber is throwing everything at the wall hoping that something will stick and turn its enterprise into a high-margin business. That's what you're seeing with Pool, Eats, Trucking, talks of Drones, self-driving cars, etc. Uber is lurching from random desperate idea to random desperate idea. None of them will work because transporting people and goods has always been, and will always be, a low-margin business.


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## ubershiza (Jan 19, 2015)

It just about time for another rate cut.


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## hewlett2packard (Sep 29, 2016)

ubershiza said:


> It just about time for another rate cut.


according to the kitty clock, Yes, time for rate cut


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## OlDirtySapper (Jul 26, 2016)

They started here in Peoria last year and despite constant rate drops and only advertising for drivers they have completely failed to even impact the cabs enough to piss off cab drivers. I would say that the small 5-6 car cab companies in town have more market share than uber currently. Its pretty sad when you cant take over at 1/3 the price. Honestly I don't think they will have any professional drivers by next year at this rate. All the guys I know are looking at getting back to black car service and cabs because Uber is 1/2 the pay.


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## Flarpy (Apr 17, 2016)

They're churning through all their potential drivers by alienating them with awful pay.


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## ginseng41 (Nov 30, 2014)

If only. People Stull are jumping to drive . I don't see how drivers in most markets can make anything


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## Flarpy (Apr 17, 2016)

ginseng41 said:


> If only. People Stull are jumping to drive . I don't see how drivers in most markets can make anything


It'll slow. There's only much market penetration they'll ever have.


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## LA Cabbie (Nov 4, 2014)

Problem here with both wall street and silicone valley because they are both run by the same people is that they want to see a 'hockey stick growth'. This is like filling a gorge with water. At first the water will roar in, but once capacity is reached, it will slow because it self regulates. That's natural. I think what Uber is looking for is a waterfall ride.


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## TwoFiddyMile (Mar 13, 2015)

LA Cabbie said:


> Problem here with both wall street and silicone valley because they are both run by the same people is that they want to see a 'hockey stick growth'. This is like filling a gorge with water. At first the water will roar in, but once capacity is reached, it will slow because it self regulates. That's natural. I think what Uber is looking for is a waterfall ride.


Uber needs the waterfall cause once the flow slows down they don't want the smoke and mirrors to show.


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## ubershiza (Jan 19, 2015)

TwoFiddyMile said:


> Uber needs the waterfall cause once the flow slows down they don't want the smoke and mirrors to show.


Right now the drivers are still enjoying the grand illusion $$$ but when the incentives stop it will be a different ball game


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## melusine3 (Jun 20, 2016)

ginseng41 said:


> If only. People Stull are jumping to drive . I don't see how drivers in most markets can make anything


Like anything, word does get around. Uber/Lyft started out promising extraordinary compensation. Once people realize that's generally a lie, they drop out and tell their friends.


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## agtg (Jun 8, 2016)

ubershiza said:


> It just about time for another rate cut.


And this is the real reason they're doing worse. They have marginalized the people serving them in the trenches, but they can't stop us from educating passengers and controlling the crappy environment they've cultivated with Pax perception.

This makes for a poor experience for all involved, and that spreads quicker than the crappy viral marketing videos that Uber lies to the public with.

Real growth will only come when drivers are compensated properly and feel comfortable selling Uber to everyone. They've worked so hard to control their image, but all they've done is destroy it by biting the hand that feeds them.


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## agtg (Jun 8, 2016)

melusine3 said:


> Like anything, word does get around. Uber/Lyft started out promising extraordinary compensation. Once people realize that's generally a lie, they drop out and tell their friends.


Word of Mouth: The quickest and cruelest form of viral marketing.


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## TwoFiddyMile (Mar 13, 2015)

agtg said:


> Word of Mouth: The quickest and cruelest form of viral marketing.


Pool riders- can't get a ride.
X riders from airport no surge- can't get a ride.
Any airport rider staying local- can't get a ride.
If this doesn't slow growth I'm a gorilla.


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## melusine3 (Jun 20, 2016)

agtg said:


> And this is the real reason they're doing worse. They have marginalized the people serving them in the trenches, but they can't stop us from educating passengers and controlling the crappy environment they've cultivated with Pax perception.
> 
> This makes for a poor experience for all involved, and that spreads quicker than the crappy viral marketing videos that Uber lies to the public with.
> 
> Real growth will only come when drivers are compensated properly and feel comfortable selling Uber to everyone. They've worked so hard to control their image, but all they've done is destroy it by biting the hand that feeds them.


Every. Single. Passenger. Asks me how I like driving for Uber. I can't/don't lie.


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## melusine3 (Jun 20, 2016)

agtg said:


> Word of Mouth: The quickest and cruelest form of viral marketing.


We need to make memes. There aren't enough of those (if any) out there.


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## melusine3 (Jun 20, 2016)

TwoFiddyMile said:


> Pool riders- can't get a ride.
> X riders from airport no surge- can't get a ride.
> Any airport rider staying local- can't get a ride.
> If this doesn't slow growth I'm a gorilla.


Why do you think they're constantly adding hundreds of drivers? The new ones don't know any better and answer those calls, including the ones we avoid. They drive to the areas we now won't drive to and pick up people at places we won't. That is their business model. We need to make the public aware of what is happening so the drivers stop signing up.


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## TwoFiddyMile (Mar 13, 2015)

melusine3 said:


> Why do you think they're constantly adding hundreds of drivers? The new ones don't know any better and answer those calls, including the ones we avoid. They drive to the areas we now won't drive to and pick up people at places we won't. That is their business model. We need to make the public aware of what is happening so the drivers stop signing up.


Glutting the world with drivers doesn't fix the broken.
Within 3 weeks the newbs figure out how to screen jobs, skip pool and not do locals from the airport.


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## OlDirtySapper (Jul 26, 2016)

melusine3 said:


> Every. Single. Passenger. Asks me how I like driving for Uber. I can't/don't lie.


Yeah but then these cocksuckers rate me lower for telling them the ****ing truth. Don't ask if you don't want a real answer.


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## ginseng41 (Nov 30, 2014)

I talk about how most of my passengers are great but then mention something awful like pokers or something like wrong addresses to make them change their ways dependingredients on if they're thinking of signing up or not


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## TwoFiddyMile (Mar 13, 2015)

OlDirtySapper said:


> Yeah but then these cocksuckers rate me lower for telling them the &%[email protected]!*ing truth. Don't ask if you don't want a real answer.


Never tell pax the truth.
Only happy thoughts.


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## CuffLink (Sep 15, 2016)

TwoFiddyMile said:


> Never tell pax the truth.
> Only happy thoughts.


Passenger's not going to change the downward trajectory of an Uber drivers life.
Subsequently no reason to tell the truth. Happy thoughts = 5 stars

When a pax askes how I like Uber ,* I immediately turn it around and say "more importantly , you as the passenger, how do u like Uber "*

Take youself out of the equation


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