Published on: June 16, 2014
On Friday, MNB took note of a Bloomberg
report that Uber, the car-sharing service that seeks to supplant much of the traditional taxi industry in many big markets, "is fighting its biggest protest from European drivers who say the smartphone application threatens their livelihoods."
I commented, in part:It's ironic. While the cab drivers were protesting by parking their cars in the middle of the street and trying to snarl traffic, it is a pretty good bet that Uber drivers were picking up fares and making some money.
I'm sympathetic to the idea that the taxi drivers are seeing their livelihoods challenged … but that just puts them in good company, because pretty much every industry out there has either been challenged or is under threat of challenge.
I think that traditional cab drivers perhaps would be better served if they examined their own levels of service, to see if there are ways that they could be more competitive. I get really tired of people who complain when they find that the rules of the game have changed, and that innovations threaten traditional business models.
As Spenser says in several Robert B. Parker novels, "The ways of the Lord are often dark, but never pleasant." Adapt or die.
MNB reader Bryan Silbermann wrote:Your comments today about Uber lead me to this observation: Uber and its ilk are growing like Topsy and becoming ever more pervasive. One of the most interesting and provocative analyses of the sharing economy was in the May 2014 edition of Wired (to which I subscribe and which I find among the most provocative thinking on how technology is changing our lives).
This article is a must-read for anyone dealing with consumers. Just one part of it is “The Evolution of Trust,” a graphic that highlights the way in which social norms, structures and safeguards have changed over 50,000 years. One quote stands out for me: “In the sharing economy, commerce feels almost secondary to the human connection that undergirds the entire experience.” Seems to me to parallel one of your recurring themes about the need for businesses to understand that the experience they offer is just as critical as the products they offer. These apps are redefining our social interactions and ways in which trust is created between buyers and sellers of products and services. To me that’s an Eye-Opener.
MNB user Peter Wolf wrote:
I have used Uber many times and think it is fantastic – the app is great and the communication between the Uber driver and the customer is outstanding. But here is what I like the most – the driver who is coming to pick you up has been rated by the Uber riders before me. Having been on an number of very scary taxi rides, especially in Chicago. It is nice to know some background on the driver you are getting in the car with. This week in Chicago I used Uber going to and from the airport and it was great!
MNB reader Linda Wish wrote: I had a very similar experience last year attending the enormously popular Safeway Gala in San Francisco.
I had checked with the valet working at the hotel to be sure there would be cabs available when I needed to depart for the event, but lo and behold when I hit the curb, I was standing there with 10 or 12 other folks, all in formal wear looking distressed.
I pulled out my phone and ordered an SUV, and 12 minutes later made a bunch of new friends and that many new UBER fans!
I have continued using UBER, and have never been disappointed, whereas I have had more than a few unfortunate cab rides or cabs that never showed up.
But MNB reader Jim Nolan wrote:
Kevin, I generally agree with the notion of adapt or die as a way to compete. However, I have some concerns with the Uber cabs. If traditional cabs are following the taxi commission rules and own a legal medallion they have a significant investment in the business. It's hard for medallion cabs to compete with an operation that has a vastly different cost structure because they are operating outside the regulations. Essentially the Uber system is akin to gypsy cabs operating on the same turf. Cabs are regulated for safety, it sounds like Uber is not subject to the same regulations. I like the innovation in the business model but would prefer that it be subject to the same costly regulations. Then they would be competing on a level playing field.
From another retailer:The Uber issue is less about NEW competition and more UNFAIR competition. If cabs are required to operate with licenses that can cost as much as $270,000, why should Uber be able to provide the same service without the fee?
If transportation providers operate under the same rules, then Uber deserves credit for offering a service more appealing to consumers. I’m just not sure why they get a $1/4Million advantage.
MNB reader Don Skiver wrote:
Kevin, you like to say, “let them disrupt!” Hurray for the Ubers, they are giving a better service. And granted taxi service could stand to be improved. But I think the bigger point you are missing is that in almost EVERY city, taxis or livery service has been highly regulated to death (both out of necessity from prior predatory vendor practices and as an easy revenue generator for cities). I worked for a long time in parking, and same thing, everyone thinks they are the greatest moneymakers and what a ripoff to pay that much to park in some cities, but when there is nowhere to park or too many cars on the road because of cheap parking everyone wants it better regulated.
I think cab drivers want Uber to be on the same playing field as they are. In almost every case the fee a taxi can charge is mandated and posted, they pay high license fees, have to carry special insurance, etc, but Uber is skirting under these regulations, able to charge and do what they want.
I am sympathetic to the taxi drivers' lament. But I think that if the last couple of decades have taught us anything, it is that competition isn;t always fair - that there always will be people looking to invent a new business model that circumvents convention, that tries to find ways around the rules, that challenges the ways things always have been done.
That's what Uber is doing. There probably are some downsides, but this is the way competition works today. I really like the way MNB reader Julie Thompson came at the issue:Horse-drawn carriage drivers probably hated Ford as much as taxi drivers hate Uber.
I love so many things about Uber vs. taxis....
Uber feels less creepy: The drivers are well-groomed and friendly, and the cars are clean and new-model.
Uber is more reliable: You know exactly (to the minute) when they will be arriving, who they are, what they are driving and what their rating it.
Uber feels more civilized: You don't have to exchange money at the end of the trip because your CC is on file. You just smile, say thank you, and hop out. You don't even TIP!
Uber sends an email receipt immediately after each trip. ...which leads me to my main point:
Another advantage Uber has over its competitors is access to ALL of their customers' email addresses!
I also love that Uber drivers rate every passenger even as the passenger is rating the driver... this two-way feedback is mandatory, not optional, after every ride. So if you are consistently a drunk/rude ASS of a passenger, no one is going to want to pick you up. It keeps everyone on their best behavior. Civilized.
Final thought - Uber is competing with taxis, yes, but they have their eyes set on a bigger competitor: the personal vehicle. Think about 20-somethings in a city like San Francisco where a parking spot can cost $100-200/Month. Add in the car payment, the insurance, the hassle of street-parking (the HUNT for a spot, meters, tickets, getting towed, etc.) when you're away from home, potential for vandalism, accidents and DUI's (seriously...) If you KNOW you can get an Uber car in 4 minutes pretty much any time of the day, owning a car may not be worth it.
Rental car companies should be scared also. I was in LA a few weeks ago, and called Uber the whole time (no rental car for me). The longest wait was 4 minutes. Two of the cars I called showed up in less than 90 seconds.
On Friday, MNB reported that the US Supreme Court ruled 8-0 that Pom Wonderful can sue Coca-Cola for what it views as misleading label claims, a ruling that is seen as having important implications for marketers, which no longer can rely on compliance with Food and Drug Administration (FDA) rules as protection against such charges.
Pom Wonderful went to court to say that Coca-Cola misled consumers when it labeled a Minute Maid "pomegranate blueberry" product that only contained 0.3% pomegranate juice and 0.2% blueberry juice. Coke had said that it could not be sued because it met FDA regulations.
The Supreme Court ruling does not validate the Pom claim, but rather just enables Pom to pursue its claim in the courts.
I commented, in part:I'm no lawyer, so I'm probably unqualified to offer an opinion on this. But I think it is legitimate to suggest that something that is 0.3% pomegranate juice and 0.2% blueberry juice really isn't pomegranate/blueberry juice at all … or at least there is a little bit of bait and switch taking place. At the very least, this strikes me as something that ought to be litigated in the courts … and certainly in the court of public opinion. It is sort of the same thing that happens when you look at the ingredient list on some boxes of frozen blueberry pancakes and find out there really aren't any blueberries in them at all.
MNB reader Lynn Spishak wrote:I also read the article from … NPR Food. If you look at the picture of the Minute Maid, clearly stated on the front of the bottle is "100% Fruit Juice Blend" Anyone who cares about their juice ingredients is going to see that as a red flag and flip over the bottle to read the ingredients. From that they will decide if it is up to their standards to buy or not. Anyone who doesn't see that or does not read ingredients of the products they buy, doesn't care - making this lawsuit a waste of time.
MNB reader Steven Ritchey wrote:One thing I was remembering from my days in retail and in sales, is according to the FDA, if a drink has a certain percentage of juice in it, and I’m not sure what that percentage is, it can then call itself a juice, just not 100% juice, it is then a juice drink, at another lower percentage, it is simply a flavored drink.
I’m not saying this is right, and am not even sure if it is the case anymore, but is how it was several years ago when I had to know such things. I have to think this is still true, if you look at Welch’s Grape Juice, they have Welch’s 100% Grape Juice, and then they have Welch’s Grape Juice Drink.
I'm not judging the legal dispute. I have no idea how the courts will rule, though I am enjoying the irony of Pom Wonderful suing another beverage company for false advertising.
But I wonder if we're at consumer-centric time when language that has been accepted as being accurate enough won;t be seen that way anymore. Maybe clever marketing constructs won't be perceived as so clever anymore, because consumers are getting smarter.
Speaking of smarter consumers….
One of the things we noted in out story was how, in oral arguments, Justice Anthony Kennedy said that "I think it’s relevant for us to ask whether people are cheated in buying this product," which prompted Coke's lawyer, Kathleen Sullivan, to respond, “We don’t think that consumers are quite as unintelligent as Pom must think they are … They know when something is a flavored blend of five juices and the nonpredominant juices are just a flavor."
Justice Kennedy replied: "Don’t make me feel bad, because I thought that this was pomegranate juice."
Which prompted one MNB user to write:I really take offense with the Coke lawyers statement that people know that the titled juices are just flavorings. I purchased that juice over standard apple juice for my grand kids so that they would get something better than Apple Juice. I did a quick look at the label but did not dig into the details. I assumed, (we all know what that means), that if it said Pomegranate Blueberry juice that meant that the majority of the juice would be as labeled. I am disappointed that I have just learned that I will have to read all of the details on all labels. One thing for sure, Coke has damaged their reputation with me and They will no get my business in the future. I will also share this with my friends and my Facebook page to share the attitude that they have toward transparency with consumers. I know that they aren't the only company that does this kind of thing, but they fooled me once, so shame on me. It won't happen a second time! The label should read. "Apple juice, with pomegranate and blueberry flavoring".
Like I was saying…