A growing economy is connecting people with suppliers: Hotels.com, expedia.com, airbnb.com, and Uber.com, to mention a few, and as much as I love these services, the more worried I genuinely get. The long tail is well described, and today it's a fact that the ones who produce the goods often are the ones who gain the least. I firmly believe in capitalism and a free market, but I am yet concerned, as the appetite for some of these services skews the free market, mainly because of a lack of transparency.
By Editor Morten B. Reitoft
Let me share a story from real life to set things in perspective. Last week, my team and I were filming in the US - and though having a rental car gives you convenience, it's also nice to dump the luggage in the trunk of an Uber or Lyft and just be taken to your destination. So, I did what I always do: picked an LYFT to take us from LAX to CitizenM Downtown Los Angeles. The price was reasonable, and as I knew we were up for a longer trip the following day, I scheduled a pickup for 7:00-7:15 am from the hotel. The first driver was announced around 6:55 - bailed after just a few moments, and the next one was picked by the app and bailed, so it did for six in total. The last driver hadn't checked his app, so we got into the car, and after less than five minutes, the driver realized that he was up for an almost two hours drive, so he stopped the car and kindly asked to drop the trip with him.
I was honestly a bit surprised, and at this time, I realized that we would be late for our shoot, so I told the driver that I couldn't understand why he, as a Lyft driver, couldn't complete an accepted tour. I was charged about $160 for the trip. The driver was surprised, and I got VERY surprised. Lyft had offered the two hours ride to Santa Barbara for $18, which could hardly cover the gasoline and less the time. I got upset. Not at the driver but at Lyft. How can they exploit people this way? I was under the impression that the driver got a percentage of whatever the 'meter' said, but I was wrong, and the driver told me how terms have changed for ride-share drivers since the pandemic.
The ones who deliver a service are not the ones who get paid. Just like when you order Uber Eat, Hotels.com, or any other 'share provider,' the cost we pay for convenience is interesting.
I LOVE using Uber and Lyft for some of the reasons mentioned above. Where regulators, to an extent, claim that the success of Uber and Lyft is because of lower prices, I think they are wrong. Uber and Lyft are used because it's SO intelligent and so convenient to be picked up based on your current location and then go to a pre-selected location, where you already know the cost of going; at least, that's why I prefer the ride-share services. If the App providers take a fair share, which is up to the market to decide, then I believe it will benefit most stakeholders.
But if the share services get too expensive, consumers will pay extra for delivery and, at some point, see increased prices from the producers of the service you provide, and then the value may be less attractive.
My daughter is the marketing manager for a restaurant chain in Denmark, and she tells me how much they pay the providers and how you are not allowed to differentiate the prices from being picked up in the store and buying through the apps. She also tells me that her chain almost depends on the provider, which represents a large percentage of the business today. So is this good or bad?
Well, if I had known that a Lyft driver from Los Angeles would only be paid $18 out of the $160 I was being charged, I would never have asked and rented a car from the beginning, which we, of course, ended up doing anyway!
So back to my headline. When I use the word exploit, I believe most would say your can't. I deliberately picked that word because some people in our societies HAVE no other choice than accepting. I believe in transparency if we want good products and services as consumers.
If Lyft had written to me, "We charge you $160, but we will only give the driver $18," I am not sure I would have accepted it. Will this give more competition - of course - and sooner or later, the drivers will display the price and how the price is split, and that I believe will lead to competition.