Company Description
Uber is a multinational taxi-hailing company that operates using a non-conventional business model of matching consumers to cars through mobile apps and does not have its own park of vehicles or formally employed drivers. Since it was founded in 2009 in San Francisco, Uber has managed to disrupt the cab service market using technological innovation and focusing on “selling the taxi service differently by using the whole city as a resource” (Walji & Walji, 2016, p. 27). In UAE, Uber initially started its services in 2013 in Dubai, further expanding those to Abu Dhabi, offering ride-hailing services in both cities and bike rentals in Dubai. However, it experienced issues with expanding operations across MENA because of the well-established presence of its main competitor, Careem, in major cities of the region, as well as faced tenures with transportation authorities of both Dubai and Abu Dhabi because of clashes related to service pricing and availability (Aswad, 2017). The vital milestone in Uber’s history in UAE is its acquisition of Careem at $3.1 billion in 2019, which allowed extending company services to the major markets of Egypt, Jordan, Pakistan, and Saudi Arabia.
While Uber has formally acquired Careem’s mobility, delivery, and payment business components, both will remain operating under independent brands. It is necessary admitting that the Careem acquisition was the largest deal in Uber history and changed the functioning of the UAE market. The given decision had high strategic importance because of the opportunity to create the basis for evolution and offer new services. This deal makes Careem a wholly-owned Uber subsidiary, and its stock will be converted into Uber equity (Al-Omari et al., 2020). However, the brand and its application remained intact, which helped to enter the market gradually, using the loyal clients of the Careem brand and their readiness to continue using it (Al-Omari et al., 2020). The existence of Careem Now, a food delivery service similar to Uber Eats, also simplified the task of entering the given market (Al-Omari et al., 2020). Uber created beneficial conditions for successfully affecting the target population by using the major rival’s services and integrating them into its own structure. Finally, the company will be able to further expand on its existing lines of business of ride-hailing, food delivery, and freight services that were not actively developed in MENA.
At the moment, the brand demonstrates good progress and stable growth. Uber receives more than tens of thousands of requests every week with the constantly growing number of people joining the company (Mansuri, n.d.). In 2016, 3000 drivers across the UAE worked with the brand; however, its number has grown 17 times after the launch, resulting in the growing revenue and the ability to provide services to various locations in the short term (Al-Omari et al., 2020). Moreover, it has become an integral part of the UAE market with the growing loyalty of clients and brand value, meaning that there are new opportunities for Emiratis to earn and enjoy a high comfort level.
Considering the above analysis, the following marketing plan is based on launching a new Uber service in UAE. Briefly, the service extends the idea behind the Uber Eats (currently transited to Careem brand) by introducing trucks that will deliver groceries to homes in remote locations across the UAE. The following goals were identified for the aforementioned objective:
- To introduce a competitive grocery delivery service that will allow choosing the needed product both online and visually, targeting to improve customer experiences during 2021;
- To address the problem of accessing necessary grocery goods in remote locations of UAE by leveraging the advantages of communication technologies;
- To further build on the brand image and reputation of Uber in UAE by extending innovative services to new locations and targeting new customers.
Situation Analysis
Situation analysis is required to evaluate business environments and factors that affect the success of a company initiative. Considering Uber’s objective to extend its operations into innovative delivery services in new locations, it is vital to evaluate specific conditions that might either support or prevent the implementation of a described business idea. Hence, the analysis of environmental factors and SWOT analysis will be further performed to analyze the risks and benefits for Uber in initiating and deploying the project.
Demographic Environment
Currently, Uber does not target specific age groups while delivering its services and maintains age, gender, racial, and cultural diversity. However, with the launch of a new service for delivering groceries at home, it could be considered that the focus might be eventually focused on females actively involved in household activities, babysitting, and shopping. At the same time, the male population can also benefit from the emergence of such services. Hence, the demographic environment for Uber and its new initiative is overall favorable.
Economic Environment
UAE has a prosperous economy with an exceptionally high GDP per capita, a very low unemployment rate, and a very high amount of foreign direct investments, which makes it one of the richest countries in the world. While the economic wealth mostly comes from the oil and oil fossils exports, the nation also diversifies its revenue streams and intensively invests in tourism and construction. Uber follows the low-cost strategy of providing its services; hence, new ventures and existing business lines will only benefit from UAE’s economic environment.
Political and Legal Environment
UAE has its political specifics that should be considered by external businesses expected to expand their operations in the country. Administratively, the country consists of 7 emirates that have their own governmental organizations, which is seen as a flexible solution for managing both internal and cross-country affairs. However, it means that any organization that attempts to do business in one or another emirate is required to adjust its operational principles to individual compliance requirements. Previous analysis shows that Uber already experienced issues with following those when it was temporarily banned from operations in Abu Dhabi. Furthermore, while the political situation inside the UAE is relatively stable, occasional conflicts occur near the country’s border for the land and oil reserves ownership. It is also worth admitting that most businesses in UAE are government-owned, which leaves little space for private sector development. Moreover, Uber might expect new changes based on the business legislation, especially during the post-pandemic times. However, after the acquisition of Careem, Uber has more opportunities to sustain challenges imposed by the government. Hence, the political environment could be assessed as moderate in terms of favorability.
Social Environment
Several factors should be considered in terms of social factors in UAE. First, the bigger part of the UAE population is educated, meaning that they correctly realize the current digitalization trends and can employ various applications for their convenience. Second, the country is highly multicultural and has several ethnic and religious groups. They might have diverse demands for the quality of provided services, which should be considered when planning activities. For the current state of things, it suggests that the social environment is overall favorable.
Technological Environment
Major cities of the UAE are the landmarks of technological advancements, with Dubai itself pursuing its further establishment as the most developed smart city worldwide. The UAE government also makes significant efforts to develop technological solutions for UAE farmers, which allows them to connect directly with food producers and make an arrangement about potential purchases and amounts required per season (Cherrayil, 2019). Additional innovative projects are actively investigated in UAE’s R&D centers, placing high emphasis on innovation. Therefore, the technological environment in UAE is overall favorable.
The key aspect identified through the SWOT analysis are summarized below:
- Strengths
- Uber can successfully leverage on UAE’s prosperity as an economy and nation, offering existing services in new areas and opening new lines of business and opportunities
- From the social perspective, Uber can diversify its service between different population groups and recruit drivers in numerous cities across the UAE
- The recent acquisition of Careem allows Uber to expand services to cities other than Dubai and Abu Dhabi, as well as attempt to provide more distant travel to other cities such as Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah
- Uber will be the only company offering Grocery Truck service in the UAE characterized by the convenience and friendly design, meaning that diverse populations can easily use it
- Grocery Truck will be available in various areas, including deserted ones, with complicated access to shops, meaning that it will help people to save time and benefit from the availability of fresh products delivered in-time
- Weaknesses
- For the new initiative, Uber will require to find licensed truck drivers with their own vehicles, which is more challenging than finding a taxi driver in Dubai or Abu Dhabi. Alternatively, Uber will have to rent or buy trucks, while it is a huge risk if the driver will appear being not enough qualified for the job
- The product can be imitated by other companies if it becomes successful, meaning that the constant upgrade of the service is needed to preserve the competitive advantage
- The service is dependent on technology and its stable functioning; otherwise, the effectiveness reduces
- Opportunities
- With the help of Careem executives who have better market awareness, Uber might initiate a recruitment campaign and create a community of truck drivers, offering them additional incentives for joining the team
- The initiative is new on the market, which means that Uber might experiment with formats without fear of competition
- Uber can benefit from operating in areas with complicated access to transportation and food delivery services
- Constantly increasing access to the Internet creates a favorable environment for the brand’s rise
- With the success of Grocery Truck, additional services presupposing using the same facilities can be offered
- Threats
- Because of legislative changes or political shocks, the initiative will be banned by the government, either partially or completely
- Lack of awareness of the quality of goods will create a negative perception of the initiative by consumers
- Differences in internal policies of every city in the UAE might complicate the work of Grocery Truck because of the problematic access to all areas
- Different types of corporate societies and supermarkets might complicate finding all types of products in one place and their delivery
Description of the New Service
The new service proposed to expand Uber’s business in UAE conceptually exists between visual and online grocery shopping and is titled Uber Grocery Truck. The idea behind this is that many customers order food deliveries at home, while the packages provided are small and do give sufficient freedom of choice. Specifically, consumers will use the same mobile app that hosts other Uber services and order a truck to arrive during a specific timeframe. As the Truck arrives at the destination point, customers can look through the available goods and select what is most necessary for them. The basic types of products offered by the Uber Grocery Truck will include bread, fresh fruits and vegetables, proteins, and dairy products. The difference is that customers are provided certain freedom of choice without leaving home, which is comfortable for young mothers with kids or elderly consumers. Moreover, the Truck can provide charcoal, firewood, and barbecue materials during camping, which becomes especially important during the winter season. This feature will promote a better brand image among clients and attract them to a new service. The portfolio alignment comes from the fact that the service combines the idea of Uber Eats for food delivery and the use of a new service, Uber Freight, that is expected to be presented with entering a new market and providing the grocery truck.
The rationale behind the idea stems from the following factors. First, grocery truck service is expected to be in demand across the areas that do not have a supermarket nearby and therefore consumes time for travel and purchases. Second, it will be demanded in rural desert areas, where there is a lack of supermarkets, forcing locals to travel to the nearest petrol station for the basic goods. Specifically, the service will be recognized during wintertime, when petrol stations experience shortages in supplies. Consistently, new services will eventually help to customize Uber’s vision statement in MENA to: “transportation as reliable as running water that is resistant to the desert storms, everywhere for everyone,” followed by the revised mission of providing safe, affordable, and reliable services even in the most unexpected places, while also creating new job opportunities for drivers in new markets (). At the same time, each Truck will have the primary product and some extra offerings depending on the area and the most typical requests. It will also help to customize the offered service and meet clients’ demands.
The above assumptions were validated through primary research of 151 participants, seeking to explore their purchasing habits and attitudes toward online shopping. Overall, 68.9% of females and 31.1% of males participated in the research. More than half of the participants indicated that they buy groceries online a few times a month (50.3%), followed by those who make similar purchases two times a week (23.2%). The majority of respondents specified that shopping grocery online saves their time and provides ease of access to all types of products. Furthermore, most respondents stated that their leading concerns about buying groceries online are shipping quality and delays, and the inability to touch the merchandise before it arrives.
The majority of respondents (40.4%) specified that they spent from 16 to 30 minutes purchasing groceries online, followed by the group (33.8%) that took less than 15 minutes. The two advantages of physical grocery shopping include touching and feeling the product and buying fresh food, while the two disadvantages are spending too much time at the cashier desk and spending time and money on travels. Fruits and vegetables, bakery, and pastry were listed as the top grocery products usually purchased by respondents. Apple Pay (41.7%) was specified as the favorite payment method, followed by the credit card (35.8%). Finally, online tracking was viewed as a preferred method to track order status. Combining the survey findings, it is evident that users make grocery purchases online but eventually expect discomfort because of the lack of physical contact and variety of choices and delays with deliveries. Alternatively, they appreciate saving their time and money spent on travel to the supermarket. Hence, the combination of physical presence and online delivery is expected to address their concerns.
References
Al-Omari, S., Bishnoi, M., & Jakhiya, M. (2020). Souq-Amazon and Careem-Uber acquisition deals: An analytical study of the two merging giants in the UAE.International Conference on Business Management, Innovation & Sustainability (ICBMIS) 2020.
Aswad, C. (2017). Uber signs deal with Dubai regulator after pricing rows.
Cherrayil, N.K. (2019). How technology-led innovation is building the future of UAE. Web.
Mansuri, S. (n.d.). How will Uber-Careem deal affect the start-up ecosystem in MENA region?
Uber (2021). About us.
Walji, J., & Walji, J. (2016). Uber, a disruptive business model of a taxi service.International Journal of Systematic Innovation, 4(2), 23-29.