Eli5: why are there soo many Uber/ubereats like apps?

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How do these firms even compete with each other?

I understand that different taxi apps in an attempt to attract drivers simply pay more than others apps but how do they even secure the funding to launch an app like that in the first place? Same thing for food delivery apps

Imagine you were an investor, and someone told you, “I’m going to compete directly with Uber Eats, our competitive advantage is that we pay out delivery guys more”. Why would anyone fund that? That’s not a strong competitive advantage.

In: Technology

4 Answers

Anonymous 0 Comments

The basic thing here is that “no one has cornered/dominated the market yet” although we are approaching that. 

So when a new idea comes up (like “taxi service right from your phone App!” Or “order food/items and have them purchased by a shopper/delivery guy!” For example) then investors all jump on them and give them seed capital to try and grow and take over. 

This is why you see tons of competition in early/new market segments… until someone or just a few big players take over the market and dominate and the others fail or get bought out and folded into the larger group. 

We see this happen time and time again. The USA had like 20+ car manufacturers in the first several decades of cars existing and that market development and growth. Every small company competes hard and some outperform the others, grows larger, and eventually smaller companies have to merge with eachother to compete with the larger… or they get bought directly by the larger and get folded in. 

This is why the USA used to have 20+ different car firms, and now they basically have 3. GM, Ford, Stellantis (formerly Chrysler group) and that big three holds many older brands under their control. 

Where is Nash? Where is Eagle? Where is Studabaker? They all lost the car game and Ford and GM won…. That’s just one example. You see this with big box retail, with fast food, with airlines, with aircraft, with telecom, and so much more. 

Uber/Lyft have both sort of won the app taxi game, and the other startups are failing away. Ubereats, doordash, grubhub, etc are still fighting with other apps but eventually someone will win that market more fully.

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