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Uber targets NZ business market but there are a couple of flies in the ointment

An old-school element might be added to the mix. But there's also a new-technology complication. Watch Uber NZ boss Richard Menzies' interview with Grant Walker. 

Chris Keall
Mon, 28 May 2018

Uber has flagship customers including Genesis Energy and 2degrees signed up for its new business service. But it’s after more, the controversial company’s New Zealand general manager Richard Menzies says.

Its bid to expand could include an old-world element: allowing businesses hail rides via a phone call.

Some businesses just prefer doing things the old-fashioned way, it seems.

Mr Menzies also talks up the high-tech elements of Uber’s business service, which include an online dashboardnni that lets you set which staff can use the service, at what time of day, and in which areas. It syncs with various third-party expense-tracking software.

The company also removed another key business objection when it added the option to book rides in advance.

Two complications
There are a couple of flies in the ointment, however.

One is surge pricing (or “dynamic pricing” as Mr Menzies prefers to call it); when Uber pricing can nudge up by a few percent or even double when lots of people try to hail a ride at once around a peak time or an event.

If a business person books a ride in advance, do they have to take their chances with possible surge pricing? In short, yes.

An Uber spokeswoman says, “With scheduled rides, users can plan a ride up to 30 days to 15 minutes ahead of time. Riders will be shown a fare estimate at the point of scheduling. Surge pricing may apply at the point of pickup.

“Close to the pickup window, the Uber app will request the trip on a rider's behalf. We'll send reminders ahead of the trip and notify the rider when the booking is confirmed and their ride is on the way. They will be notified if surge pricing is in effect before the ride and given an option to cancel without a cancellation fee.”

The option to cancel with no fee is good but it still leaves the rider with the hassle of having to book a cab at short notice.

The other fuzzy area is airports, especially Auckland Airport (others have been broadly open to Uber or are in talks).

Some Uber riders can take passengers right into the terminal, others can’t. They register as individuals, Mr Menzies says (an Uber spokeswoman added the additional context that an Uber contract driver typically has a card with the airport because they recently have been or are still a taxi driver; a number of Uber drivers also do part-time work for traditional cab companies).

Uber NZ now has 450,000 active riders and more than 6000 drivers, Mr Menzies says.

Zoomy won't follow suit
Homegrown rival Zoomy (backed by the NBR Rich List Spencer family), recently said it now has 3200 drivers, spread across Auckland and Wellington.

However, chairman Ben Unger said the Auckland-based startup has no plans to follow Uber into the business market, which he says is already well-served by the likes of Corporate Cabs.

Mr Unger says he can understand why Uber is targeting companies. Between 9am and 5pm tends to be a lull for ride-sharing companies, he says. However, he can’t see an economic angle.

Zoomy takes a 15% commission on rides, which has helped it sign up a number of Uber drivers (an advantage of Uber’s contract approach is that its “partners” are free to sign-up to multiple services, then take whatever rides they think will pay the most during the day.

Mr Menzies says Uber is happy with its current arrangement (which sees a 25% clip of the ticket for GST-registered contract drivers and 28% for others). He’s happy to let the free market decide, the general manager says.

Zoomy has far less surge pricing, Mr Unger says (or “special pricing,” as he calls it), which has helped the service attract 88,000 downloads of its app. However, the flipside is that drivers get a larger cut of a sometimes smaller pie.

Tired drivers?
Uber was in the news last year after one of its contract drivers drove a couple through the night from Auckland to Wellington, after driving a full day.

Mr Menzies says an electronic logbook system has since been introduced and will be bolstered by other measures shortly. 

Any driver who puts passenger safety at risk is immediately suspended, he says.

Lesser infractions or a dip in a driver's ratings from passengers prompt warnings. If those warnings are ignored, a contract driver is sent on a course. If that doesn't change their behaviour they are jettisoned.

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Chris Keall
Mon, 28 May 2018
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Uber targets NZ business market but there are a couple of flies in the ointment