Uber And Lyft: The Limits Of The Amazon Model

Aug. 15, 2021 5:17 PM ETLYFT, UBER10 Comments

Summary

  • The Amazon business model of undercharging and overproducing to gain scale at the expense of profits is beginning to show its limits.
  • Uber and Lyft are in an alterable cycle of driver, customer and platform costs that eat into almost all their bookings.
  • Not every business is ripe for disruption by scale and technology.

Woman in Rear of Car Driving Through New York City
halbergman/E+ via Getty Images

The Amazon Model

Chart
Data by YCharts

That chart is, essentially, the Amazon (AMZN) model:

  • Underprice goods or services to gain scale.
  • Value scale over profits.
  • Eventually the profits will come.

As you see with

Chart
Data by YCharts

Chart
Data by YCharts

Chart
Data by YCharts

This article was written by

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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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