Uber has been known to take a hit to its margins in its bigger bid to gain market share for its transportation services. But now, in the city of New Delhi, it is operating for no profit.
A few days after Uber restarted its business and said that it would be applying for a taxi license so that it could operate legitimately in the city, the company has spelled out some of the details behind what it is doing to stay on the road. Perhaps the important of these is that Uber says it will operate as “a not-for-profit platform that takes no commissions or fees for its marketplace services,” pending approval of a license.
Uber says that it is basing its current business model in the city on that of another transportation startup and app called PoochO. As an app created by public transportation organisation DIMTS, PoochO has bypassed some of the regulatory issues faced by Uber and other rivals like Ola. As outlined by Uber, PoochO does the following:
- It acts as a marketplace between rider and driver, allowing riders easy access to the closest transport providers, and allowing drivers a way to more paying customers.
- It is an app that connects rider to only commercially licensed drivers
- It is a not-for-profit platform that takes no commissions or fees for its marketplace services.
- It requires that all drivers have a PSV Badge issued by the Delhi government
“Uber has modified its business model in line with the above framework, and is currently operating without commission or fees until the regulatory ambiguity is resolved,” the company notes in its blog post. “Additionally, we will take responsibility for providing a safe transportation platform and continue to innovate in process and product to make Uber safer in Delhi, across India and around the world.”
Uber’s problems in India started last year, after regulators banned the app when it was discovered that one of its unlicensed drivers had assaulted a passenger. Since then the company has been scrambling to make amends, initially pledging to help track down the driver, and then suspending its service altogether for a period.
This is not the first time that Uber has cut its own profit in the name of continuing service. The company has taken the same approach in Belgium and Germany in relation to UberPop, its low-cost service that lets any driver work as an Uber driver. This is the first time that the company has given up profit across the board.
In December Uber confirmed a $1.2 billion funding round at a $40 billion valuation, made in part to fuel its rapid expansion in new markets.