Why Uber cannot scale with its business model
The Six Percent Entrepreneur
Why Uber cannot scale with its business model
August 11, 2021
In this episode, we talk about how Uber eats has a difficult time competing in Colombia.
So in the previous episode I talked about how we can actually build the Amazon of services and to take that idea a little bit further, we're actually going to talk about how Uber eats has a difficult time competing in Colombia. So I actually recently moved to Medellin Colombia for those that have been in the, no, I've been in Tulum Mexico for a couple of months prior to that, I was kind of floating around all different areas in Mexico but I feel like Colombia is probably going to be a better home for me. Who knows? We'll find out I'm doing this whole tax trifecta strategy if you want to learn more about that. I actually made a Youtube video about it so you can go check that out on my youtube page.

 But yeah, so now I'm in Medellin Colombia and I popped open my iPhone and I download the Uber app and I downloaded the Uber eats app which both of these apps weren't available in Tulum because the taxi mafia taxi cartel owns both of those services in Tulum, but in Colombia they do have Uber but Uber eats, which is something they don't have is actually gone. So if you download Uber eats, they say, you know "sorry, you've had to discontinue our service in this area"  blah blah blah blah blah. One of the reasons for this is actually, the main reason for this is is because there is actually a competitor that is able to deliver a much better experience for the latin american market than Uber can. 

So when Uber is trying to scale to different areas, it's a little difficult for Uber to scale with its one business model because as soon as you change the demographic, the cycle graphics of the customers, which the cycle graphics of customers in latin America is very different from the cycle graphics of customers in the U. S. Then the delivery in terms of delivering your service or your value, it becomes a little different and it's difficult to scale and this is why going vertical is so important because when you go vertical essentially makes competition obsolete. 

And if you're confused about what going vertical is, um you can go check out the free 30 minute audio course on how to go how to skip investor funding by going vertical. So if you go to the vertical method.com.theverticalmethod.com. Um you can go check out that audio course and learn more about how to skip investor funding with the GPDS framework and it's awesome content should definitely go check that out. 

But what's going on in Colombia is there is another company called Rappi and Rappi is pretty much dominating latin America wrap these headquarters is actually in bogota Colombia. So it's a Colombian company. It has presence in Mexico. I've used Rappi several times in Mexico but it does really well in Colombia. So if you think about Colombia, they have very different set of needs. Right?

 Just in Mexico for example, not many people have credit cards the way that people pay if you want to pay through bank transfers, you can either go to your bank or you can go to your neighborhood of OXXO  which is kind of like a 7/11. It's like uh it's like a neighborhood um chain convenience store I suppose. But you can go to the OXXO and you can make transfers through your OXXO account etcetera. So in Mexico, if you were to service the mexican community, then you would have to take note of that and you would have to know that okay getting cash and accepting cash collecting cash is going to be different. So how do you solve these problems? 

And one of the ways to solve it is by getting partnerships with OXXO so possibly someone can fill up an OXXO card for a month's worth of food. And that way it's convenient for the person using the app and it's just much seamless and much easier. But these are the type of issues that Rappi can actually fix because their verticalized eyes and their verticalized with the latin american market. And these are issues where Uber actually has a difficult time competing because their business model changes for every single area that has different regulations that has different cultural norms that has different ways of using cash and credit cards and banking systems, etcetera.

So this is the power of going vertical. In the past we've wanted to go wide and try to get the whole market. But now when a service a business model, a product is so easy to actually copy. The only point of differentiation is that we're going to have is our brand story in that connection with this community. And in order to get that brand story and that strong connection with the community, you have to go vertical so you can deliver this unparalleled service that no one else can. Alright, this is Robin Copernicus boom, bam, I'm out. 

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