Emergence of Lyft as a sharing economy organization
Sharing economy organizations challenge traditional businesses by utilizing high tech solutions to offer tailor-made services to customers. Ridesharing is one of the main services provided by this market. People prefer comfort and usually ridesharing firms provide much-needed comfort through well-advanced application to simultaneously inform both drivers and customers. According to a market estimation, roughly 4.2 billion rides were taken using ridesharing services in the U.S. in 2018. As one of the leading firms, Lyft is a sharing economy service provider, including ridesharing, bikesharing, food delivery, and more. Lyft entered the sharing economy transportation market to challenge the position of Uber by considering weaknesses Uber exhibited and generate profit in an ever-growing market segment, namely the sharing economy. Since Lyft’s foundation in 2012, an ongoing and growingly fierce competition takes place between Lyft and Uber. As of September 2020, Lyft is the second-largest ridesharing service provider in the U.S. behind Uber Technologies, accounting for 31 percent of the market. In comparison, Uber held 69 percent of the market share.Business performance of Lyft
Founded in San Francisco in 2012, Lyft pursues a visionary business agenda with a mission to improve people’s lives with the world’s best transportation. To implement this mission in the real world, Lyft follows an expansive corporate strategy. Within a few years of operations, Lyft grew to become a large corporation providing sharing economy transportation services. For instance, Lyft provided around 619.4 million rides in 2018. During 2019, Lyft generated over 2.1 billion U.S. dollars in revenue. Yet, as a long-term missioned business, Lyft is still far away from being profitable. Since 2016, the company only reported net losses due to its expansive corporate strategy that exceeds inflow of financial funds into the Lyft. In 2019, it reported over 2.6 billion U.S. dollars of net loss. This is partly because of the investments Lyft implements for enhanced future operations in the sharing economy. Lyft implements an extensive research and development (R&D) strategy, for example in the field of self-driving car research. In only four years, Lyft increased its R&D expenditure more than 23 times, reaching 1.5 billion U.S. dollars invested into innovations in 2019.The transformation of taxi and transportation services
The increase in usage of ridesharing services such as Lyft or Uber has led to a decrease in the use of traditional taxi cab services. Some taxi companies are starting to recognize the need to be more competitive in order to counter the price and convenience advantages of ridesharing services, for example by reducing their prices or introducing user-friendly mobile applications. However, a primary reason ridesharing companies have these advantages is that, generally, ridesharing services operate outside the regulatory frameworks applicable to taxi cabs. This creates significant cost savings, for example regarding licensing fees. As long as this regulatory asymmetry remains, it is likely that ridesharing services will continue to pull customers away from traditional taxis. Another reason for the rise of ridesharing services is the growing awareness of ridesharing services across the U.S. In a survey, only 15 percent of U.S. consumers had used ridesharing apps in 2015; by 2018, this figure had more than doubled to 36 percent. On the other hand, there are significant problems that sharing economy organizations, like Lyft, must tackle to mitigate non-desirable economic performance. One of the problems is trust in sharing economy services. Consumers are highly concerned over the extent to which sharing services can be trusted.
