Uber’s debts continue to grow: the group lost $4.5bn in 2017 on revenues of $7.5bn, up from losses of $2.8bn in 2016. However, the recent announcement to wind down its UberRUSH service came as a surprise to many and acts as a reminder that even some of the largest and best-funded Silicon Valley ventures can’t run on losses forever.
The closure follows the demise of others in the highly competitive on-demand sector, despite the undeniable growth in demand for quicker, more convenient delivery. Shyp announced last Tuesday (27 March) that it would be shutting down, following a $250m valuation in 2015 amid the early hype for on-demand cycle deliveries. Like others, Shyp struggled to scale beyond its launch in San Francisco. London-based Jinn also entered administration last October following a struggle to turn a profit, just five months after raising (a more modest) $20m of funding.
So what are the keys to success in on-demand logistics? A tech platform, whilst many would argue the most important feature, clearly doesn’t seal the deal alone. You also need concentrated market demand, scale – both in terms of couriers and customers (neither of which come overnight), focus yet the flexibility to adapt and optimise network efficiency, and support resource as parcels can’t look after themselves.
These features stand the likes of Amazon, with their Prime Now service, and CitySprint, with their On the dot offering, in good stead. Both are supported by existing carrier networks and are focused on meeting customer demand for convenience. But unfortunately for some, there will be plenty of money thrown at other hyped-up start-ups in the meantime which just don't deliver.
We’re winding down UberRUSH deliveries and ending services by the end of June