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Uber Discounts: Who Really Pays the Price?

Problem Statement:

Uber offers a 100% discount (up to Rs 300) for first-time users to boost customer acquisition. Manjunath, an Uber driver partner, completed 10 rides with first-time users in a month. How much did Manjunath lose from these rides? Options: 0 300 3000 30000
Answer: 0

Solution:

When Uber provides a 100% discount for first-time users, it is a platform-driven promotion, meaning the customer’s discount is absorbed by Uber, not the driver. Manjunath, the driver, does not lose any income from these discounted rides. Uber ensures drivers like Manjunath are still paid in full for the completed rides. This mechanism is important to maintain driver satisfaction and ensure that promotions aimed at customer acquisition do not negatively impact the drivers' earnings. For smooth operations and brand success, it’s crucial for Uber to satisfy both the driver and the customer side of the business.

Hence, the correct answer is 0 – Manjunath did not lose any money from these rides.

Lookalike Businesses with Supply & Customer Sides:

Swiggy/Zomato: While offering discounts to customers on food orders, restaurants (the suppliers) are not affected, as Swiggy manages the promotion.


Airbnb: Discounts to travelers are absorbed by Airbnb, while hosts receive the full payment for their bookings. Similarly, during peak demand months Airbnb incentivizes Hosts for listing and the revenue share is adjusted to help Hosts earn more.


Amazon/Flipkart: Sellers on the platform receive the agreed sale amount, even when customers are offered discounts or free shipping or bank discount promotions by Amazon.


Ola/Grab/Bolt: Similar to Uber, Ola offers discounts to riders, but drivers are not penalized; they receive their full payment for the rides completed.


Takeaway

In marketplace models like Uber, Swiggy, or Airbnb, there are always two customer segments: the supply side (drivers, restaurants, hosts) and the demand side (riders, customers, travelers). To maintain a healthy ecosystem, platforms must balance the needs of both. Discounts or promotions aimed at attracting customers should not come at the cost of the suppliers. A successful brand ensures that both sides are satisfied to enable smooth operations and continuous growth. Balancing the interests and satisfaction of both the supply and customer sides is key to the long-term sustainability of marketplace businesses.

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