Amazon

Amazon should buy Lyft not Uber and here’s why

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History

Amazon is the largest and the biggest e-commerce company in the world presently. The company takes orders online and arranges delivery at the buyer’s doorstep. Amazon has their warehouses in different places around the globe and they arrange delivery of packages through their courier service.

Amazon uses its own fleet of delivery vans and skilled drivers for speedy delivery of ordered packages. It has also been released that Amazon is planning to lease its own fleet of jets in order to tackle its large number of deliveries. Amazon’s CEO Jeff Bezos is currently working on the delivery of packages using drones and UAVs to reduce delivery time.

In order to cut down their logistics expense, Amazon quietly invited over UBER drivers for delivery of their new “On Demand” delivery service packages. As such services are best known for their low prices and very low margin of profit that is why e-commerce companies hire them to deliver their packages in case of a massive number of demands.

Earlier this year, Amazon chalked out an outline plan in an email where they planned to contract drivers who will deliver parcels of common household goods to customers speedily. This was done for a program launched last year by Amazon by the name of “Amazon Flex“. The program is accessible via an Android and iOS application by the name “Prime Now” which comes with the $99 per year Prime Membership of Amazon. It was thought by industrial analysts that if this plan had materialized, it would very easily control the shipping costs of Amazon which earlier grew more than 18% last year.

UBER

The name UBER is driven from a German word über meaning “above”. Therefore, it means “Super” or “Topmost”. The company was founded 8 years ago in March 2009 by Travis Kalanick and Garret Camp. The company possesses over 12000 employees and had a revenue of over US$ 6.5 Billion as per a 2016 survey.

Uber Technologies Incorporated is an American Tech Company whose headquarter is in San Francisco, USA. The company operates in over 570 countries around the globe. Like Amazon, it also develops its market through a cell phone application which is compatible both with Android as well as iOS. The company develops, operates and markets the UBER car transportation. The flexibility it offers is that UBER drivers can use their own cars for this purpose, although drivers can also rent a car to drive with UBER.

Lyft

Lyft is another transportation network company which has its headquarters in San Francisco, USA. The company was launched in June 2012 and operates in more than 300 cities of the USA including New York, Los Angeles, and San Francisco. On average, it provides approximately 18.7 million rides every month. As of April 2017, Lyft is a company which is valued at $7.5 Billion and has raised a total of $2.61 Billion in funding.

The facility is also linked with a cell phone application which is compatible with both Android and iOS. People sign up through the application and link it up with their valid cell phone number. Payment can be made through Credit Card, Apple Pay, Google Wallet or a Pay Pal account.

The application also shows complete details about the car and driver who is coming to pick you up, sends you photos of the car and driver’s name along with ratings of the driver made by past passengers. The application also allows you to add your personal information in the profile along with the picture, music preferences, hometown, etcetera which helps the driver in making your journey comfortable.

In the application, Lyft is offering 4 types of rides. Lyft Line is the cheapest option and will match passengers with other riders if they are going in the same direction. This type is not available in all the cities. Lyft is the basic and most popular offering that matches passengers with nearby drivers. Lyft Plus matches passengers with a six-seater car, whereas, Lyft Premier matches passengers with a luxury car.

Reasons for Amazon to Favor Lyft

The huge debate is whether Amazon should use UBER or Lyft for its delivery service. UBER is on the decline for many reasons. It has lost money faster than any other tech company in the world. Reasons are numerous but salient ones are the pay scales of its drivers, advertisement and expansion of business worldwide without cutting expenses and saving much for the expansion. The resignation of UBER’s CEO Travis Kalanick was another clear indication of the downfall of this company.

Although UBER is higher in valuation as compared to Lyft, UBER is embroiled in a lot of conflict at the moment with its CEO and co-founder parting ways with the company. If Amazon buys Lyft instead of UBER, it would prove to be a much better investment. There are many reasons for this and few of them are enlisted as under:-

  1. It requires about $120 Billion to buy UBER whereas Lyft can easily be bought in 1/8th of the above-mentioned price, which is $15 Billion.
  2. If Amazon gives special discounts on Lyft making it only available for Prime Members, it will greatly explode the number of Amazon Prime Memberships.
  3. With Lyft, Amazon will be delivering goods along with Whole Food Groceries on the doorstep with one-hour prime shipping through ride sharing force. In short, it will be convenient for Amazon less and Lyft more to deliver goods instead of making the ends meet by delivering people.
  4. Seeing the financial downfall of UBER, it is soon going to get bankrupted thereby opening an alley for Amazon to buy the company at a much-discounted rate along with UBER’s intellectual property at auction.
  5. Because of Amazon’s huge financial resources, it will be able to get into UBER’s ATG’s intellectual property as well. And if UBER sues Amazon, it will automatically be forced to settle the issue otherwise Amazon is going to drag the fight out indefinitely deteriorating the expiring of UBER’s resources further.

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