Last weekend Uber decided to close the doors on its sameday courier venture UberRUSH. At the same time, Shyp announced that they will be closing down operations in a few weeks’ time. These are two large VC backed Silicon Valley upstarts – so what went wrong?
Uber is the ring leader here. What people sometimes forget is that Uber didn’t create a demand for ‘on demand cars.’ The demand was already there. People had been using taxis for decades before they arrived on the scene.
They packaged their offering up into a brilliant app and people migrated from traditional car services to Uber overnight. The important thing to note is that they didn’t create the market. They just took business from existing companies by the clever use of technology.
What Uber then did was notice the obvious similarity between on-demand cars and on-demand couriers and created UberRUSH. This was then marketed to the same convenience hungry consumer audience.
Great in theory, apart from one problem: the market for consumer driven on-demand courier is currently so tiny that it barely qualifies as a market.
Sameday courier has existed for decades but its premium nature means it is out of reach for the consumer and has been almost exclusively a B2B offering.
So that’s it!
Uber took a great app and concept from an established market and tried to create a whole new market with it. The notoriously super hungry high growth nature of their VC backers meant that while there was obvious interest in the concept from consumers. However the market was not growing quick enough to be of any real interest to Uber investors.
Shyp then followed suit with the same (and other!) problems.
Sameday courier has a frequently underestimated complexity that extends beyond the simple delivery.