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NRF 2017: Uber calls for retailers to consider surge pricing | Essential Retail

Over the last seven years, Uber has revolutionised the transportation industry. But this revolution has not been the invention of the flying car, explained Garrett Van Ryzin, head of marketplace optimisation advanced development at Uber, instead it uses technology to create a marketplace for hire cars,

Speaking at NRF 2017 in NYC, Van Ryzin said the development of this marketplace has allowed Uber to organise the pricing of the transportation industry much more efficiently than the incumbent taxi services.

He explained how a taxi with a flat pricing structure spends a lot of time waiting for jobs, and this lack of efficiency is made up by the high fares it charges. Uber, on the other hand, operates a surge pricing model, where the more demand on the service, the higher the fare becomes.

“Reliability is key to our service and dynamic pricing makes that possible,” said Van Ryzin, who explains that during a surge caused following the end of a concert, some customers will accept the higher fare, while others will decide to have a beer with friends and wait until the price drops when there are more cars available. “It moderates how many people are requesting rides, while surge pricing also attracts more suppliers [drivers].”

He pointed to New Year’s Eve 2015, when Uber witnessed an engineering failure and its surge pricing model went down shortly after midnight. While it normally operates a 90-100% customer competition rate – where customers successfully get a ride through the app – due to the lack of surge pricing this competition rate dropped to 25%.

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NRF 2017: Uber calls for retailers to consider surge pricing – Essential Retail.

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