Why I don't believe in Uber's Success • Hacker News Board

Re: Why I don't believe in Uber's Success

#411

Post by pwellens » Sat, Jan 28, 2017, 3:03 PM UTC

Interesting thoughts. I wrote along this line about UberEats and what is wrong with their current model. They believe they can win the battle thanks to subsidized unit economics. However this is simply not sustainable. The same conclusion is valid for all on-demand delivery startups.

Instead they should leverage their existing community, i.e. users being located next to each other. Similarly to UberPool where ride-sharing is the only way for Uber/Lyft/etc to work, grouping users for food delivery with variable rewards based on location (i.e. discounts) is the way to go.

More here: https://medium.com/@pwellens/how-a-single-feature-could-fina...

Re: Why I don't believe in Uber's Success

#412

Post by chetanahuja » Thu, Feb 02, 2017, 8:11 AM UTC

aserafini wrote: post #370

gls2ro wrote: post #355

Earlier quoted context omitted.

Maybe there can be profit to be made from this business too with a bit of _delay_ in between receiving and giving. I'm trying here just to imagine this company. I think it will work because of the scale. I'm thinking: I take dolar bills from one person, I keep them 10 days and then I give them to another one. And I repeat this for 1 trillion dollar value. Even if the profit in 10 days is 0.1% then you will have 1 mil…

This is how Amazon benefits from free cash flow in their retail business. With payment days of >90 days to their suppliers but almost immediate payment from their customers they get 90 days to reinvest that money at a profit before paying it back. Essentially an interest free loan from their suppliers.

> almost immediate payment from their customers Isn't there a gap between customer making the credit card payment and the bank transferring the actual money into Amazon's account?

Re: Why I don't believe in Uber's Success

#413

Post by aserafini » Thu, Feb 02, 2017, 10:15 PM UTC

chetanahuja wrote: post #412

aserafini wrote: post #370

Earlier quoted context omitted.

This is how Amazon benefits from free cash flow in their retail business. With payment days of >90 days to their suppliers but almost immediate payment from their customers they get 90 days to reinvest that money at a profit before paying it back. Essentially an interest free loan from their suppliers.

> almost immediate payment from their customers Isn't there a gap between customer making the credit card payment and the bank transferring the actual money into Amazon's account?

Probably. And they also won't always sell an item as soon as they receive it, which eats into free cash flow. But generally speaking, they get paid for goods by customers before they need to pay the supplier, which creates free cash flow.