How Uber has transformed the on-demand economy
Executive Summary
Economy
By facilitating a more convenient and on-demand form of transport and delivery, Uber helps save time, expand mobility, create new business for restaurants and the hospitality industry, and provide flexible earning opportunities for thousands of driver and delivery partners in Sri Lanka.
In 2021, Uber unlocked an estimated Rs.81 billion in economic value for the Sri Lankan economy. This includes both the impact of earnings of driver-, delivery- and restaurant-partners facilitated by Uber, and the wider indirect and induced multiplier effect created throughout the company's wider supply chain.
According to Sri Lankan riders, ridesharing is the most significant transport innovation they have experienced in the last decade, and more impactful to them than any new transportation infrastructure project.
In total, in 2021 we estimate that this increased flexibility is worth an estimated Rs. 1.2 billion to driver and delivery-partners.
Consumers
The on-demand economy has helped make everyday life easier for Sri Lankans - saving time, increasing choice and improving mobility. For consumers, the primary reason for using Uber is convenience. Ridesharing platforms like Uber have made it easier to travel from point A to point B.
91% of riders say that convenience is an important reason they use Uber. In a normal year, we estimate that Uber saves riders over 3.7 million hours a year.
69% of Uber Eats users agree that food delivery apps have helped to improve quality of life during the last year while eating out is restricted.
In 2021, we estimate that ridesharing with Uber and Uber Eats produced Rs. 52 billion in consumer surplus for Sri Lankans.
Driver and Delivery-Partners
Driver and delivery-partners overwhelmingly choose to use the Uber app because of the flexibility it provides, and the ability to control their own hours. The vast majority report being highly satisfied with their experience, and that Uber has helped them earn additional income.
61% of driver and delivery-partners said they were satisfied with their experience using the Uber app. In total, in 2021, we estimate that driver-partners earn an additional Rs. 775 million a year in higher income through Uber, or an average of 27% more than their next best alternative source of income or work.
35% of driver and delivery-partners say that schedule flexibility is important to them when looking for work. In total, in 2021 we estimate that this increased flexibility is worth an estimated Rs. 1.2 billion to driver and delivery-partners.
Restaurant and Merchant-Partners
Food delivery platforms like Uber Eats have made it easier to access a wide range of good quality food, and access groceries when you can’t leave the house. During the last two years, Uber Eats has helped provide a vital revenue channel to restaurants.
88% of Uber Eats users agree that food delivery apps have made it easier to discover new restaurants, and 69% that they helped improve quality of life when they weren’t allowed to eat out.
In total, we estimate that in 2021 Uber Eats helped drive Rs. 2.1 billion in additional revenue to restaurant-partners in Sri Lanka.
Communities
Uber helps provide a safer way to get home late at night, and helps complement public transport by filling in the gaps it can’t reach.
96% of female riders say that safety is an important factor in their choice to use Uber, and 62% of female riders agree that it is now easier to get home late at night.
67% of riders without access to a car said the availability of ridesharing services like Uber was important to their choice of not owning a vehicle.
In total, we estimate that 1 in 7 Uber trips connects with public transport.
Consumers
How riders use Uber
Over the last decade, Uber has increasingly become a part of everyday life. From getting home from a restaurant, to travelling between meetings, helping carry heavy items, to being there in an emergency, the availability of convenient, safe ridesharing services has become something many Sri Lankans increasingly rely on.
Uber served over 1 million customers in Sri Lanka in 2019, the year prior to the coronavirus pandemic.
Outside the pandemic period in a more normal year, Uber is being widely used to help us get to and from friends and family, eating out and entertainment.
But it is not just being used for leisure. We also found that Uber is being widely used to help with work, everyday chores and childcare.
And Uber is an important option for when you really need to get somewhere fast or on time. On average, riders say Uber saves around 9 minutes per trip compared to the next best alternative. Building off this, we estimate that Uber saves riders over 3.7 million hours in a normal year.
Why do riders choose Uber?
When we asked riders about the most important reasons why they used Uber, safety (93%) and reliability (92%) came out on top, with other factors such as convenience (91%) and time saved (91%) being just as important as comfort (91%).
Which factors tend to be important or unimportant in why you choose to use Uber?
Even more striking, however, was when we asked as part of the survey for riders and consumers to write in their own words why they use the service - and two words came back far more frequently than others: Convenient and Easy.
In your own words, why do you use Uber/Uber Eats?
Why do you use Uber? 1
“It is easy to find an Uber at a busy time and they can be found all over the country.” Male customer, 28, from Central Province
“It's convenient to book a vehicle while getting ready to go somewhere and I can get picked up on my doorstep. It's also convenient as I do not have to show directions to the driver due to the location services provided.” Female customer, 23, from Western Province
“To get to places with poor parking access.” Female customer, 38, from Western Province
“It's convenient and easy to go to and from places. I often use Uber when I have absolutely no method of transport.” Female customer, 18, from Western Province
“I use Uber for special occasions. Mainly when I have to go somewhere without getting sweaty and I want to feel clean. Other than that, to come home from a restaurant, I use Uber as well.” Male customer, 38, from Western Province
“Because it is a convenient alternative to hailing down my own taxis.” Female customer, 32, from Western Province
“Uber charges a lower cost than every other app I've found.” Male customer, 21, from Sabaragamuwa
Uber Eats
With restaurant dining rooms often shut in the last couple of years, Sri Lankan consumers have increasingly turned to food delivery platforms such as Uber Eats to keep accessing a wide variety of good quality food locally. Over four-fifths of (84%) of food delivery app users say that on average they order using a food delivery app at least once a month, and 69% agree that such apps have helped improve quality of life while eating out isn’t allowed.
When we asked what the most important reasons Uber Eats users used food delivery apps were, they pointed to reasons from quick delivery times (66%) to just being tired of cooking or doing the dishes (32%).
Which of the following, if any, are important reasons why you order using food delivery apps? Please select all that apply.
How much value does Uber create for consumers?
How much is the increased convenience, safety and reliability enabled by Uber worth to riders and consumers?
One of the most important measures of economic welfare is the consumer surplus - the amount you would have to pay someone for them to voluntarily give up a good or service. If a good has a zero consumer surplus, that implies we can take or leave it - whereas goods with a high consumer surplus play an important role in our lives.
As part of a poll, we asked riders and consumers how much they would have to be compensated to lose access to the Uber app for the next month.
In total, in 2021 we estimate that rides with Uber produced Rs. 27 billion in consumer surplus for Sri Lankan riders, while Uber Eats produced another Rs. 25 billion in consumer surplus. Together, that’s the equivalent of 0.3% of Sri Lanka's GDP.
Driver and Delivery-Partners
Driver and delivery-partners are highly satisfied with the experience of using Uber
In our survey 61% of driver and delivery-partners said they were satisfied with their experience using the Uber app, compared to 19% who said they were unsatisfied.
In total, in 2021, we estimate that driver-partners earn an additional Rs. 775 million a year in higher income through Uber, or an average of 27% more than their next best alternative.
If they weren’t driving with Uber, the majority say they would look for another, similar driving or delivery role. Just 14% say that they would look for a traditional full-time job as a replacement, while:
The Importance of Access to Flexible Work
When we asked driver and delivery-partners what they most liked about using Uber to drive, driving was by far the leading response.
In your own words, what do you like most about driving or delivering for Uber?
The ability to choose your own hours is often particularly important to driver and delivery-partners. Many driver and delivery-partners balance their time on the Uber app with jobs, platform work, education or caring responsibilities. In our driver-partner survey, 35% of driver and delivery-partners say that schedule flexibility is important to them when looking for work. Only a minority said that using Uber was their only source of income.
In order to test its importance, we asked driver and delivery-partners whether they would prefer a hypothetical situation in which they received higher earnings, but had to work fixed hours. A majority of driver-partners said that they would rather retain the right to choose their own hours, even if the alternative was a 20% increase in earnings. In total, in 2021 we estimate that this increased flexibility is worth Rs. 1.2 billion to driver and delivery-partners.
Flexibility matters for many reasons. 53% of driver and delivery-partners say that they earn income from other sources, as well as via the Uber app - 36% have a traditional full-time job too - and it is only a small minority of driver and delivery-partners who use the platform for more than 40 hours a week.
What do you like most about driving or delivering for Uber? 2
“The earnings and meeting interesting people.”
“Flexible working hours and a good income.”
“I can meet and talk to different people.”
“Because I can work in my own time.”
“Driving on my own terms gives me more flexibility in life.”
“It's good to meet people and earn extra income while going to and from work.”
“I can drive whenever I have time.”
Restaurant and Merchant-Partners
By making it more convenient to order from a wide range of restaurants, food delivery apps have significantly increased the amount of everyday groceries customers order for delivery:
15% of Uber Eats users say that the availability of food delivery apps has significantly increased the amount of food they order. An independent estimate from prior to the COVID-19 pandemic found that the availability of food delivery services can increase restaurant sales by 30-50%. 3
In total, we estimate that in 2021 Uber Eats by itself created Rs. 2.1 billion in additional value for restaurant and merchant-partners in Sri Lanka - and a gross impact of Rs. 51 billion for the Sri Lankan economy as a whole.
Communities
Keeping communities safe
Having enjoyed a good evening out, many people can be anxious about travelling home in the dark. In our polling, 38% of women under 25 said they generally feel unsafe travelling home at night. Before ridesharing, it could be difficult, if not impossible, to find a taxi at the end of a night out - and taking public transport could require a long walk in the dark to your front door, or waiting alone at a bus stop.
Independent academic research has found that having Uber available in a city reduces drunk driving, traffic accidents, and the number of arrests for physical and sexual assault.4 In our polling, over three-fifths of riders (63%) agreed that Uber is often the safest way for them to travel home.
Sustainability
Decarbonizing transport is one of the most important steps for countries to achieve net zero emissions, with the sector responsible for around a fifth of global CO2 emissions.5
While ridesharing increases overall mobility, this does not need to come at the expense of sustainability:
- Because of Uber’s on-demand nature, Uber achieves much higher utilisation rates than taxis, reducing the amount of time driving without transporting riders.6
- For riders, the availability and reliability of Uber makes it possible to replace a driving trip with a multi-modal trip, combining public transport and rides with Uber - and for a number of riders to go without owning a car altogether.
Technologies such as ridesharing, carpooling and electric bikes are making it easier to get around, and reducing the burden of congestion. In our polling, 67% of riders without access to a car said the availability of ridesharing services like Uber was important to their choice of not owning a vehicle.
Almost nobody relies exclusively on ridesharing services to travel around an area - instead they form an important complement for public transport, covering those journeys for which other modes of transport would be unsafe, inconvenient or take too long.
Frequently Asked Questions
About the Report
- New nationally representative polls of approximately 1,000 consumers in each country, run by Public First.
- A new survey of driver and delivery people for each country, reaching over 7,000 drivers and delivery people in total. While Uber invited drivers and delivery people to complete the survey, the actual data was hosted by Public First, with individual level data kept anonymous and not shared back with Uber.
- Internal data provided by Uber on the number of drivers, driver payouts, restaurant/merchant payouts, and hours worked in each country.
Measuring Uber’s Economic Impact
- Payments to drivers, delivery people and restaurants
- Indirect and induced impact of driver and delivery person spending on vehicles (eg estimated car rental, insurance, fuel, running costs etc)
- Induced impact of additional driver and delivery person income
- Indirect and induced impact of restaurant spending via Uber Eats
We do not include the impact of any direct investment from Uber in each territory (eg its offices, employees etc).
The aim of GVA is to try and take account of the additional value created by a company and organisation - the value added - on top of the value of the raw materials and inputs it takes in.
- The indirect impact looks at the impact of an organisation’s procurement and supply chain - in this case, for example, driver spending on vehicles or restaurant spending on food and kitchen supplies.
- The induced impact looks at the impact of the wages of a business and its supply chains employees, and how their spending supports other businesses. In this case, we are looking at the impact of spending of drivers and delivery people, as well as the wider supply chain.
Other Estimates in the Report
In order to do this, we took the data Uber provided us on the total level of payouts for restaurants and merchants per territory, and then estimated the proportion that was additional based on averaging two sources:
- The average self-reported proportion from this question in our polling in each country: In your experience, how has the availability of food delivery apps affected the amount of food you order for delivery?
- The incremental spend for restaurants calculated in Collison (2020)
“If Uber did not exist, how much do you think you would be likely to earn per week in your next best alternative?”
“Imagine you had to choose between one of the following two options:
- Fixed schedule but MORE consistent weekly earnings at X% [lower/higher] level than you do now
- Flexibility to choose your own hours, but earning only the same amount per hour that you do now
One way to think of this is that most goods in the market charge the same price to all or a group of customers - but they are not likely to create equal amounts of value. The price you pay for something is likely to be at least equal to the minimum value it creates for you - or you would not have chosen to buy it - but there is no reason the value it creates can not be significantly more than this. By totalling the surplus consumer value, we produce a measure called the consumer surplus.
Following the methodology of Brynjolfsson, Collis and Eggers (2019), we asked riders and Uber Eats users a single discrete binary choice question in the form:
“Now imagine you had to choose between the following options. Would you prefer to keep access to [Uber for rideshare/Uber Eats] or go without access to [Uber for rideshare/Uber Eats] for one month and get paid $X?”
The price offered was randomised between $1.25, $2.50, $5, $10, $20, $50, $100, $200, and $500, or a local equivalent with similarly valued price points.
We then computed both a linear and logarithmic regression of the results of this poll to derive a demand curve and the total consumer surplus per user, taking the average as the headline measure.
We then used the difference to estimate time saved per trip, multiplying by Uber provided data on total number of annual trips by region to estimate total time saved per year.
Appendix - Methodology
Consumer Surplus
Following the methodology of Brynjolfsson, Collis and Eggers (2019), we asked riders and Uber Eats users a single discrete binary choice question in the form:
“Now imagine you had to choose between the following options. Would you prefer to keep access to [Uber for rideshare/Uber Eats] or go without access to [Uber for rideshare/Uber Eats] for one month and get paid Rs. X?”
The price offered was randomised between Rs. 1.25, Rs. 2.50, Rs. 5, Rs. 10, Rs. 20, Rs. 50, Rs. 100, Rs. 200, and Rs. 500.
We then computed both a linear and logarithmic regression of the results of this poll to derive a demand curve and the total consumer surplus per user, taking the average as the headline measure.
Time Saved
As part of our polling, we asked riders for the duration of their most recent trip with Uber, and how long the next best alternative would have taken. We then used the difference to estimate time saved per trip, multiplying by Uber provided data on total number of annual trips by region to estimate total time saved per year. We then calculated the monetary value of this using average hourly salary.
Gross Increase in Driver-Partner Income
Gross Driver-Partner Income is calculated from proprietary data provided by Uber on total driver and delivery-partner payouts and the number of driver and delivery-partners partnering with Uber by region.
Increase in Income (%) is taken from the driver-partner survey, and the average response to:
“If Uber did not exist, how much do you think you would be likely to earn per week in your next best alternative?”
Value of Flexibility
As part of the driver-partner survey, we asked the following single discrete binary choice question:
“Imagine you had to choose between one of the following two options:
- Fixed schedule but MORE consistent weekly earnings at X% [lower/higher] level than you do now
- Flexibility to choose your own hours, but earning only the same amount per hour that you do now
Which would you choose?”
X was randomised between 5%, 10%, and 20%. We then used a probit and logit regression to derive a demand curve, and the total driver-partner surplus per user, averaging the results of the two models. This model was conditional on both driver-partner type (rideshare- or delivery-partner) and location. This was then scaled up to a national level and regional level by data provided by Uber on driver-partner numbers.
Impact on Restaurant and Merchant-Partners
The model utilises Uber’s internal data on the total payout to restaurant and merchant-partners via Uber Eats. For restaurants we estimate the proportion that is additional using the average of:
- The self-reported estimate from the consumer polling of how much spend is additional, and would not have been ordered if food delivery apps did not exist.
- The mid-point of Collison (2020)’s estimated range of the proportion of dollars spent on food delivery apps that are incremental.7
Following standard input-output methodology, we used the latest OECD detailed multipliers, to calculate Type 1 and Type 2 output multipliers for restaurants and merchants for Sri Lanka. These multipliers are used to show the total impact via restaurants and merchants that Uber Eats has on the economy.
Total Economic Impact
Total economic impact is calculated as the sum of:
- Driver-partner payouts.
- Indirect and induced impact of driver-partner spending on vehicles.
- Induced impact of additional driver-partner income.
- Indirect and induced impact of restaurant-partner spending via Uber Eats.
This measure is a gross estimate, looking at the total amount of economic activity supported by Uber in Sri Lanka. It does not attempt to measure what would happen in a hypothetical where Uber no longer existed. Our modelling does not include the impact of Uber's direct investment or employment footprint as a company, or any spillover effect this has to the wider tech ecosystem.
- Quotes have been edited for spelling and grammar, but are otherwise unchanged.
- Quotes have been edited for spelling and grammar, but are otherwise unchanged.
- The Impact of Online Food Delivery Services on Restaurant Sales, Jack Collison, 2020, https://web.stanford.edu/~leinav/teaching/Collison.pdf
- Driving Safety : An Empirical Analysis of Ridesharing’s Impact on Drunk Driving and Alcohol-Related Crime, Frank Martin-Buck, 2016, https://pdfs.semanticscholar.org/3f1e/b273fcee888441147105882dd12ca811fd35.pdf; Ride-Sharing, Fatal Crashes, and Crime, Angela K. Dills and Sean E. Mullholland, 2016, https://onlinelibrary.wiley.com/doi/abs/10.1002/soej.12255; Assessing the Impact of Ridesharing Services on Public Health and Safety Outcomes, Marlon Graf, 2017, https://milkeninstitute.org/sites/default/files/reports-pdf/110117-Ridesharing-and-Public-Health.pdf; Rideshare Utilization Decreases Motor Vehicle Trauma and Impaired Driving, Christopher R Conner, Ryan S Kitagawa, Samantha Parker, 2020, https://academic.oup.com/neurosurgery/article/67/Supplement_1/nyaa447_101/5982419
- https://ourworldindata.org/co2-emissions-from-transport
- Disruptive Change in the Taxi Business: The Case of Uber, Judd Cramer & Alan B. Krueger, 2016, https://www.nber.org/system/files/working_papers/w22083/w22083.pdf
- https://web.stanford.edu/~leinav/teaching/Collison.pdf