A PROPOSAL FOR UC PARTNERSHIP WITH UBER
11
A Proposal for UC Partnership with Uber
Alexis Blanco, Cecilia Garcia, Malachi Landavazo, Hazell Montes
De Oca
University of California Merced
Table of Contents
List of Figures and Tables……………………………………………………………………….... 3
Executive Summary…………………...…………………………………………………………... 4
Assumptions…………………………………………………………………………………....…. 5
Background……………………………………………………………………………………...… 6
Problem……………………………………………………………………………...…………...... 7
Feasibility………………………………………………………………………………………… 10
Student Demand for Uber………………………………………………………………... 13
Solutions………………………………………………………………………………………….. 17
Advantages of Uber………………………………………………….…………….……. 19
Potential Problems/Limitations………….………………....……………………….…..
19
Pricing…………………………...……………………………………………………………..... 20
Conclusion………………………………………………………………………………………... 23
References………………...…………………………………………………………………....… 24
List of Figures & Tables
Figure 3-1: Demand for Uber Drivers………………………………………………………….....
9
Table 4-1: CatTracks Average Route Times……………………………………………………..
11
Figure 4-1: ZipCar Usage Poll………………………………………………………………...… 12
Figure 4-2: Transportation Satisfaction
Poll…………...……………………………………….. 15
Figure 4-3: Uber Interest Poll……………………………………………………………….…… 16
Figure 4-4: Uber Driver Poll………………………………………………………………..…… 17
Table 4-2: Poll Responses and Extrapolated
Data………………………………………………. 18
Figure 6-1: Uber Driver Poll……………………………………………………………………… 22
Figure 6-2: Average Uber Fare………………………………………………………………...… 23
Executive Summary
This proposal examines the current transportation options
offered to students at UC Merced. The purpose of this proposal is
to show that the current transportation options are inadequate, and
that a partnership with Uber would provide students with the option
that they are still in need of.
Uber is a taxi-like transportation system that was started up in
2008. By logging into Uber online through website or application,
customers can set a pickup location and nearby drivers will be
alerted. Payment to drivers is handled by customers’ online
accounts, making it unnecessary to carry money for payment or tips.
This system allows customers to cheaply and quickly be transported
and allows drivers to work their own hours without hassle. The
qualities of this service are ones that the current transportation
options at UC Merced are lacking in one way or another.
To determine the effectiveness of the transportation options
currently available, thorough examination of each option was
conducted. By looking closely at the advantages and disadvantages
of these services, we were able to determine whether or not Uber
would be an ideal candidate for providing service qualities that
are currently lacking. After determining this, we then used online
polls to gauge the feasibility of securing a partnership with Uber.
These polls were extrapolated to fit to the undergraduate
population, giving us a fair estimate of actual campus
feasibility.
Using the results of the data gathered through polling and the
examination of current transportation services, we were able to
determine that there is a significant interest in having Uber as a
readily available transportation option. The majority of students
are not satisfied with the services currently available, and an
even more significant portion of students have shown interest in
using Uber if it were easily accessible.
Based on these findings, we opted for a simple and fairly
straightforward way of partnering Uber with UC Merced. The
university would provide Uber with access to campus for the purpose
of advertising in an awareness campaign. This would help the
potential customers and drivers of Uber become aware of a push to
make Uber more accessible in the area, and would not cost the
university anything. Uber would benefit from increased usage of its
services, and students would benefit from an easily accessible
service that is very much in demand.
Assumptions Regarding Collected Data
In the process of creating this proposal, it was necessary to
distribute online polls in order to collect relevant data. The
information gathered from this data is detailed in later sections.
Out of the 6,237 undergraduate students, we received approximately
128 responses for the survey we distributed online. Therefore, only
[(169/6237)= .02052] 2.05% of the undergraduates responded to the
online survey. Moreover, we also sent out an additional question as
a separate survey where we received 41 responses.Therefore,
[41/6237)= 0.00657] .65% of the undergraduate students responded.
Since only less than 5% of the undergraduates responded, this could
cause our data to be skewed. Because of this possibility, our data
might not be an ideal representation of the entire undergraduate
population. Due to time constraints we set a goal of receiving at
least 100 responses, taking into consideration that we had about 2
weeks to gather data.
Assuming that the students surveyed took their time to answer,
they are expected to have answered truthfully. They are assumed to
have standed by their initial answer, without switching to the
other end of the spectrum. Incorrect answers would throw off the
data already gathered and would require a redo of the survey. Even
then gathering that data would require us to assume that we might
get the same number of responses or a higher number. Even then the
data collected would be different from the original therefore
making the data possibly unreliable.
Our survey asks questions that require students to have prior
knowledge of certain services, one of them being about the ZipCar
services that the school offers them. However there might be
students who are not informed about ZipCar because of various
reasons that include: them owning their own car, not having a
driver's license, etc. Another question requires them to know what
Uber is and how it works. However some people might not know what
Uber is and yet within our survey the question must be answered in
order for the person to submit it. Without prior knowledge of the
companies that are being asked about, the results might not be
measured accurately.
Background
As the University of California, Merced campus continues to
expand, the need to accommodate the many incoming students
increases. Currently, the university has only one primary form of
transportation and one secondary form. The primary form of
transportation is referred to as CatTracks. CatTracks is a bus
transportation system that transports students for free with
representation of their CatCard (student ID). It travels to and
from campus, making stops in essential parts of town, such as
grocery stores, apartment complexes, the Merced Mall, and shopping
centers. Although CatTracks has accommodated students, its downfall
begins with its inconvenient times, detailed later in this
proposal. With students having classes and homework, the bus system
taking so long cuts into an easier accessibility to campus.
The secondary form of transportation available to on-campus
students is ZipCar. The ZipCar system provides three vehicles on
campus that students who choose to pay and register with a valid
driver's license can have access to.
There are currently 6,237 undergraduate students and only three
accessible cars, however many students do not have their driver's
license, making ZipCar inaccessible to them. UC Merced is in need
of an alternative transportation system for its students, helpful
to those both on and off campus. With invigorated resources the
Uber transportation system can benefit the students in various
aspects.
The Uber transportation system was founded in 2008 by Travis
Kalanick and Garrett Camp. Both Kalanick and Camp formulated their
plan under the simple ideology of “Tap a button, get a ride”
(Uber,2016). Since 2008, Uber has been doing just that. The company
operates through an application on any smartphone through the
simplicity of setting your current location, number of people who
you are with, and “tapping.” In a matter of minutes the Uber driver
is picking customers up at their requested location. Anyone who is
seeking employment as an Uber driver needs to meet certain
requirements such as extensive background checks (Uber, 2016).
Uber drivers apply through the Uber website in which their
vehicle must first meet several requirements, one being that the
vehicle cannot have been manufactured later than the year 2005. The
driver must present a valid driver's license, registration, and
must undergo an extensive background check (Uber 2016).
Problem
According to the Uber Merced Facebook page, Uber drivers in
Merced are “new” because they have been doing business here since
June 2015, which explains the current problems they are
experiencing. After researching various articles we have come to
the conclusion that college students know more about Uber than the
community itself. In an article from the Merced Sun-star newspaper
from 2015, there was a high demand from college students for Uber
drivers during the nighttime. It makes sense that the majority of
the demand comes from college students since they are familiar with
Uber drivers from their hometown. According David Fusto, who is an
Uber driver, there are approximately only 10 Uber drivers in
Merced, but only 3 to 4 are consistent with providing their
services.
Figure 3-1: Demand for Uber Drivers
Both the article and Figure 3-1 demonstrate that there is excess
demand for Uber drivers, signifying that Uber should consider
expanding and stabilizing in this area. Figure 3-1 shows a standard
supply and demand graph for the Uber company of Merced. Taking into
account that the UC has grown in size, this explains the increase
in demand for Uber. This high demand comes primarily from young
people (college students) since they are more knowledgeable of what
Uber offers. In the graph, this increase in demand is shown by the
demand curve shifting to the right. The supply curve does not
change because the amount of Uber drivers has not increased since
there are only about three to four drivers who are consistent. As a
result, with the new shift of demand, the equilibrium price
increases, therefore making the services more expensive for
customers. If the supply does not increase, then it leads to the
problem of being overpriced and having a decrease in customer
base.
After driving around in Merced, we have seen little Uber
promotion. Looking at the Uber Merced Facebook page, they currently
have only 243 likes, making social advertisement an underused
resource. This is a way that Uber can expand and become known in
the community.
Furthermore, another potential problem that Uber is experiencing
is under-paying the drivers. Payment for Uber drivers has been very
questionable as most drivers have been paid unfair wages. However
college students are in need of money and they will feel more
content than what a regular full-time driver earns. College
students have less expenses and less responsibility. Other drivers
do what they do as part or full-time job and they might be feeding
more than one person with their wages. Therefore, the Uber from
Merced should consider employing students.
Feasibility
Before even considering whether or not there was enough student
interest in Uber to warrant a closer business relationship with UC
Merced, we had to consider what current campus transportation
options there are and how well they cover student needs. This
included taking a look at the CatTracks bus system, the local bus
transportation system, the ZipCar service offered on campus, and
local taxi companies.
The CatTracks bus system is the university’s personal public
transportation system, created for the purpose of getting students
to and from campus for free. With this goal in mind CatTracks runs
a variety of bus lines that route through a varying number of
locations in Merced, including shopping centers and hotspots for
off campus student housing. In this attempt to get a decent amount
of location coverage, however, the CatTracks bus system sacrifices
one aspect that can be quite important when someone is seeking
transportation: speed. Looking at Table 4-1, which was created
using information from the bus schedules listed on the CatTracks
website, you can see that the time it takes for a bus to complete a
full route can take anywhere from forty minutes to an hour and
forty-four minutes. This large gap in time makes it virtually
impossible to make a quick trip to an off campus location, and adds
on hours to an extended off campus outing. Students looking for
quick transportation cannot look to CatTracks to satisfy their
needs, and the situation with the local bus transportation system
is very similar.
Bus Route
Average Time for Bus to Complete Route
A-B Line
58 minutes
C-1 Line
40 minutes
C-2 Line
57 minutes
FastCat Line
53 minutes
NiteCat Line
64 minutes
E-Line
104 minutes
E-1 Line
93 minutes
E-2 Line
54 minutes
G-Line
62 minutes
Table 4-1: CatTracks Average Route Times
ZipCar is a car rental service that has recently been brought to
UC Merced. Looking at the company website, ZipCar offers
information on how the rental process works. After creating an
account and confirming that you have a valid driver’s license and
credit card linked with your account, a ZipCar card is mailed to
you. When it arrives your ZipCar card works as a key to lock and
unlock the car that you rent out. When you want to rent a car you
go online and reserve a car and timeslot, the cost depending on how
long you want to rent the car for. This service allows students to
get to any location they need to go to in a timely fashion, but
there are still a few issues. Perhaps the largest limiting factor
of this transportation service is that there are currently only two
ZipCar cars in service, with the third being out of commission due
to a wreck. With only two cars and, according to UC Merced’s
website, an undergraduate population of 6,237 students, it can be
difficult to obtain the timeslot needed to make a trip, and as
Figure 4-1 shows it has kept many students from even using the
service.
Figure 4-1: ZipCar Usage Poll
On top of the competition to reserve time-slots, there is also
the possibility of a student not returning their ZipCar on time,
causing issues with scheduling and possibly causing people to miss
a time sensitive event. Finally, the ZipCar cars can only be
accessed on campus, making the entire service unavailable to any
off campus student in need of quick transportation.
In Merced there are two taxi services which we know are
currently in operation: Merced Taxicab Co. and Yellow Cab. We
contacted these companies because their service is the most similar
to the one provided by Uber, making it necessary to gauge how the
competition operates. The issue we found with the taxi companies
was that their rates, 15% tip included, were around double those of
Uber estimates. We found that Merced Taxicab Co. charges $3 a mile,
while Yellow Cab charges $2.70. In order to determine the
difference in cost for each service, we used the distance to go
from UC Merced to Target, which is a distance of just about 6
miles. Using the rates provided by the taxi services, the ride,
including a 15% tip, would cost an individual $20.70 if he or she
were to use Merced Taxicab Co., and $18.63 if he or she used Yellow
Cab. Mapping the same route on the Uber website, we were given an
estimate of $7-$10 for the same trip, making Uber a significantly
cheaper service in comparison. Students looking for a ride would
not be able to save money using a taxi service instead of Uber.
Considering all of the advantages and disadvantages that the
current transportation options provide for UC Merced students, we
realized that there is an important niche that Uber could fill to
make up for the pitfalls of the other transportation services. With
enough Uber drivers working in the Merced area Uber could operate
as a cheap, fast, and convenient transportation service for
students both on and off campus. If Uber were to work as an
alternative transportation option, however, we needed to find out
if the student body also found the current transportation services
lacking, and more importantly, if they would be interested in using
Uber if it were readily available.
Student Demand for Uber
In order to collect data on students’ opinions, we created an
online poll and spread the word to students on UCM Classifieds,
where we received a total of 128 responses. Using the responses
recorded from this poll, we were able to extrapolate how the total
undergraduate population would respond if we were to poll them.
These extrapolated results can be found in Table 4-2 at the end of
this section. Maintaining the standard confidence level of 95% and
basing calculations off of the the poll result in Figure 4-2, we
found that between 46.16% and 63.24% of the undergraduate
population find the current transport options to be inadequate in
covering their needs.
Figure 4-2: Transportation Satisfaction Poll
That is roughly 3,000 students who feel that campus
transportation options should be expanded or improved. We also
asked whether or not students would use Uber if it were readily
available on and off campus, and of the 128 responses, 71.1% said
yes. Using this information, we were able to find that, maintaining
a confidence level of 95% and basing calculations of off the poll
result in Figure 4-3, between 63.33% to 78.87% of the total
undergraduate population would use Uber if it were readily
available.
Figure 4-3: Uber Interest Poll
That is a minimum of 3,949 UC Merced undergraduates willing to
use Uber if it were easily accessible. This positive response
validated our belief that Uber could provide students with a
transportation service they are not currently able to receive, and
shows us that there is a fair amount of benefit to be reaped both
by the university and Uber if a partnership were to be
established.
After establishing that a majority of students would be
interested in using Uber if it were readily available, we next had
to see whether or not enough students would be interested in
working as Uber drivers. Again we created a poll online and
distributed it to the Facebook group UCM Classifieds, where we were
able to gather data from student responses. Our poll asked students
if they would seek employment as Uber drivers if there was a high
student demand for Uber. Out of the 41 responses gathered and shown
in Figure 4-4, 73.2% said yes. Using this sample size to
extrapolate how the undergraduate population as a whole would
respond, we found that between 59.69% and 86.71% of students would
be interested in seeking employment as Uber drivers.
Figure 4-4: Uber Driver Poll
Using the worst case scenario of this range, that is a minimum
of 3722 students. If only a fraction of these students showing
interest were to actually go through the process of becoming a
driver, it would still make the Uber service in the area much more
accessible.
Figure
No. of students responding yes
No. of students responding no
Extrapolated range of students responding yes
Extrapolated range of students responding no
4-1
18
110
507 - 1,251
4,985 - 5,729
4-2
58
70
2,292 - 3,358
2,878 - 3,944
4-3
91
37
3,949 - 4,919
1,317 - 2,287
4-4 &
6-1
30
11
3,722 - 5,408
828 - 2,514
Table 4-2: Poll Responses and Extrapolated Data
Solution
The solution to UC Merced’s unreliable transportation services
would involve a partnership with the Uber driving company. Being
brand new to Merced, a lot of people are not knowledgeable about
who or what Uber exactly is. Uber should focus first on dealing
with constant advertising to those people within the Merced
community. Social media advertisements are something that a lot of
companies do today because it helps spread awareness about their
companies all while people are enjoying their time on sites such as
Facebook, Instagram, etc. It also exposes those in the university
to a service like Uber and integrates it as part of the
transportation services available to them.
Partnering with a university is something that has not been
unheard of from Uber. As of now the University of Southern
California (USC) is one the biggest universities that Uber provides
free transportation to. According to the Daily Trojan, USC’s
official newspaper, the partnership started after their original
transportation services, Campus Cruiser, failed to be quick and
efficient in picking students up (Stone). The students demanded a
car service that managed to pick them up upon command and with
reliable drivers. Because it was something students were asking
for, President C.L. Max Nikias took it upon himself to improve the
system and therefore reached out to Uber to negotiate a solution to
expand their transportation services throughout the campus and
provide safety to all their students (Stone).
According to the Uber Merced Facebook page, there are currently
242 people interested in Uber’s promotion within Merced County.
With only 10 drivers and 3-4 consistent drivers there are many
missed opportunities that Uber could be taking advantage of.
Therefore Uber should be able to partner with the UC by seeking out
students interested in the opportunity to become an Uber driver
through advertisements conducted within the campus. Then from there
students who are willing and have a driver’s license would take the
initiative to apply for a job within the Uber company. The wages a
student driver would earn would have to follow the payment model
already established by the Uber company (see Figure 6-2).
Comparing it to the Uber transportation services at USC, the
training should only take about 2 hours and should make it easy for
students. According to a student driver interviewed for the Daily
Trojan he commented “I feel like even if I had been trained longer,
the things that I would question, they were easily answered. I
don’t see why it would take two weeks to train actually.” The
students are more inclined to go into work knowing that the
training does not take long and the job starts to pay the moment
they are able to pick up the first client. It creates available
jobs to any student with a license and introduces them to getting
familiar with the area around.
Overall the partnership between Uber and USC has been
successful, generating more funding for this program that passed
the fall semester of 2015. The school’s transportation program was
granted an additional budget of $500,000 for new resources that
included hiring new drivers and obtaining new vehicles. Because the
high demand came from local students from the area and not the
community itself, USC proves that a program in transportation for a
university could be effective.
Advantages of Uber
Ultimately, Uber has benefitted several communities that can be
depicted through their mission statement: “For cities, we help
strengthen local economies, improve access to transportation, and
make streets safer” (Uber, 2016). In many ways, Uber has
strengthened local economies by creating jobs with flexible
schedules for the population. Uber has improved access to
transportation by being easily accessible to people all over the
world through the simplicity of an app. Not to mention, Uber has
decreased drunk driving, by offering accessible rides late at night
for those who have been drinking. Surely both UC Merced and the
community of Merced itself can highly benefit from Uber. Students
having accessibility to Uber can accommodate the lack of campus
transportation methods, create jobs for students that can be
altered to fit their own class schedules, and can assist in
preventing accidents caused by drunk driving. On the aspect of the
Merced community, the citizens of Merced county would also benefit
from the same three aspects that the students will benefit from.
Because UC Merced continues to grow and flourish, so does the
community. With the uprising of shopping centers and restaurants,
the desire to enjoy the newest places requires transportation,
which could be easily facilitated with the presence of Uber in
Merced.
Potential Problems/ Limitations
A potential problem is employing unsafe drivers, therefore
making customers feel uncomfortable. Customers might fear driving
with a stranger, leading them to become scared of the driver having
bad intentions. This is logical because there have been historic
experiences about stabbings shootings, and robberies from Uber
drivers. In an article written by Ellen Huet published in August
2015, she explains more about these tragic experiences and that the
Uber company in Los Angeles, CA has not been abiding with the
policies that they are supposed to follow. Therefore, customers in
Merced will fear of having similar scenarios occur to them. In
addition, there might also be the possibility that by employing UC
students as Uber drivers, UC student customers will feel safe,
since they are their peers. However, the community might not fully
agree, since students might be perceived as too young. A lot of the
potential workers for the Uber partnership would include students
and therefore it could be one's peer providing the service. That
way most students would possibly feel safer having a person along
that is the same age as them.
Pricing
In order to create a partnership between Uber and UC Merced,
there needs to be an awareness campaign hosted by Uber on campus.
For example, the campus should give access to Uber to set up tables
in common areas and hold information sessions on campus. Therefore,
they will have direct contact with the career services center, to
help get the word out through emails and advertisements for
information sessions. This campaign will be cost free since Uber
would just need approval to table and host information
sessions.
Figure 6-1: Uber Driver Poll
As it is shown in Figure 6-1 and the data explained under the
section Feasibility, there student interest in being employed as an
Uber driver, This means that the campaign does have a high
probability of being successful, especially considering that most
people who decide to be Uber drivers are often college students in
the process of searching for a stable job or just looking to earn
extra money.
After gaining the approval from campus to advertise, the Uber
company needs to decide what wages it will offer the students. It
will be best that Uber should only partner with the UC to recruit
drivers, not to distribute wages. The main reason is due to
complications that will arise, such as abiding with policies either
from the state or federal government. According to Glassdoor, the
average wage for Uber drivers in California is between $14 and $15
per hour. Therefore, the Uber from Merced should pay students a
similar wage that is within the average wage. Considering that the
average pay for work study at UC Merced is between $12 to $14 per
hour, the relative average wage of an Uber driver falls within the
range.
Figure 6-2: Average Uber Fare
The figure above shows the average cost for an Uber driver in
the area of Modesto, CA. As you can see, the driver earns a minimum
of $5.60 so if they serve three or more customers they will earn
approximately $15 to $16 per hour. We have to keep in mind that
this rate is volatile, since customers might need to be driven
longer distances, as well as other factors such as the
cancellation, booking and base fare fees.
Currently the minimum wage in Merced, CA is approximately $9 per
hour. When comparing it to the average earnings per hour as an Uber
driver, it can be concluded that Uber drivers earn $5 more per
hour. Therefore, if Uber were to employ students from UC Merced the
students would have the opportunity of earning higher wages for
college expenses (such as rent, books, materials, food, etc.). In
addition, it will also benefit the Uber because it will have more
drivers, therefore offering its services to a larger range of
customers. The customers will also benefit because if supply
increases along with demand, the equilibrium price will decrease to
its initial level. (Figure 3-1)
Conclusion
After analyzing the transportation services offered by UC
Merced, we believe that partnering with Uber will benefit both the
students and Uber. In every way, the partnership will improve the
transportation services for students. With the inconvenient
schedules of CatTracks and the inconsistent, limited services of
ZipCar, the transportation services for UCM students remains
unsatisfactory. After close evaluation and research, the benefits
that Uber will create for student transportation makes the
partnership an optimal decision for the university, the students,
and the Merced community.
References
Stone, C. (2015, January 25). Campus Cruiser adjusts to new Uber
partnership | Daily Trojan. Retrieved March 03, 2016.
Uber. (2014, November). A Deeper Look at Uber's Dynamic Pricing
Model | Above the Crowd. Retrieved March 10, 2016.
UC Merced. (n.d.). Fast Facts. Retrieved March 12, 2016.
Uber. (2016). Our Trip History. Retrieved March 10, 2016.
N. D. (2015, April 17). How Uber surge pricing really works.
Retrieved March 10, 2016.
Uber In Merced. (n.d.). Retrieved March 13, 2016.
UC Merced. (n.d.). Home. Retrieved March 13, 2016.
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