In theory at least, it can just be some algorithm and some screen space on the app.
- Ideally in a shared ride what happens is that instead of 2 drivers, driving 12 miles for passenger A and 14 miles for passenger B, you have 1 driver who drives 15 miles for both passengers trips.
- So 1 driver to pay who is now more efficient, and 2 paying customers. You charge each customer X% less, pay the driver Y% more, and theoretically you could keep your margin the same but now fulfill more rides (another driver is free now that you put two rides in 1 car)
- However, now let's consider how much cheaper it can really be...
- Sharing a ride for a cheaper cost makes sense when you and the person you share with have a generally overlapping route. The discount you get as a customer is a function of how likely you are to get matched with someone.
- Turns out there aren't a lot of rides with good overlap (airport rides might be the best type of ride tbh). Thus the discount is quite small. If the discount is small it means you have less people using it. Less people using it makes the discount even smaller! Eventually you have no discount and no incentive to use the service.
- To keep users incentivized to use the shared mode, Lyft and Uber have to subsidize the pricing to make sure that match rate stays high. Every "shared" mode ride that has only 1 person in it is a big loss, but incentivizing more people to use it can result in a smaller net loss across the marketplace