Uberization’s new frontier: Auto Sales?

Uberization’s new frontier: Auto Sales?

teslaDisclaimer: I don’t own a Tesla (yet!).

Much has been written about the disruptive business models by companies like Uber and AirBnB. Having used their solutions successfully in three continents, I am a big fan of their services. (Apparently others are too, as we see new terms like “Uberization”, “Sharing economy” and “Peer to peer economy” on a daily basis…)

In fact, there was a recent article about Uberization of air travel, but that is a much more complex undertaking, at least at this point…

I came across an interesting article by Marion Manekar on what the Uberization of the economy is about. The 5 word summary of the article is described in a tweet – “To Uberize, remove the middleman”…

As Maneker puts it, “I don’t think of Uber as a force that dis-intermediates—as we olds used to say—transportation, but one that creates value for itself, its drivers, and its users, by developing a new layer that integrates them all with maximum utility… To me, uberizing meant trapping a series of innovative processes—phone-enabled geo-location, payments and driver management and distribution—into an app-accessible service...”

If you break down the above thesis, the key points are innovative processes riding on existing and new infrastructure, glued together by ever-updating software. In the case of Uber it means using technology like geo-location and smartphone apps, existing government rules around taxis, and financial incentives, coupled with convenience for drivers and riders.

The same software-led revolution is disrupting other industries too – good examples being Apple Pay, Nest and Sonos. All these are taking advantage of our increasing reliance on our smartphones, and their constant connection to the cloud to put less focus on the supporting hardware – resulting in most hardware manufacturers focusing more on software enablement.

Amidst all this comes a new experimental disruption by Tesla – itself a pioneer in the software-enabled car – around auto sales: “Tesla is launching a referral program, where current Tesla owners can create a referral link to share with their friends. Anyone who buys a Tesla via a friend’s link will receive a $1,000 discount on a new Model S. (Used models are not included in the program.) On the flip side, those doing the referring will get a $1,000 credit applied to their account, which could be used to buy service, accessories or put toward any future car purchase.

It goes a bit further. If you manage to sell five Model S sedans, you’ll get an invite to the opening party at the Gigafactory in Nevada, which is sure to be a good time. Sell 10, and you will have the option of purchasing a Founders Series Model X…”

Tesla’s founder Elon Musk calls it a guerrilla battle against auto trading associations – since Tesla is not allowed to sell in every State, they can have their owners “refer” friends, thereby totally bypassing the traditional auto sales channel. But just like Uber, they can use the existing governmental checks and balances in the auto trade transaction to their advantage.

It is yet to be seen how successful this experiment is, but if it is successful, it could be a pre-cursor to tremendous change in every facet of our daily lives.

 

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