What Is a Sustainable Competitive Advantage?
Competitive advantage is measured by profit share — a company’s share of an industry’s profits. This definition means that a competitive advantage is impossible if an industry lacks profitability.
And based on the financial results of Lyft and Uber, there are no profits to be had in the ride-sharing industry. For instance, Lyft posted a $900 million loss in 2018 and Uber topped that with a $3 billion loss from operations.
The problem with ride-sharing — a so-called two-sided market — is that there are low barriers to entry and the switching costs are low on both the supply side — the drivers — and the demand side — consumers.
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