Reinventing On-Demand Wheels In The Rideshare Era

To stand out from the ubiquitous ridesharing giants of the world, on-demand startups are putting a new spin on transportation services with premium membership-based offerings. Alto, for instance, serves customers in the Dallas area who pay a monthly membership fee to receive a differentiated travel offering to take them from, say, uptown to the airport. “Our mission is to really redefine the passenger and driver experience,” Alto CEO and Co-founder Will Coleman told PYMNTS in an interview.

That goal, Coleman said, begins with operating Alto on a new business model. For starters, the company has a dedicated fleet of cars that it supplies, and doesn’t ask drivers to bring their own vehicles. As a result, the company knows its vehicles are safe, clean and well-maintained. And instead of having contractors, its drivers are W-2 employees. “We can select them and vet them and train them and performance manage them,” Coleman said.

In addition, Coleman noted that larger competitors say they are tech companies – but Alto is a “service company, and we use technology to deliver and enable excellent service.” Instead of just a booking platform, Coleman believes he has created experiences for both passengers and drivers that aren’t possible with existing models. And the idea has gained traction with investors, as the company has notched $14.5 million in funding and has investment partners such as Frog Ventures and Road Ventures.

The Membership Platform

To start the process, passengers can download the company’s app in the App Store or through Google Play. They then set up a membership, which Coleman noted allows the company to offer a high-level experience at a significant discount off of a “black car” or Uber Black ride. Moreover, as the company operates in a world where it has a fixed cost, Coleman said the company can spread that cost across its membership base and offer rides at lower prices to its customers.

Once consumers sign up for a membership, they request a ride through an experience that is similar to other services: They open an app and enter their destination, and the app confirms their pickup locations before booking. And while the company’s cars are always about 10 or 15 minutes away, Coleman encourages customers to plan ahead, as he would rather his company wait for the customer instead of having the customer wait for his company. In that spirit, Alto offers five minutes of free wait time per trip.

The Passenger Experience

Coleman said the company is currently using the Buick Enclave, a mid-size SUV that can seat six passengers and has “plenty of room for people and luggage.” He noted that the car is comfortable for anywhere from one to six guests. Customers can also customize the ride by choosing the music, lighting settings and conversation preferences (whether they would like to chat with the driver). The company’s app captures these choices and implements them in real time.

Most riders pay for each ride – per mile and per minute – and the service gives an upfront fare estimate and then bills the customer. (Coleman equated the pricing to Uber Select.) However, he said the company has been testing some subscription packages with a small number of customers, and that the company will “continue to refine those offerings for our members.” (In October, Lyft said that it had rolled out a new subscription offering called All-Access Plan, and Uber said it was testing out a Ride Pass membership plan in the same month.)

For now, Coleman said the company is “expanding out of the core of Dallas,” aspiring to take on more of the city. From there, it seeks to grow into other cities and enter additional markets later this year or in very early 2020. Alto also aims to have a national presence in the next three to five years, as it seeks to bring a differentiated on-demand rideshare alternative to more consumers.