Disrupting ordinary commute
From the outset, the economic constraints of locomotion were simple. People have used different sorts of transportation as simple as a horse. This made commuting more meaningful and sentimental, adding the element of necessity, albeit with an inconvenience of sorts. But through time one could argue human beings’ civilization spectrum took off with a modicum of moderation to hold a grip on.
It was inevitable the ordinary way of traveling would break away with simplicity and ease, not only making everything possible but also indispensable with reason. Fast forward to the digital era and we have managed to integrate technology with our day-to-day essential activities, one of them being transportation.
The diversity of the taxi industry business that can be observed globally is not principally attributable to economic or technic fundamentals. It’s primarily a function of local political exigency to structure the taxi industry, to shape the city, or to manage labor relations.
The ride hailing business came to life on the back of the information technology revolution. It began with a smartphone, an application accessing geo location of passengers and drivers with features including map, scheduled time, and details of both commuters, making it extra safe for people to use. In the age of network economy ruled by giant tech companies like Facebook, Amazon, Google, etc., a ride hailing company cannot ignore them and has to pass through the tech pathway to access a huge customer base of clients whose first reflex is to turn to their networks when they are looking for any type of service.
The other main actor to consider is the venture capital economy. It is now feasible to raise funds to develop one’s company with the objective of selling it to another bigger company without any concerns about short-term profitability. Traditional taxi companies cannot afford to lose money even in the short-term and if they are unable to turn things around they are bound to fold.
A vital strategy to avert this specter is for existing companies to focus on their core business and to delegate the rest to dedicated business units or subsidiaries focused on managing the ecosystem surrounding the business including digital communication, pricing, customer satisfaction and relation. This gives startups the advantage of controlling and considering possible selling points in order to succeed.
The most sensitive element that ride hailing companies should give attention to is the use of a common application featuring constantly updated services and capabilities and able to compete with the sophisticated apps already in operation. And behind this app, it is important for the common platform to analyze the big data produced for back office research.
In Africa, though the ride hailing business has been dominated by global giants like Uber and Bolt nowadays a number of upcoming companies are making inroads into the market. One of these is InDriver. The California-based company’s mobile app allows passengers to bargain with the driver, enabling them to name their own fare for nearby drivers who can accept, decline or counter the offer. Approaching the market with flexible options to interact with the customer, the global ride-hailing firm operates in South Africa, Kenya and Tanzania.
It recently added Uganda to its portfolio. Opera, another upcoming start up, developed a mobile payment app Opay, integrating it with its own Oride motorcycle ride hailing service in Lagos, Nigeria. The company is taking a bigger market share from Uber, one of its countries in which the latter has a considerable presence. Lagos’s constant traffic gridlock gives Oride an edge over its competitors.
One of the giants in ride hailing business in Ethiopia is Ride. It had to overcome a raft of challenges to introduce its novel business model in terms of ride hailing. Taking a risk in disrupting and transforming the traditional passenger transportation in urban areas that eventually paid off, Ride has won the hearts of drivers as well as customers, taking them along its journey of battle.
Ride changed and controlled the way people commute in safety and comfort thanks to the digitizing of its service with the perfect application. Making ride hailing easier for passengers and drivers alike, it has proven to be a game changer.
Feres, an upcoming ride hailing company, is another major player that is already competing and challenging the market within just a year of its launch. The fact that it uses an application developed in-house gives it an advantage when it comes to tailoring the application to customers’ needs based on demand research. It’s still developing features for free ride, delivery, and community service.
With its own unique vision Seregela is one of the new entrants to the ride hailing business whose entire workforce, including drivers, are women, making it the first and only of its kind in Ethiopia. According to the company, it owns thousands of new cars. Even though it does represent a bit of a stretch in terms of experiences and skills, the eligibility requirements for female drivers is to have the ability to drive and pass the company’s qualification process. Once a woman attain is deemed to be suitable for the job she will be hired as a driver. The eight-hour working shift gives the driver the flexibility to explore other means of income and makes her life a little easier.
Although there are over 10 ride hailing companies in operation in Ethiopia, only a handful have managed to succeed in the market.
On the other side of the pendulum is Catch, an overfunded ride-hailing company that despite being in the market for over a year is struggling to penetrate the growing business sector due to its failure to strategize in terms of the development of an application, the platform of the business’s core purpose. Though the application was designed in house and is an asset that represents significant advantage in the coming years, it has consistently failed at meeting the demands of both drivers and customers. In spite of the aggressive discounts on offer, many of the drivers interviewed said they felt the application was driving away not only the drivers but also the customers than most people assume.
Catch appears to suffer the most from a bad reputation, likely made worse by its application. The continuous discounts without strategizing the feedback, expenses exceeding well over 200,000 birr per month without a meaningful turnover, declining to charge commissions on the limited trip the company makes, and the inability to appeal to its target group have all made investors jittery who fear that the company is taking risks without any assurance of success. Theoretically, Catch offers almost exactly the same safety features as the rest. Even if it commenced operations a few months ahead of Feres, its poor management and lack of understanding of the market demand is causing it to lose the limited drivers on its roster. It started with a spark but is flaming out prematurely. Feres on the other hand came onto the scene with cashless service, embracing e-commerce—the future of the country’s business— accelerating the demand for its service by offering the easiest means to access it.
Ride hailing business is not only an open market in Ethiopia, but also the future for urban transportation. Its success relies on implementing cashless transactions with a robust uptake of e-commerce set to give greater advantage to upcoming and already existing companies.