SPEED OF CHANGE 2... Ride-hailing

Ride-hailing technology is here to stay, and I am glad we have come to embrace the integration of transport and technology. Developing economies have in most instances proven to be quite tough to penetrate for new businesses such as ride-hailing which leverage on technology, and this is with regards to regulation, competition and culture. When Uber first came to Kenya, they recorded a number of challenges which were not any different from the ones they faced in other developing countries. Its typical in Change Management that market disruption is often faced by resistance before it is accepted and adopted.

Culture- Its only the other day taxi drivers protested against the introduction of UBER in the Kenyan market. The resistance was so hostile, it even got violent and the drama ended up in court. Taxi drivers resisted because the monopoly they enjoyed over the years was being snatched away from them and there was nothing they could do about it. So they held street protests and fought the UBER drivers on the street to try and stop their operations not knowing that it was time for change and nothing was going to stop change. This is just one of the many cultural challenges UBER Global is dealing with in developing countries. Also the fact that our country is a middle income economy, where white collar workers are the majority and are enjoying the privileges that come with it such as private transportation. Car ownership (private transportation) is a huge trend right now owing to the fact that motor vehicle prices have largely reduced in Africa. This trend has also been a hindrance affecting adoption of ride-hailing in Kenya. This is different for more developed economies who have moved from private transportation because of its implications such as automobile emissions, traffic congestion and costs.

Competition- Watching the news yesterday evening I heard about Little Cabs, an amazing ride-hailing application that was launched in Kenya by Safaricom only a few weeks ago. As routine I read on current affairs every morning before I start my day; today I was particularly interested in reading about adoption of UBER Global in other developing economies. I read more about Didi Chuxing and how they settled on a deal with UBER Global to partner in China’s fast growing ride-hailing market. By the time they were striking the truce, UBER Global had allegedly lost $2 Billion in a period of 2 years. This partnership was a great boost to the Chinese economy and a win-win to both brands. Didi Chuxing have bought the UBER brand, business and database while UBER has managed its competition costs in the Chinese market.

Locally as a forward looking statement ‘I can only imagine how the integration of transport and technology is going to disrupt the market. With the entry of UBER and Little Cabs into the market.’ Private transportation will soon be an oust trend, in the long term public transportation will take over because of reasons aforementioned. UBER had actually started penetrating the local market steadily since the public had come to terms and was embracing. Shortly after Uber was the introduction of Little Cabs which destabilized the market and has the potential to disrupt it even more in the near future owing to the fact that the sponsor of the product is Safaricom who is a juggernaut in the telecommunication space in Africa. The fact that Safaricom has built a leading brand over the year’s means that they command an enormous market share and pushing their product would be the easier task.  

I however cannot take it away from Safaricom that they have an amazing product which I believe has competitive advantage over competitor products. The packaging of the product is blended with fantastic features that makes the product an offer too good. The ability of the user to personalize the product with features like the ability to choose the gender of the driver you want. Also an introduction of this service to users who do not own smart phones (USSD phones) which is quite a significant number tells a lot about their understanding of the market. They also offer free WIFI to the passengers who can work in traffic and the drivers who use this service to run their operations. No surge in fares at whatever time of the day favours the user especially with regards to cost. Their charges per minute and per kilometer is fairer compared to competitor products. Their take off drivers’ earnings is a good deal too.

 I believe that the introduction of Little Cabs is going to fundamentally change the future of ride-hailing. The speed of change is what will force Uber to make the necessary adjastments