Nigeria has witnessed for the past years, a lot of entrants in the transportation industry. The thing is, these entrants are making use of technology to a very large extent. Welcome to the cab hailing market in Nigeria, where the major start-ups dominating include Uber, Taxify and Smartcab (in the order of their market share).

These start-ups have been lately involved in a battle for the fittest, which would mean survival. This battle is mostly evident between Uber and Taxify, while Smartcab could be said to be a pawn in this scenario.

Uber Vs Taxify

Some weeks back, Taxify went on a mission to gain new customers, reducing their prices by a very significant amount. As soon as the news came out, a lot of us had our fingers crossed waiting for Uber’s response, and guess what? They did not disappoint us, as usual. It is worthy of note that this has been going on for a while now.

But why exactly is the battle this fierce? You would agree with me that Uber, Taxify and Smartcab serve a very small market in Nigeria. Though with a large population, the percentage that uses cab hailing platform for their day to day transport needs are relatively small. A fact which we cannot blame on internet penetration, as that is very encouraging. Instead, I’d blame it on the very low standard of living in the country.

Hence, many cab hailing platforms have found themselves operating in very limited cities in Nigeria. Mainly Abuja, and some places in Lagos. This has well limited their possible revenue and profits, unlike other countries where there is a very large market all round.

Investing in a tech startup such as a cab hailing platform might not be a very appealing idea to major investors. Securing investments for such start-ups might prove near futile, especially also considering that Uber and Taxify already hold a significant marketshare, and a loyal set of the few customers available.

Why then has pricing been the major bone of contention? Unlike regular start-ups where you can always tailor down your own satisfaction to please your customers, for a cab hailing startup, it’s more than just your customers, you have to get it right with your drivers too. So, a balance between you, your drivers, and customers has to be achieved to make everyone happy.

But when you err in this aspect, you tend to lose customers, or your drivers go on a strike, and that would deal a deadly blow to your startup’s finances. You should recall when Uber drivers went on strike after they attempted a reduction in price, which would ultimately lead to a reduction in the driver’s wages.

Now we have established that the cab hailing market is not too attractive. The reasons why we think this way has been made known in this post, but we will give a brief summary for your easy understanding.

Why Cab hailing start-ups are not at their peak in Nigeria

  • * Low patronage (Small market)
  • * Price control problems
  • * Low profitability
  • * Fierce competition

At this point, you might be wondering if you should still go on to establish that cab hailing startup you have always been dreaming to. If you ask me, I’d tell you to go ahead, but there are a few things you have to do differently. This is where creativity sets in.

If you must find a cab hailing startup, I’d suggest you spend resources first on targeted advertisements. This time, you should be focused on acquiring a lot of new customers, which might not be possible unless you give them a reason to jump ship. For those not using the platform yet, you would need to go locally to reach them. Streamline your services to serve these sets, and educate them.

Also, adding such features like a mobile Wi-Fi in you cabs could help you win the patronage (not loyalty) of some customers. An excellent logistics would win their loyalty. A mobile Wi-Fi would undoubtedly increase costs of running the startup, but then, that is the price you might just have to pay.

Let us know how highly, or low you think of the cab hailing industry in Nigeria.

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