Seven years ago, e-hailing services didn’t hold much significance in Nigeria.But EasyTaxi came into the spotlight in 2013. One year later, Uber ventured into the Nigerian market in 2014, blazing a trail for Taxify. The latter then followed suit in 2016. Evidently, this rejuvenated the e-hailing services in Nigeria, with Lagos, as the lead city.
But then, the drum beat changed. It began with the exit of EasyTaxi in 2016. Ordinarily, companies wouldn’t exit a profitable market. So could the uncertainties of the Nigerian market be a major contribution to EasyTaxi’s exit?
If so, then speculations about Nigeria being a tough market is justified, if not, it indicates profitability in the Nigerian market is hard . Either way, none of these factors are anything to be proud of.
The Uber-Taxify tussle.
Uber launched in 2014 and has not had a smooth ride.
Asides the difficulty of breaking into the Nigerian market itself, other challenges followed. Starting with the Lagos state government holding them at the throat over rent, to the Uber Abuja drivers’ two-day strike over poor payment and insecurities in October, 2016, then a 50% slash which led to Uber Lagos drivers protest in November, 2016, followed by their recent price tussle with the biggest competition, Taxify.
Unfortunately, the latter is bringing in another wave of protest from Lagos drivers today, over Uber’s alleged decision to still retain 25% commission despite its 40% price slash. This reduction is no doubt a move to up their game against Taxify in the competitive market.
Granted, Uber has had its own fair challenges, perhaps, this contributes to its expensive pricing and Taxify has proven a worthy competition. To elaborate in the latter, Taxify launched on November 18, 2016 with a fair price of 40% discount and 15% increased earnings for drivers.
Although, not up to 10 days after its launch, there was a decrease in discount to 25%. According to Taxify, this was in a bid to increase drivers’ earnings and still be better at prices than competition. The purpose of the reduction in less than 10 days, was somewhat accomplished. Taxify managed to retain a business model cheaper than its competition.
And since no major argument or situation has hinted strong customer dissatisfaction from either sides, the only yardstick to choose a preferred provider boils down to prices. Given that customers choose the most cost effective side, it is easy to see which e-hailing service might have a higher market acquisition.
The resultant effect
A competitive market is a good thing as not many people are fans of a monopoly. Besides the fact that it might limit their freedom of choice, it could be somewhat intimidating.
However, in the case of e-hailing services, there are not much factors that allow for flexibility. They both utilise same features as Google maps, mobile apps routes and there is not so much that the apps could do differently. As such, the only flexible factor where changes could be effected is pricing.’
What then is the fate of a business model whose competitive advantage only lies in shifting pricing grounds? The only hinges to remain in business lies on pricing, of which reduction gives a better advantage, then we might have a big reason to worry.
Bearing in mind that higher pricing doesn’t imply greater satisfaction and vice versa, consumers of this service could capitalise and gain the upper hand in this whole saga.
From the cumulative effects so far, drivers have been pushed to tight corners when these competitors draw their swords. But in unfavourable conditions, their threat-to-strike also threatens the business as a whole. As the companies aim to satisfy customers, drivers are demanding their right, and competition is taking its own toll, with one incessantly trying to dominate (or totally knock out) the other.
While all these linger, the consumers are left to cater for themselves, and thanks to the law of indirect effects, the economy might become a mess. So, it becomes a two-way thing. On one hand, if Taxify’s resilience is overshadowed, then Nigerians fall back to the mercy of Uber’s expensive charges. On the other hand, should these giants keep throwing dices, the rolled out numbers might keep being detrimental to the populace they serve. Not forgetting that drivers are also members of this populace.
Hence, with all these spurring, and the obvious Uber drivers’ plight, the deal right now is even bigger than a question of wins or losses. It’s about how fiercer the tides could get and how the ship (Nigeria’s e-hailing industry in this case) stays afloat.
In the bid to find a balance for e-hailing services in Nigeria, a healthy competition remains the best advocate.
Source: TechPoint
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