| For this particular market, they are not charging less than the market will bear, they are charging all they can. They have to keep taking an 'L' specifically because there is extreme efficiency in price information discoverability in a commodity market. Explaining: Some background info:
- almost all drivers are signed up with all services [ ie i) Lyft, Uber - which are global & ii) Faras, Bolt which are international but Africa only I think ] - riders have all apps and will price shop on every single app before booking a trip because it will be the same freaking vehicle and driver (ie literally the same service because of item above) - ride prices are pretty expensive relative to local earnings: take for example, that first item (Minimum to and from JKIA, which is the main airport in Nairobi). It is 1000kshs which is about $8 - not a big amount in the west but is a bit of coin in Kenya - a day;. If I can get the same ride for $6, it is kind of a big deal because it means I can maybe also get a meal from the ride savings
- estimates say apps takes 30% (20% commission and 10% booking fee) and this is off the top of the payment So, the rides are a fungible commodity. It is the same ride, all you are choosing is whom to buy it from Consider Bob looking for a ride to the airport: he looks at all 4 apps ( Uber, Lyft, Faras and Bolt), finds the cheapest one (Alice, on say the app HNewsRides) at Kshs 800 (~$6) and books that (since it is the same freaking car and driver as all drivers all use all the apps! Note that they can also sorta see - based on proximity and time to arrival for pickup - that the same ride with Alice would cost Kshs 900 on AppA, Kshs 1000 on AppB, Kshs 950 on AppD etc ) Even worse, after Bob has taken a couple of rides with Alice, and they know each other a little better, they will establish a relationship and exchange phone numbers so that Bob will just reach out to Alice directly and cut out the middle man ( apps ) because Alice will charge them the app amount less say 25% (because there is no cut for the app now). Bob gets a 10%-20% discount on the ride and Alice (the driver ) gets 20% more for the ride. This means that apps have to cut prices again to compete ad infinatum till every ride is free (or the apps are paying riders to get market share and then jack prices, which they have done ) So, the real problem is extreme information availability and a multitude of players. If there were just one or two apps, price management is easier but with 4+ players, price competition is the name of the game. About the "it will be the same driver and vehicle" thing: this is a quirk of the Kenyan market. If an ride is showing as less than 5 mins away from you on all apps, it is likely to be a situation where it is just one specific car and driver across all apps. Nairobi has horrendous all day traffic. Really bad. Think your worst nightmare traffic and multiply by two. Two cars separated by as little as 1 mile could have as much as a 10 min difference in estimated arrival times because of traffic. So, if a vehicle says "5 mins away" in 4 different apps, you can relatively safely assume it is the same vehicle listed on across all apps. |