Battle-ground shifts from price to innovation as Uber and Taxify lock horns

Dip Patel, Kenyan  Uber Manager posing next to an Uber ChapChap.PHOTO:WILBERFORCE OKWIRI

After a bruising price-war that saw ride-hailing companies viciously slash prices to attract customers, the battleground is now shifting to innovation and efficiency.

The two major taxi-hailing companies - Uber and Taxify - are now waging their wars on non-price factors. Without legroom to reduce prices further down, Uber, Taxify, LittleRide and Mondo Ride are burning the proverbial mid-night oil to outfox each other on car efficiency and customer service.

“What happened is that they reached a level where they could not go any further down in terms of prices,” said David Muteru, the chairman of Digital Taxi Association of Kenya (DTAK), a new outfit the drivers hope to use to face the tech companies.

No news could be better for the drivers who not long ago took to the streets to protest what they said were blatant reduction of prices by the technology companies.

In an interview with Weekend Business in November 2017, Muteru decried the raging price war that ate into drivers’ earnings even as technology companies refused to similarly reduce their revenue share.

Prices have generally stabilised- they are neither going down nor up. But the taxi wars are far from over.

Today, cars such as Toyota Axio, Toyota Belta, new model Spacio, new model Raum, and Toyota Ractis are popular with all the ride-hailing companies not only because they are presentable but also because of their relatively low fuel consumption.

But it is San Francisco-based Uber that has taken this second-round of war to a new level. Particularly, after it unveiled uberChap Chap, Suzuki Alto 800 at the start of the year.

This tiny car whose 800 cc fuel consumption is comparable to the three-wheeled tuk-tuk that helps people move within the city of Nairobi. And it has already turned into a darling for most drivers as a money saver.

“uberCHAPCHAP is priced to be more affordable option for riders because of the fuel efficiency of the vehicles, that is the  Suzuki Alto 800,” said Uber East Africa Spokesperson Janet Kemboi.

With UberChap-Chap, Uber hopes to remedy the main flaw in Kenya’s taxi-hailing business model- a situation every shilling earned has to be shared among car owner, driver and the technology company.

This model has put drivers under immense pressure, with some forced to do longer hours so they can be left with a fair share of the revenue at the end of the day.

“With the launch of uberCHAPCHAP, some of our driver-partners will now be business owners and own brand new vehicles which are fuel efficient,” said Kemboi. The drivers have acquired the cars through a lending agreement between Uber and Stanbic Bank.

“So the deal with uberCHAPCHAP is that you will use brand new cars that are fuel efficient, which can be beneficial to driver partners due to the lower costs,” said Kemboi.

So, on the Uber app- in addition to UberX and UberSelect- there is also uberCHAP CHAP.

Taxify responded by adding another feature to its app. In addition to Taxify and Comfort, there is also Taxify Boda. This is a new feature in which the Estonian-based taxi-hailing company connects boda-boda operators to customers. Taxify last week launched a tuk tuk app for Mombasa riders. The Taxify App will not only benefit the passengers using Tuk Tuks, but also the drivers who would have signed up for the app service.

“People can access boda-boda, but to what extent? Now, we want to take it to the next level. For you to get a boda-boda, you need to walk to the stage or wait 10 to 20 minutes hoping that a boda-boda will pass,” said Taxify Kenya Operations Manager Chisom Anoke.

Mr Anoke says Taxify wants to create a situation where boda-boda operators go to customers rather than vice-versa. Taxify won’t be the first company to wade into the chaotic industry of boda-boda. Mondo Ride, another ride-hailing company, tried and but yet make any headway.

Taxify says it is banking on the level of trust and demand that they have been able to build since they entered the Kenyan market.

Before Uber unveiled UberChap-Chap it was forced to drop its disdain for old cars. Ever since they got into the market in January 2015 Uber had insisted on relatively new cars- and of certain make, some of which had high fuel consumption.

However, at a time when the drivers were grappling with reduced earnings, Taxify disrupted the market by partnering with traditional taxi drivers despite their old cars. Uber was forced to reconsider its policy.

The Silicon Valley tech firm allowed all types of cars on its app, recommending low cost, fuel efficient cars that include a Toyota Vitz or 800 -1200cc car models.

Today, rather than have a blanket ban on old cars, almost all taxi-hailing companies have put them into splendidly good use. The old cars have come in handy for riders who are price-sensitive; those who don’t care so much about the beauty of the car but just want to reach their destination. And most Kenyans fall into this group.

On Uber app, slightly older cars are on UberX while on Taxify app, they are under Taxify. These are the equivalent of Economy class in the airline industry.

For riders who want some luxury as they travel, they can always take Comfort and UberSelect in Taxify and Uber respectively- or the equivalent of Business class in the airline industry.

But perhaps the most pronounced war has been on customer service. The two main taxi-hailing companies have revamped their apps, adding more support and safety features in a move to woo riders who look beyond prices.

“Riders are sophisticated, where they think beyond just the price,” says Taxify Regional General Manager Shivachi Muleji. He says Taxify has been expanding its support base in what is aimed at accelerating their response time.

Shivachi explains that Taxify has since introduced such things as lost-item-collection process to make it easier for customers to get back their lost items while riding on Taxify.

They have also put a lot of effort on safety, noting that currently at the tap of a driver, you can call ambulances from Nairobi Hospital, Nairobi Women’s and other hospitals.

Uber too has put in a lot of effort on safety and support. Kemboi says driver-partners have access to a 24/7 local emergency line to use in the event they feel unsafe.

There is also the Incident Response Team (IRT), available every day of the week to respond immediately to any reported incidents or accidents globally. 

“We have recently added numerous safety features, unique to the Uber app, such a Driver Share My Trip, a safety feature which allows driver-partners to share their whereabouts and trip status with friends and family.”

In addition, Uber has introduced multiple stops, fare split, calendar integration into its app.

Uber and Taxify do not think they have engaged in price wars, but acknowledge that competition is more on non-price factors.

“We try not to get into price wars. What we try to do is to understand the market, and reduce the price when we need to,” says Anoke.

Anoke says that Taxify only got into slashing the prices last year when they noticed that circulation of money in the Kenyan economy had been constrained by the high political temperatures.

Taxify, which entered the market when Uber and Safaricom’s LittleRide were trying to catch their breath after an energy sapping price bout, decided to forego its 15 per cent commission on every ride, pushing competition to another level.

Taxify, does not think they have been burning cash. Instead of pumping their money in advertising as their competitors, says Anoke, they have subsidized drivers.

The companies are also trying to diversify, to keep the revenue stream running. Uber has gone into delivery with Uber Chap Chap, while Taxify has waded into the rather trick boda-boda business.

“At Uber we are constantly innovating to improve our service and quality for both riders and driver partners. We strive to keep on ensuring we offer the best technology to driver-partners and riders,” said Kemboi.

But even as second round of taxi wars rage on, it looks like Uber is stumbling. There have been numerous complaints on social media from Uber users, of drivers deliberately refusing to respond to a request forcing customers to cancel the ride.

Should the rider cancel after 15 minutes, they rider is charged Sh250 in his next trip. There have been unverified reports that the drivers are deliberately sabotaging Uber, whose popularity among the drivers is fast waning.  

Uber’s mechanical explanation has not been convincing. Ms Kemboi says Uber app has an in-app support system that helps riders get a prompt response for their queries in the shortest time possible, enabling them to report on a cancellation by a driver partner. “And we normally reimburse the fee once we have reviewed the matter,” said Uber spokesperson.

Unfortunately, for most riders as the cancellations have increased in frequency, the re-imbursement process has been tedious.

“The in-app “Help” service can be accessed within the Uber app by tapping the menu icon (three bars) in the top left hand corner. Riders can then navigate and tap on the “help” icon, scroll down and report the issue at hand.”