Asian Taxi Dispatch Apps – A Threat to Uber Hegemony
- Blogs, Startup, Technology
- March 22, 2019
Uber came and conquered the ridesharing market a decade back. There was no competitor for three solid years except a few insignificant regional players. Until the time it had a real competitor, the taxi dispatch app was already operating in six of the top global economies. Despite the arrival of many rivals, the growth of Uber did not halt – until 2013 when it launched in Asia.
The company’s Asia expansion plan was identical to its strategy in rest of the world. The strategy did not immediately backfire. However, unlike Europe and North America, it could not leave a long term impact either. After making a decent start in China, Didi Chuxing started to overpower it in the country. In less than two years of China initiative, Didi Chuxing acquired Uber in 2016.
The silicon-valley ride-hailing company faced a similar fate in Singapore as well where Grab was the conqueror. In the MENA region, Careem is the primary challenger.
Thus, the regional ridesharing companies of Asia-Pacific, South Asia, Middle-East, and North Africa (MENA) are posing severe challenges to Uber. Besides, Uber is not only threatened overseas. Didi Chuxing and few other regional players are preparing to take the battle in Uber’s own backyard.
Why is Uber unable to fly as high in Asia as in North America and Europe? Our research in the local dispatch taxi app companies offers an explanation.
Native Cultural Adoption is Crucial
Owing to the widely varying ethnicity, western countries have a range of cultural demographics. However, each of these countries promotes a mutual culture which enables inclusiveness and globalization. In sharp contrast, native cultures and traditions are dominant in Asian and African regions.
Uber initiated in Asia with the same model of delivering identical services in all regions. In other terms, Uber tried to implement the western model in Asian environment. The initial success follows from the fact that developing nations of Asia lacked a service prior to Uber. With a couple of exceptions, Uber was the pioneer in providing a comprehensive ride-hailing solution. The service was a massive relief from local taxi and mostly miserable public transport.
However, it failed to sustain the growth with the advent of local startups. The services started by local entrepreneurs are highly personalized to the needs of native passengers. Careem, Grab, and Ola provide the three primary examples. The founders and top leadership of each of these startups are native individuals who understand local cultural norms. They ensure that these norms reflect in their ridesharing business model.
Uber did not consider the formal training of drivers on harassment as an essential element. Consequently, the taxi cab dispatch app faced multiple allegations associated with security of passengers and drivers. Contrary to Uber’s generic model, Careem addressed the specific problems of Middle Eastern and North Africa. The company’s advertisements reflect local traditions, unlike Uber which runs almost the same promotions as in the US.
Careem Grab and Ola are relatively flexible in declining rides. They also offer virtual wallet because a significantly higher proportion of the population does not keep a credit card. Contrarily, Uber has a stricter policy for declining and payment.
Alliance Instead of Rivalry
In a rapidly growing demand for ridesharing, it is unwise to view competitors as rivals. Partnership between companies enables them to expand profits. On the other hand, rivalry spills out massive costs in outperforming the competitors. Asian Cab Startups are expanding with the approach of collaboration and mutual growth.
China – the biggest rideshare market of $35.58 billion – made Didi Chuxing the king of country’s taxi dispatch app industry. With a massive 25 million rides/day, Chinese market is more than four times bigger than all of Europe combined. The company is also growing its foothold outside China with mergers and acquisitions. The successful mergers enabled Didi to value at $56 billion – more than Uber by a margin of $8 billion.
Didi supports Careem in MENA, Grab in Singapore, and Ola in Indian peninsula to keep Uber at bay. Nevertheless, Uber managed to sustain some Asian business by keeping a part of shares in Didi and Grab. A percentage of 17.7% and 27% in China and Singapore respectively ensures a considerable revenue stream from Asia. This move also demonstrates the significance of collaboration in Asian taxi dispatch app market.
After consolidating its position in Asia, Didi is pushing its foothold in South America with same partnership approach. If Asian rideshare companies continue to grow with the same strategies, Uber will soon be battling in its hometown.
Avoiding Regulatory Disputes
One significant hurdle in the way of Uber is its aggressive approach in dealing with regulatory bodies. Although Uber manages to continue services using its global influence, yet the approach creates a hostile environment for the company. The transport and taxi regulations widely vary in different parts of the world. Consequently, the local administrations back other flexible rideshare services to counter Uber.
In sharp contrast to Uber, major taxi dispatch app businesses in Asia are cooperative with regulatory administrations. This cooperation may not help them immediately. However, gaining the regulators’ support assist them big time in the long run.
Respect for employees may not be a compulsion, but Careem ensures to respect its drivers. This policy lifts the reputation of company far above Uber. Ola, Grab, and Didi besides Careem also ensure that they facilitate driver with efficient taxi dispatch driver app. Drivers earn significantly better than Uber.
Lesson for Entrepreneurs
Global ride-hailing market is expected to reach $285 billion by 2030. Market saturation is not a problem in any region. It is the business approach of a company that may halt growth. Uber’s expansion model yields quick results, but it is volatile. In contrast, Asian rideshare giants are penetrating slowly but steadily. Entrepreneurs should respect local cultures and regulatory bodies. Moreover, they should perceive competitors as potential partners rather than rivals.
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