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Unsustainable Taxi Startups in a Prosperous Industry

Since the inception of smartphone revolution, an impressive number of startups made their mark on various industries. There is a significant increase in the rate of emerging businesses owing to the remarkable developments in technology. Taxi app companies alone are the reason behind an industry worth $40 billion. However, many taxi startups fail to sustain for longer periods due to inflexibility in the business models.

One of the previous articles explore the reasons behind the most successful taxi app solution. Contrarily, this article discovers the causes of failure – specifically, due to the deficit of sustainable policies. It also mentions brief case studies and recommends an appropriate path to ensure sustainability. Although a substantially high number of taxi businesses flopped, yet this text emphasizes the ones which nosedived after making a decent start.

Lack of persistence remains the primary cause behind flopped cab startups.

Karhoo

It was a promising initiative started in London. It raised sizable funding within weeks of its launch. The taxi app attracted over 0.3 million users in the first couple of weeks. The business model was disparate to the existing companies but was favorable. It did not challenge the established operators since Karoo did not keep paid drivers. Instead, the London taxi app complemented the competitors’ productivity by finding rides for them and got a commission in return.

However, Karhoo went into bankruptcy in less than six months after making a dream start. The executives invested in subsidizing the rides to increase the user-base since they were expecting funding from multiple sources. Although the company was attracting investors, yet none of them promised the cash flow.

Consequently, the taxi app business ran out of money. The employees worked without salaries for few weeks before succumbing to the impending bankruptcy.

Sidecar

Analyst labeled it as one of the fiercest competitors of Uber and Lyft. One significant element that distinguished this on-demand taxi service from the giant competitors was the ability to incorporate new features. The features like rating drivers and choosing the driver of choice apart from others made the company stand out. These driver friendly policies were highly praised in the industry.

However, Sidecar failed to address the problems of users – the actual force behind the business. While Uber app and Lyft allowed booking in three taps, Sidecar required traversing through multiple choices before finally getting a ride. In an industry where most of the consumers require quick actions, Sidecar took few minutes to schedule a ride. The time driver took to reach the pick-up location was aside.

Uber in Korea

Despite making impressive gains around the world, Uber failed to attain traction in a developing country as good as South Korea. In all these years of Uber’s global success, it could only introduce and sustain UberBlack in Korea – that too up to a minimal extent. The core cause holding Uber is the firm grip of the local taxi union and strict regulations from government.

Amid such circumstances, CallBus – a local startup – successfully started and consolidated its position. CallBus founders learned from the case of Uber and introduced a service which did not pose a threat to taxi businesses. It offers only the night time services. During these hours, the number of taxi drivers is extremely low, but the passengers are somewhat higher.

In-depth Failure Review

The primary reason for failure of Karhoo was the lack of sustainable funding. The company made excessively ambitious plans considering the initial influx of money. However, it choked in the long-run as investors delayed the promised money. Taxi app industry requires promotional packages to attract customers, but this practice should not stand at the cost of entire volume of bankruptcy risk.

The acquisition and successful remodeling of Karhoo by Renault indicate that solid funding source can sustain business considerably long time.

The case of Sidecar indicates that the on-demand taxi companies should emphasize customer journey map – the hypothetical paths which customers travel to acquire services. Sidecar introduced many exciting features which the top taxi apps could not offer by that time. However, it missed on one of the crucial elements – customer facilitation.

The case of Uber presents a significant factor for the success of any startup – the respect rendered to and collaboration with the local community. The government disregarded the stature of Uber and all the facilities that it could bring to the riders in favor of local taxi community.

However, CallBus is successfully running by targeting the areas where service was insufficient to meet the demand. Apart from night-only services, the company employs taxi drivers who are helping them in attaining support in the taxi union.

How to sustain business in dynamic taxi app industry?

By considering the three cases and a bunch of other studies, one should ensure that the startup complies with the following principles.

  • Avoid expansion in regions where an adequate amount of funding is unavailable. One should make sure that the prospective investors make an investment before starting on an ambitious plan.
  • Cosmetic changes in taxi app should be among the last features to add. The on-demand cab startups should strive to eliminate any shortcomings which prevent customers to prefer the service over its rivals.
  • Regardless of the size of business, the local regulations the primary factors to consider while scaling up. The service should be tailor-made to cater to the specific needs of the local community.
  • The companies should ensure to embrace newer promising technologies. It is notable that technology, which disrupted the traditional taxi business, can uproot current businesses too. Thus, the incorporation of technology is essential. Uber already revealed plans to introduce flying pilot-less taxi to address the growing traffic concerns.

Invest Where it Matters

It would be highly inappropriate for a taxi app business to flop despite knowing the causes of failures. The demand for services is big enough that arrival of many new successful startups will not create saturation. All a business enthusiast needs to do is to ensure the facilitation of customers and to invest in the appropriate technologies.

Your taxi startup should not lead to failure as long as CabStartup is the underlying platform. Start your free trial today to evaluate our platform. Let’s grow together!

By Shahrukh Satti 0 Comments

The Reasons of Success of Cloud-Based Taxi Startups

The efficiency of the management system is the primary parameter which differentiates poor execution of business model from a precisely executed one. In a fiercely contested cloud-based cab startups industry, each of the significant players carries shortcomings in its service management framework.

Many startups fail to inspire after generating significant revenues despite an attractive because of the model. The primary reason for failure is the performance deficit owing to inefficient management software.

For instance, Shuddle and Taxi For Sure are two of the most pertinent examples. Each of these ride-hailing applications offered unique features like customized vehicles for kids and booking via social media applications including Twitter. However, the companies failed to sustain the pressure of requests due to incapable service management. The systems were built to address a minimal number of requests in parallel. They failed when the number of users abruptly grew in a matter of days.

The absence of effective cloud-based management software is the core limitation of taxi service startup systems. A precisely designed and implemented cloud model must offer the following characteristics.

Precision

A deficit of precision results in failed business pursuits because the top competitors emphasize the most on this element. The success of cloud-based cab startup follows from the fact that the customers wanted a service which could pick them from their doorstep only by sharing the geographical location. Besides, they also wished to put an end to surcharges which were generated due to inefficient fare calculator.

A cloud-based system with a robust artificial intelligence integration can identify the exact location of a customer. The system also runs smoothly without connection drops which ensure fair calculation of fare.

Swift response

More or less, each system works well in routine circumstances. Customers evaluate the services when an unusual situation occurs. An ordinary system will choke during high-pressure days like Christmas and New Year. The efficient taxi management app system will rapidly respond to the consumers regardless of the density of requests.

It is intensely difficult to retain a customer who is annoyed by the service. Taxi For Sure did not have a deficit of drivers or vehicles. Instead, the software failed to connect the most suitable ride with the customer. Even Uber faces difficulties during peak commuting times but manages to retain customers because there is no service as good as Uber. Thus, the service which response in the quickest time takes the battle of winning customers.

Data Backup

The traditional taxi service is obsolete because the companies did not have a strategy to store the data of customer and driver. Successful ride-hailing applications maintain a suitable number of vehicle availability in each area by assessing the number of customers. The frequency of taking rides is also a part of evaluating consumer behavior.

A company is unable to examine the customer trends if it does not have the history of their past trips. By assessing the behavior, they can offer customer-specific packages. For instances, some customers commute daily. The system should offer discounts to such riders after forecasting the trends.

Tracking System

The taxi app service technology allows customers, drivers and support staff to track the location of ride and customer in real-time. This tracking provides the estimated arrival time to riders and in-ride security to passengers. The absence of cloud platform restricts the businesses from such facility because the software running on commodity hardware cannot sustain massive workloads. The efficiency deteriorates, and the ride results in a miscommunication between stakeholders.

An cloud-based cab startup without real-time tracking mechanism is as almost as ordinary as the obsolete taxi service.

Remote Access and Processing

The most distinctive feature of any cloud-based management service is the ability of teams to work remotely. Since both data and processing software reside on remote servers instead of end-user nodes, the teams based in various locations of the world can collaborate and work to achieve the same goals. The changes made by a team at a workplace are visible to other teams too. This ability enables the businesses to address the region-specific needs.

The odds of a system breakdown are close to negligible because the applications are distributed in a vast network of servers. If one of the servers fails to respond, another covering server addresses the request.

Flexibility

Every digital platform requires improvements over time. The extent to which a system allows modifications and upgrading define its flexibility. The downloadable applications are also capable of software updates, but they increase the pressure on processors of end nodes. They also occupy unnecessary space in hard disk. Contrastingly, the updates and alterations are carried out on remote servers while using the cloud-based system.

Considering the growing state of competition, the businesses need to remain multiple steps ahead of their competitors in evolving the system. Cloud technology also enables the companies to keep the system intact while adding new functionalities. This capability is essential to prevent the growth of an unwanted side-effect.

Data Integrity

Customer records and personal information are intensely confidential. Over the past few years, many companies had to pay substantial penalties because the customer data was not adequately secured. The compromise of integrity and confidentiality of records has made the customers more cautious than ever before.

Fortunately, the architecture of cloud-based cab startups ensures a significantly high level of security. The access specification allows access to the authorized personnel only. While the users are unable to catch a data breach on a standalone computer as long as they do not find a set of missing or modified data, the cloud management tools share a breach attempt with concerned personnel as soon as one occurs.

Recommendations

A strong idea sets the stage for the entrepreneur to create the business. However, efficient implementation is essential to sustain it. The success rates of cloud-based cab startups are significant to the degree that some startups have outperformed giant and established competitors by incorporating cloud platform. The only element which many of these startups offered was enhanced service management through cloud computing.

You can be the next successful entrepreneur. If you intend to own an efficient cloud-based service management system, our experts can help you. Sign up today for assistance.

By Shahrukh Satti 0 Comments
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