Uber And The Next Phase Of Car-hailing In Dhaka
Uber is a brilliant company and probably one of the most aggressive disruptors in the startup world. The startup has made a name for its aggressiveness and muscle power for swaying the opinion of regulators in many cities where it operates.
The old news is that it has launched in Dhaka on 22nd December. The social media and leading media outlets are all consumed with the news. Heated arguments are going on whether Uber would make it in Dhaka or not, whether media outlets are doing a good job giving Uber too much of an importance, what would happen to 8 plus car-related services in Dhaka and more.
To be clear, Uber’s launch news is the most redundant part of this story which makes clear that social medias are potent places for discussing relatively worthless topics. Almost everyone in tech knew months ago that Uber is about to launch in Dhaka. We did a news when Uber put out its first hiring announcement in Dhaka in February this year [Cue: you may read it here].
However, it is a significant event for Bangladesh startup scene in general and transportation services in particular that Uber has finally launched and fueled a spirited discussion. Among many other impacts of Uber, three likely events demand attention : a) local transportation services, not only apps but all related services, will face a new formidable competitor b) it will push local companies to improve or die and the third one is simple: nothing significant will happen!
Diving deep: A bit about Uber
Uber beta launched in 2010 as an app to request premium black cars by Travis Kalanick and Garrett Camp. Travis, the CEO of the company, is known for his combative style and great performance as a wartime CEO. Uber is one of the fastest growing startups in the world. The startup raised $3.5 Billion From Saudi Sovereign Wealth Fund in June this year at a valuation of $62.5 billion which makes it one of the most valuable private companies in the world.
It serves around 2 million rides per day globally, according to data from September 2015, and operates in 538 cities including our neighboring countries India and Pakistan. In most of the regions where it operates it is spending heavily to unseat the incumbent leader and in many other cities it runs the show.
The company brought in $1.5 billion in revenue in 2015, although it is losing money in the most of the markets where it operates. The company just came out of China after a long and costly battle with Didi Chuxing Technology. The startup now owns 20% of Didi’s shares after Did bought Uber China operation. It is the most valuable transportation company in the world that does not own any car.
The startup offers a host of services and moved far away from its original premium black cabs model. Today it plans to change the “logistical fabric of cities around the world”. It offers rides through multiple products including its much lauded Uberpool service, it offers logistics services in many different regions and Ubereats delivers food.
The redundant talk
According to many people, Uber received quite a reception from leading media outlets in the country (it was the lead news in The Daily Star) and also from a certain class of the population which many claims is not/was not the case for the many local car-pooling and taxi service startups.
When it is true that we usually feel more taken with foreign services and put undue importance and show undue respect to foreign brands, the counter argument is also valid to some extent. Up until now, we don’t have a clear leader in the car-hailing market in Dhaka and Uber, by far, is an excellent alternative.
We have car-hailing services started as early as a year ago but could not pull off a great execution. Moreover, PR, nowadays, is anything but an orchestrated strategy. So the point of Uber getting undue attention is at least partially moot. Uber has done an excellent job in pulling off a great launching show.
Uber in Dhaka
As you already know, Uber launched in Dhaka on 22nd November at 2:00 pm with Shakib Al Hasan taking the first ride. The startup has partnered with Grameenphone to offer its service. According to sources, it has 150 cars in Dhaka and is offering TK 250 worth of free rides until December 31st.
“Uber has a simple goal to use technology to make our cities more accessible while reducing congestion and pollution. In line with the government’s vision of Digital Bangladesh, we are thrilled to be in Dhaka to harness technology for the benefit of riders, drivers, and the city,” said Amit Jain, president, Uber India and South Asia.
Summoning an Uber is simple. You submit a trip request using its app which then automatically sends to the Uber driver nearest to the consumer, alerting the driver to the location of the customer. Uber application will send the detail of the driver and vehicle to the passenger to ensure their safety. Besides, the location of any vehicle can be tracked in the middle of the journey. The riders in Dhaka, in most cases, has rated the service quite highly so far.
Uber has received quite a reception in Dhaka. Even people who did not know about Uber before applied themselves to know about the service. As said before, part of the credit goes to Uber Dhaka team who pulled off a brilliant launch strategy.
What does this mean for the 8+ transportation services in Dhaka?
Given the example of India and other countries, the ride is going to be super challenging for the local companies. Moreover, our local startups don’t have access to easy finance what Ola or Grab has.
While in India and many other countries, there was a strong player even before Uber coming into the market, in Bangladesh scenario is quite different. There is/was no apparent market leader.
Chalo and BDcabs started in 2015 but it is hard to tell how they are doing. Chalo failed to maintain a solid customer service whereas BDcabs remained a limited operation service with its partnership with Toma Taxi. Amarbike and similar motorbike services have received quite a high rating but none of them are dominant either.
Recently launched Taxiwala is doing heavy promotion but it did not get much time to get a good market share. With the word of mouth advantage Uber has already surfaced many of the local players.
Part of the responsibility goes to the local companies because they failed to build a reputation in the last one year.
Uber launched in 2014 in India and although it is yet to make a strong position in India. A recent report by Techcrunch said, “Ola covers more cities in India than Uber right now, and evidence suggests it is just ahead in major cities, but Uber is upping its focus with new features for India and expansion plans, so Ola is forging ahead with its entertainment push to sway more affluent users — the kind that might be acquainted with Uber — to its service.”
The question that whether Uber wins the race in India remains to be seen but it is quite apparent that it is giving Ola a hard time.
— Shakib Al Hasan (@Sah75official) November 22, 2016
The scenario, however, is different in Bangladesh. None of the local startups cover outside Dhaka, while Chalo has been talking about its plan to launch outside Dhaka it does not have operations yet. On the other hand, Uber has announced its plan to start operations outside Dhaka. It has already started spending huge in promotion with free rides and all. Service-wise, it has received quite a good mark in the last two days from users. Using its operational prowess and deep pocket it can easily outspend any local player.
Said that, one other thing Uber would definitely do for local players is that it will push all these companies to play harder. We have already seen increased social media promotion from companies like Chalo and Taxiwala which is a good thing to happen. Similarly, it will also push startup ecosystem in the country forward by infusing a sense of competition and learning. As in India and Pakistan, it will have issues in Bangladesh that are quite unique to the country which a local player understands better but it depends on the local startups whether they take that advantage.
In Bangladesh, transportation is a huge market. There already are a number of local players in the market including Toma, BDcabs, Sam, Oikhali, Pathao, Orggro, Amarbike and recently relaunched Taxiwala. Now that Uber has come, the market is going be more competitive now and we will see increasing activities from local players as well. Despite, all the talk about competition and all, it will push local companies to be better and will also create awareness about car-hailing and all.
Transportation is a complex problem in Dhaka where traffic congestion is a key challenge. It is hard to predict a winner which is applicable for Uber as well. In Dhaka, the problem is not only safe and reliable taxi service or availability of transport, it goes deeper than that and anyone who solves it effective and efficiently will be the winner.