A dive into Uber in Pakistan
A journey from want to need to broken promises…
In 2016, I was a 19 years old without a car and a driving license. Requesting my way to every single place I wanted to go. In January, I missed my best friend’s wedding because my father and my two uncles refused to drop me at the venue. Hiring a Rickshaw was not safe after the sun goes down and hiring cars and drivers was an intensive and expensive procedure, so there was no other option left other than to sulk over it in my bed.
A few months later, Uber (a San Francisco based cab service) came to Lahore. A solution to many of my commute issues and a key to my independence.
This wasn’t just my story, Uber with its cheaper and safer cab service tapped into a big potential market of dependent students and teenagers that wanted a safer and affordable means to travel which goes beyond the buses that have a dropping or picking point. We might not be aware of this potential but certainly Uber was.
Pakistan is the sixth most populous country in the world.
75% of the population is under 35 years of age.
Two of the 12 mega cities in this region are located in Pakistan.
Launch of 3G and 4G in Pakistan.
Smartphone penetration is expected to reach 40 million by the end of 2016.
The security situation is improving.
All these factors contributed to the decision that this was the right time to launch in Pakistan.
- Zohair Yousafi, Head of Expansion, Uber Pakistan.
Moreover, Uber created job opportunities in a unique way. The negative connotation attached to taxi and rickshaw drivers was eliminated by calling the drivers “Uber Dost” (which means “friend” in Urdu). This encouraged many people to drive for Uber and helped create a service that is available round the clock at any location in Lahore.
Uber successfully identified the pain points of its customers: 1) safety 2) affordability 3) chauffeur like service 4) integrity of drivers.
In just a year, Uber set its image as the only convenient cab service in Lahore with 6000 drivers who give rides to over 235,000 riders every month. I was travelling 10 km in only 150 PKR ($ 0.93), and with their discounts and offers, sometimes even lesser than that. All this without any groveling for a lift.
But like any other company Uber had its fair share of challenges in Pakistan, some general and some unique to the region.
Very soon Uber came face to face with an emerging cab service called Careem. At some areas where it was hard to book an Uber, Careem stepped up. The rivalry benefited the customers the most. Both services indulged in a competition to be the most affordable, or the most relatable by making certain offers and discount with collaborating with local brands and events e.g. Uber gave a 50% discount on rides to Coke Fest and Careem gave free rides to polling stations on Election Day in Pakistan. Despite of being a loyal consumer of Uber, I took the Careem’s Jamhuriat (Democracy) Car because my polling station was 22 km from my house and had cost me a lot on Uber.
Careem was always a step ahead of Uber. But Uber shocked everyone by announcing Careem’s acquisition in 2019. People were outraged, as this meant a cartel is formed and with no competition the prices will be high and Careem would lose its nationalistic image as it was founded by a Pakistani.
People were not wrong, no competition lead to hike in prices which initially didn’t do much damage as the cab services became the need of the people. The discounts were offered less often and the base price was as high as it ever was, on both services.
Soon after Uber acquired its competitor and started earning maximum profits, it went against the interest of people and started exploiting the need so much, that people started avoiding both services and switched to SWVL or Airlift, airconditioned bus services with a specific amount of passengers which can be pre-booked at certain time slots in just 50 PKR per ride ($ 0.31). Careem and Uber lost many people who need to commute to their offices everyday to these services.
Many drivers had to get off both apps as the consumer count went down. It became very hard for people to book a driver leading to a bad experience with the cab services. Starting a viscous cycle where Uber and Careem were losing both drivers and users everyday.
Uber is after all a business. They were losing million of dollars just to remain convenient for people. They started with a “penetration pricing” that attracted many users. With Careem coming into the picture, Uber priced its services based on “competition-oriented pricing approach”.
Uber also made very attractive packages to the drivers. So much so that people quitted their jobs to earn better by driving Uber and many car rentals saw it as an opportunity and put their cars and drivers on Uber app to make money as these drivers can make over 15 trips a day earning profits for their bosses that were impossible in their regular business.
Uber with its great business model could have done better by “sticking to their core value and the promise” they began with.
Uber knew it had to suffer loses till the company gains enough users, but competition detracted Uber from the self-created values for its users. Acquiring Careem was a great market strategy for eliminating the competition but Uber became to haughty too soon by hiking its price manifolds. This lead in many new competitors and customers were easily swayed as the loyalty they had for Uber or Careem was long gone.
Uber keeps innovating with features like UberMoto, a bike ride on demand at affordable prices mainly used by young boys in the city. And UberDelivery, through which you can send any package using Uber cars, anywhere in the city at any time you want. However, Uber sales still dwindling during pandemic.
Uber has become one of the utilities in our lives but won’t ever have the same respect it had when it first came out.
“Broken promises diminish and set the stage for a long and possibly impossible win back.”
In a nutshell:
Learn more about
Uber’s surprising struggles in Pakistan are a lesson in the flaws of the sharing economy
https://qz.com/india/824719/ubers-surprising-struggles-in-pakistan-are-a-lesson-in-the-flaws-of-the-sharing-economy/
The Damage Brands Suffer From Breaking Promises
https://www.forbes.com/sites/onmarketing/2015/10/15/the-damage-brands-suffer-from-breaking-promises/?sh=18eb3fd563b1
