The Kenyan startup giving Uber a run for its money
For every Goliath there is a David
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Yesterday I announced I was heading to the US and had an incredible response!
Thanks everyone who has reached out and suggested people I should get in touch with. I'm excited (and grateful) to be hitting the road tomorrow ✈️
On today's edition, I'm collaborating with Mercy (Awiti) Awuor - a brilliant writer and storyteller based in Nairobi.
On Tech Safari I want to use the platform to highlight great writers from the continent.
Mercy is one of those writers, and covers how companies are using branding to win over customers in Africa.
One of my favourites from Mercy is how Carrefour is winning over Kenya's (stubborn) retail market.
If you enjoy this piece, send me an email - I'll share the feedback with Mercy (and will have her on again). And you can follow Mercy on LinkedIn here.
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Across the world, for every 100 people, 18.2 of them will own a car.
In Africa, for every 100 people, only 3 people will own a car.
Automobile penetration in Africa is low - but Africans need to move from place to place. They have two big barriers to easy movement:
Cars are expensive to buy upfront.
Public transport infrastructure is low quality and ineffective.
Which makes Africa's mobility space one of the biggest opportunities for disruption with tech.
Africa’s ride-hailing opportunity is massive, and in 2020 ride-hailing revenue reached $2.5 billion.
So it’s no surprise that the global ride-hailing giants, like Bolt and Uber, have made multi-million dollar commitments to launch in Africa.
But standing up to the giants are challenger companies - local ride-hailing apps popping up in every country.
These challengers are smaller, homegrown and building closely with drivers and riders to make sure that their experiences are the best.
One of those is called Little Cab.
Backed by Safaricom (M-Pesa's parent company) and brainchild of Craft Silicon (a Nairobi-based software company), Little Cab launched in 2016.
And it held great promise for Kenya's ride-hailing market.
Why is that?
Little was a homegrown hero. Swaddled in the warmth and security of the Kenyan home ground, Little gained customers' trust quickly.
Little enjoyed the second mover's advantage.
Uber was the reigning king when Little launched. But they were facing teething issues - like disgruntled drivers and resistant local taxi operators who wanted Uber banned.
On launch day in Mombassa, an Uber driver was attacked and his car was set ablaze. Trust in Uber was wavering.
A few months after Little's market entry, Uber slashed their prices by 35%. The price war had started.
And then a new player joined the game. Bolt (called Taxify at the time) entered the market with even lower prices and crazy customer discounts.
The center of gravity for ride-hailing had started to shift again.
Trouble on the streets
While dropping prices is the way to attract a large customer base quickly, it had a flip side for drivers. Customers were saving and enjoying good service at their expense.
So what did Little do?
They refined their product around both of their customers' needs
The key word here is both. They segmented their customer base into two - drivers and riders - and built around both customers.
For drivers, Little adopted a price-based brand positioning. And to date, it's still their main selling point.
Little neutralized driver commissions. For each ride, Little only takes 15% commission from drivers. At the time, Bolt and Uber were taking 20% and 25% from drivers respectively.
If you’re a driver, Little Cab is simply ‘where the money is.’
Kimani, a Nairobi taxi driver who uses all three apps alternately says, "I always prioritize Little rides. I don't mind declining a ride on either Uber or Bolt for Little. They pay us very very well."
The positive results of these high driver satisfaction rates have tickled down to Little's customer experience.
Driver-rider disputes, a common challenge with the other ride-hailing apps, are very rare on Little.
Take October 2022, for instance.
Uber and Bolt drivers, feeling constrained by what they called exorbitant commissions, staged a go-slow protest.
While not the first protest, this forced the two apps to slash their driver commissions to 18%.
Needless to say, these protests didn't bother Little's operations at all.
Happy driver happy rider plays out perfectly for Little.
The price transparency for both parties made sure that drivers don't feel constrained. And on the flip side, riders don't feel over-billed.
At 55 Kenyan Shillings (0.41 USD) per KM, Little's prices are slightly lower than its competitors.
Taxify = Bolt
Little also focused on being accessible, building out features for riders that gave them flexibility and options.
Little is available on all devices - Android, iOS, Windows devices, and even USSD for non-smartphones.
They offer live fares, which lets riders monitor their taxi charges in real time as they ride. And they give riders the freedom to choose a preferred driver.
Not so Little
Little isn’t little anymore. Since growing in Kenya, Little has spread its wings to neighbouring countries like Uganda, Ethiopia, Tanzania and Somalia.
The little guy went up against the giants (who had millions to throw around) - and gave them a run for their money.
The same story is playing out across the continent.
In Nigeria, the bustling streets are seeing local apps like Oga Taxi, fight for market share against the once-considered unbeatable Bolt.
Ride down South to Johannesburg and Yookoo Ride is staging a similar scuffle. Launched in 2017, the intra-city ride-sharing app has climbed the ranks to 4th out of 36 competitors.
And in Egypt, the once-small Careem defeated Uber to become a goliath - eventually being acquired by Uber for 3.1 billion.
In all these cases, the clear winners will be those that understand their markets, and build around all of their customers - just like Little.
And have you seen any other challenger ride-hailing apps that have come from Africa?
What do you think of Little Cab’s story? Let me know on LinkedIn here.
And that's a wrap! If you're missing our Tech Round Up today hold on tight for Saturday for all the news in African tech this week.
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