#BounceExclusive: 4 Reasons Uber May Lose Its Market Leadership In Nigeria
"Witch cried at night, the baby dies in the morning."
That is the simplest way one can describe the latest trouble Uber is facing in Nigeria.
Apparently in response to the fare slash implemented by its competition in Nigeria, Uber slashed its own fare by 40%.
The decision was not taken lightly by its driver partners as they took to the streets of Lagos, protesting the fare reduction.
Uber had maintained its market leadership position in Nigeria over the past three years due to the efficiency of its technology and stringent implementation of security measures and quality control.
However, that position is under threat because of the following reasons:
1. Stringent Driver & Car Acquisition Requirements: Uber is reputed for its stringent conditions for car and driver acquisitions.
For instance, for your car to be driven as an Uber cab, it needs to have been manufactured not later than 2006.
The driver must have a tax identification number, a third-party insurance. Uber also requires the driver to go for a background check with the police etc.
These are good. But in a market like Nigeria, it is already working against Uber. All that those turned down needed was a more capable competition and it became a problem for Uber.
Take for instance the requirements for tax identification number and police background check, an average Nigerian would rather not have anything to do with these agencies. They would rather move to a competition.
Uber needs to be more proactive to market realities. While some of those conditions, especially the ones concerning security cannot be compromised, relaxing some of the other requirements would have enabled them beat back some of the challenges coming from the competition.
Obviously, some of its competition took advantage of the stringent requirements to acquire more cars and drivers thereby threatening Uber’s market share.
2. Uber’s 25% Commission: Uber’s decision to stick to its guns on the 25% commission of total trip of its rider, is a disservice to itself.
First, it makes Uber more expensive and forces riders to look for alternatives. Second, for some time, the drivers had been complaining silently about the 25% commission.
But Uber either ignored it or pretended that it didn’t know about it. Until the drivers eventually took to the street after it slashed fare without consulting them and without reducing the commission.
The drivers’ concerns are genuine. Fuel price is still at 145 Naira per litre. The drivers would continue to maintain their vehicles to meet Uber’s vehicle quality conditions and to make sure to continue to get favourable ratings.
It is common sense to reduce commission especially when its running a promotion by slashing fares by 40%.
3. Poor Stakeholder Engagement: If there is anything Uber needs more than anything to remain on top in Nigeria, it is engaging with its stakeholders especially its driver partners and giving them a sense of belonging.
They need to make them feel that Uber is also their business and not just an app they have on their phones to earn money with.
From the poor handling of the protest by Uber drivers on Monday, it is obvious that Uber has little consideration for the drivers.
But this should not be. Without these drivers, Uber would be out of business. Their ability to re-engage these critical partners at this moment and henceforth will determine if it will retain its position in the market.
4. Fierce Competition: The Nigerian market, Lagos precisely is not short of taxi hailing services. These obscure hailing services will continue to chip into Uber’s market share, the sloppier Uber continues to handle its affairs.
From what has transpired within the week, it shows Uber has been taking its competition for granted.
If it really wants to maintain its market share, it must take them seriously.