Much has been written about how ridesharing works in the US and elsewhere. We’re here to share how two ridesharing companies are giving each other stiff competition in Karachi, Pakistan.
Over the last few years, Uber has reigned supreme as the top-tier ridesharing and car-calling service around the world. It has captured over 87 percent of the US market share. It has begun tremendous expansion in many countries around the world, especially in MENA countries, including Saudi Arabia (which raised US$ 3.5 billion in funding!), the UAE, Egypt, and Pakistan.
In Pakistan, Uber is facing stiff competition from a competitor. Careem, headquartered in Dubai, entered the Pakistani market slightly before Uber, and though Uber continues to swell its market share, Careem isn’t giving it up without a fight.
So how does Uber stack up to Careem, and what are the issues facing Uber as it tries to expand against its MENA-based competitor? We’ll take a look at some of the challenges Uber is struggling with, and some of the flaws of Careem, their biggest competitor, and look at how they each can find a path forward.
Uber needs better payment integration systems
Uber drivers in America and other regions absolutely refuse to take cash. The company has amended this policy somewhat in MENA countries. But Careem has a simple and robust payment system that combines both account credits and cash payments. It can combine ride credit and cards with a cash payment if your balance is short, making it much more convenient in some situations than its USA-based competitor.
It’s clear that Uber has to further adjust to the market requirements of Pakistan and other MENA countries, and that it hasn’t quite done so yet, leading many to prefer the simpler, familiar payment systems of Careem.
Uber has longer pickup times in some areas – and Careem does in others
One problem facing Uber is particularly difficult: longer pickup times. This is caused by simply having fewer Uber drivers than their competitors, so typically Careem will always have a faster pickup time by virtue of having more drivers who are closer to their customers. This is a particularly hard problem to solve. And if you ask Careem users, it’s one of their primary reasons for continuing to use Careem over Uber.
This problem, however, is mainly location-specific – in other regions of Pakistan, like North Karachi, Surjani, and Gulshan, customers report that Careem suffers from lack of availability.
In general, both companies focus the bulk of their service on city centers more than outlying regions, so you might have difficulty getting a ride with either service if you’re not in a densely populated area.
Lack of trust in ride-sharing services
Since Uber began operations in Pakistan, there have been some accusations of fraud, with fleets of rental car owners importing cheap labor and sending out all units to pick up passengers.
Now, there’s not necessarily anything illegal about. But, in some cases, it has led to poor customer experiences and overworked drivers, some of whom report working for up to 18 hours a day. Tired drivers mean increased risks for riders.
While Uber has responded to these allegations by taking more safety precautions when choosing drivers, apart from stepping up their customer service options in Pakistan, it’s still left a bad impression on some users of the ride-sharing service, who prefer Careem and other competitors.
However, Careem has had issues of its own, including allegations that a driver troubled a female passenger.
In this regard, the taxi-hailing companies in question or some experts may argue that these issues are not the fault of the companies themselves, but of drivers, who are responsible for their own conduct.
All in all, despite safe and inexpensive rides, this gives some people pause when considering whether or not to take a ridesharing service, or just use public transportation or a taxicab.
Uber has higher surge prices – but lower overall cost
Any user of a ridesharing service knows about surge pricing, and this is one place where Careem has a huge advantage over Uber.
Uber surge pricing can go up to 4x or even higher at certain times of night, or after large events, whereas Careem’s “Dynamic Surcharge” system is capped at about 2x standard rates, often making them a much cheaper option after large events, despite the two competitors being typically quite close in terms of daily rates.
This means that, during peak surges, Careem will usually be cheaper than its American-based competitor.
Despite Uber having a higher surge rate, however, it often costs less to ride with Uber than it does to ride with Careem, leading to an interesting situation – during standard business hours, Uber is less expensive than its competitor, but after late-night events, Careem is a cheaper option.
There are a couple reasons for this – firstly, Uber offers many promo codes that you can use to get a free ride.
Secondly, Uber operates most of its drivers at a loss of profit, allowing them to undercut the competition. By doing so, and making up the missing money from their own investment capital, they seek to drive competitors out of business by making it unprofitable for them to continue operations.
While that’s all relatively complex stuff, it all means that, overall, an Uber ride will be cheaper than a comparable Careem ride – except during peak late-night surge hours, when Uber prices will continue to soar past 4x, but Careem remains capped at 2x fare.
There’s no doubt about it: Uber is a premium service. And, overall, we do think that they offer a more premium service than Career and other MENA competitors.
However, just having a premium service is not enough. To surpass Careem and other ride-sharing services, Uber must innovate to gain the trust of Pakistani users. And they must eliminate any remaining corruption and poor rider experiences in order to become truly competitive.
Steps to do this include: a better, more fluid customer service experience, perhaps with live call centers rather than app-based reporting; stricter oversight of cars and drivers to prevent overworking and poor service; and an expanded fleet that is more smartly based, so as to reduce pickup times.
In addition, Uber may want to implement some app features that Careem offers, like advance and pre-scheduled rides, weekly pickups, and better cash/card integration. And while Uber’s prices are competitive, their surge pricing can be ridiculous. That alone can be enough reason for people to turn to Careem. Uber should cap their surge prices at rates comparable to Careem if they want to be competitive during large events and night-time rides.
So, while there’s a path forward for Uber in Pakistan, it’s not going to be easy, and they’re certainly not just going to be able to use the “one-size-fits-all” business model they have used in other countries. They will be forced to adapt to Pakistan’s unique requirements, or they will fail in their continued expansion.
This article originally appeared on Tech in Asia.
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