Ridesharing has been with humans since the growth and acceptance of automobiles as a means of transport; colleagues, neighbours, church worshippers and even traders on daily commute share ride to destinations. Some car owners share their ride to augment income while some share theirs to fight boredom or loneliness on a trip. Income augmentation seems to be the major reason for ridesharing. Sharing a ride is a norm especially in a society with low car ownership like we showed here.
There have been two notable attempts at solving the ridesharing problem in Lagos and Nigeria by extension. One by the first-mover in the market GoMyWay, Jekalo (a Yoruba word meaning ‘let’s go’) and Hytch (a play on the word “hitch”). All with catchy names and value propositions. GoMyWay ran a freemium model where you first onboard non-paying customers and overtime, charge for the service as trust is gained. Hytch, on the other hand, charged customers from the jump. It also had option for buses. Jekalo focused on journeys within the city of Lagos.
At its peak, GoMyWay had more than 12,000 users across 16 Nigerian states with over one 100,000 cumulative rides, according to Techcabal. Contextually, these numbers are not an easy feat when we consider the state of the then ecosystem and other supporting factors like Venture Capitalists with bias for this subsegment and market acceptance at that time.
Disintermediation
Disintermediation is a major threat to the success of marketplaces and ridesharing platforms like GoMyWay and Hytch were not exempted. In a market where the price sensitivity is high with both sides of the marketplace constantly in search of discount and bargain, disintermediation becomes inevitable at the expense of the platform, which summarily leads to a revenue loss. This threat cannot be responded to by throwing money at it without fortifying the value propositions to keep both sides transacting on the platform. In essence, ridesharing businesses should strengthen the moats in their business. New entrants can do this by enhancing the security and background checks on the car owners thereby, gain an average passenger’s trust.
Security/Infrastructure
Security will continue to be a going concern with every business. For ridesharing, operating in an environment with a poorly-updated or non-existent missing persons register and security infrastructure like surveillance cameras, creates friction in the path of the customer’s journey and adoption in a low-trust environment like Nigeria. Features like panic buttons, panic phrases and codes on the app both on the rider’s and driver’s side could go a long way to mitigate this concern. Strong punishments for security infractions on the platform could go a long way as well.
Funding Gaps
From available records, GoMyWay for example, received a pre-seed capital injection of $175,000 from a syndicate of investors. One reason cited for a shutdown by the then founder was lack of following funding from investors. Same reason cited for a shutdown by the founder of Hytch. This buttresses the fact that mobility and logistics startups are not high in the pecking order of destinations for investment capital. Uber, for example, became profitable after more than a decade since its founding in 2009 and about five years since going public. This subsegment therefore needs deep pocket of patient capital to test, iterate, breakeven and hopefully, become profitable.
Market Readiness
Culture also has a role to play in the adoption of a technology. Inasmuch as product market fit or PMF is the holy grail of venture-backed businesses, culture fit is barely talked about. Uber for example, struggled in its bid to penetrate the Japanese market despite its brand recognition and strength. The more fertile a business environment is for a particular business model or offering, the faster the iteration and adoption.
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