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Uber Is Experiencing Growing Pains In Kenya

IMG_20150604_202911I am an avid user of Uber since they started offering their on-demand UberX services in Nairobi. One of the compelling factors for me using Uber is that on average you save around Kes. 200.00 per ride compared to your typical (read: old school) taxis. This adds up and has been a strong enough incentive for most consumers like me to ditch their regular ‘taxi guys’.

However, one of the pain points to using Uber in their first few months in Kenya was that you had to use credit or debit cards to pay for rides which excluded many potential customers, leading to an overwhelming majority of customers being expatriates. This changed when Uber launched UberCASH in Kenya which meant that you could pay for rides using cash or Safaricom’s M-Pesa.

Personally, I have switched over to UberCASH completely and it works really well. I have done rides using cash or M-Pesa and its a major convenience, especially when (sometimes?) Uber rejects your debit or credit cards thanks to our over-protective banks in Kenya that arbitrarily block online payments as a fraud prevention measure.

The initial hypothesis behind Uber launching UberCASH in Kenya was that they could tap into a largely unserved market for their services – consumers who would rather use cash or M-Pesa to pay for Uber rides. As a result, Uber ramped up their Uber Partner acquisition efforts to over 200 UberX cars in Nairobi. This did not go according to plan.

Having spoken to good number of Uber Partners since the launch of UberCASH, the overwhelming majority are not happy. The reasons for this are three. For one, there are now more UberX cars in Nairobi than required meaning that Uber Partners are doing fewer rides per day than they used to, leading to lower financial returns.

Secondly, the launch of UberCASH has not resulted in as many new customers as expected so there are actually fewer customers per UberX than ever before(?). To be fair though, it really does matter where an Uber Partner operates from in Nairobi as some areas are over-saturated with UberX rides when you look at the map before requesting a ride.

Lastly, Uber has considerably reduced the lucrative bonuses that they used to pay Uber Partners which means many are no longer making as much money as they used to. So, in a nutshell, the convergence of these three factors means that Uber is most definitely experiencing growing pains.

2015-02-12 06.49.18Going forward, it would seem that the first thing that Uber must do in Kenya is increase their marketing efforts? At the moment, word of mouth seems to be their main source of on-boarding new customers. This, in addition to viral marketing where you get your personal network to sign-up using your personally assigned code for up to Kes. 1,000.00 of free rides for each new customer is another incentive.

Uber is NOT as well known in Kenya (outside the early adopters) as it is globally so some above the line marketing and digital marketing would go a long way in creating better brand visibility (indeed, their competitor Easy Taxi is doing so already in Kenya).

Lastly, on-demand taxi services are far from being de riguer in Kenya so some market education is also required to get skeptical consumers on-boarded (I remember being this way last year for months before I signed up, even as the technophile that I am, that I needed social proof before trying it out).

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3 Comments

  1. William Chesoni
    July 19, 2015 at 10:29 pm — Reply

    Hello Moses, I’ve been following you (and your stories) for a while now and I really like what you’re doing. Just to comment on the Uber story, and I agree, Uber Kenya needs to do more in the marketing department. I am a novice ‘techie’ and I’ve known about Uber for a while now, but only came to know that they were operating in Kenya when you posted something about them months ago on instagram. The number of people who know that Uber is in operation in Kenya is abysmally low. Young people know about uber but they don’t know its in Kenya. If they go on an aggressive marketing campaign they could really get some traction in Kenya. Many young people would use uber to get home from parties as cabs usually fleece them coz they are usually intoxicated and since matatus stop operating at certain hours, they would help in getting around at night. Young Kenyans are always looking for trendy new ways to spend their money, uber could just be it.

    • July 20, 2015 at 4:28 am — Reply

      @william thanks for the feedback and comments.

  2. […] for the service. This made the cash payments a bit redundant. According to technology blogger Moses kemibaro, “UberCASH has not resulted in as many new customers as […]

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