• Sunday, July 14, 2024
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E-hailing war: OCar takes on Uber, Bolt for market share


OPay, a Chinese-backed start-up, is bringing keener competition into the Nigerian e-hailing market with its recent launch of OCar.

The launch of the e-hailing OCar into the Nigerian market is hinged on creating stiff competition for the American-owned Uber and Estonian’s Bolt (formally Taxify), as it’s dragging market base with the already established companies.

“These two key players in the ride-hailing business would face strong competition from OCar due to price-sensitivity of Nigerian consumers,” Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL, said.

OCar is taking the same trend as OPay’s ORide, the bike-hailing service, and the company hopes the car-hailing brand will be as popular as the bike subsidiary.

OCar is the latest in a string of verticals that already include offerings for food (OFood), classifieds (OList), three-wheelers (OTrike) and bus-hailing (OBus), Okash, and OWealth.

Before OCar, the taxi-hailing space in Nigeria was dominated by Uber and Bolt. Over the last five years, both companies have had the biggest market share with a combined presence in cities like Lagos, Abuja, Ibadan, and elsewhere.

But the coming of OCar is changing that narrative.

“OPay has successfully disrupted many spaces including the ride-hailing industry. Recall it still has its ORide business running which is significant competition for Uber and Bolt,” a driver who identified himself as Josh said.

Since the advent of the e-hailing industry in Nigeria in 2014 when Uber made its entry into the country, competition has swiftly followed, with apps like GidiCab, InDriver, Oga taxi, PamDrive, Easy Taxi, Rideshare, among others. But of all the newcomers, only Bolt has managed to grab considerable market share.

While both Uber and Bolt have competed based on pricing, their market strategies have mainly been around promos, infrequent discounts and availability of drivers. However, the real challenge of ride-hailing as explained by industry experts is the need to provide a demand-supply balance.

OCar started with a mouth-watering discount, charging N200 for trips within Lagos in its first week of operation and later increased to N250 charge.

The company currently offers its first-time users a 50 percent discount on their first three trips while 30 percent is offered to existing customers.

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While the hailing company has been incentivising customers through its discounted fares, OCar also pays the riders the full fare and rewards them with bonuses for trips.

“I was a former Uber and Bolt driver but now I have been with OCar for over a week. Hundreds of my colleagues have also moved as I did,” an OCar driver who identified himself simply as Chigozie told BusinessDay.

The driver said OCar is offering the drivers “more than what others have been offering and they even have good discounts for customers, which is one reason why there are always customers on the App”.

The Lagos-based OCar which launched in Africa’s most populous city less than a month ago also uses a 24-hour payment initiative to attract more riders to meet the demand of customers who come to the riding app for low fares.

While Uber and Bolt have a weekly remittance for their drivers, OCar pays drivers in 24 hours. According to a rider who spoke to BusinessDay on the condition of anonymity, the drivers would prefer the 24-hour cash payment because the business is cash-intensive and as such drivers need cash flow to fuel their cars and carry out maintenance.

“It is commonplace to hear cab drivers insist they only want cash trips,” Arua Nnamdi, a Lagos-based user of the riding platforms, said.

According to consumer goods analysts, the stiff competition from OCar can make the already established brands who wouldn’t want to lose both existing customers and drivers to offer lower fares and more attractive incentives for riders.

“We should see a reaction from them either with aggressive discounts or favourable terms for drivers,” Akinloye said.

Meanwhile, in its pursuit to become a super app, OPay, the mother company of ORide, recently announced a Series B raise of $120 million led by existing investors Meituan-Dianping, Source Code Capital, IDG Capital, Sequoia China and GSR Ventures who funded the company’s $50 million raise in July.