The news of Gokada’s sudden (but not unforeseen) shutdown due to ‘Increased competition, regulatory hurdles, and operational issues’ is quite profound. It really got me thinking, who is Gokada’s competition? Almost everyone would say ORide and Max Okada but I beg to differ.
I believe the biggest challenge and competition to Gokada and indeed the bike hailing business is the traditional commercial motorcycle system that they are trying to disrupt. While these are still early days, it is important that the key players evaluate and re-evaluate their value proposition. Simply put, bike hailing is not yet a ‘must have’ but still ‘nice to have solution.’ While ORide is recording impressive numbers which are driven through its aggressive marketing campaigns, its sight seems a full logistics enabler with the launch of its Obus and OTrike business. But on its own, ORide and indeed the others might not be the next big thing a lot of people are making them out to be. My reasons are as follows:
- Size of The Commercial Motorcycle Market: Assuming Lagos has a total of 10,000 commercial motorcycles (which is a very conservative figure) and each makes say N3000 per day. That translates to N30million per day and over 10 billion naira a year commercial motorcycles make in Lagos. This dwarfs the revenue and funds the bike hailing companies currently have. When you also factor the low barrier to entry to get a commercial motorcycle, you realize that the number can only increase. Though the barrier to entry for becoming a driver for bike hailing is lower than getting a commercial motorcycle, it does not offer the same level of freedom and control the commercial drivers have.
- No Clear Advantage over Existing Model: Uber, Taxify and Kobo360 have very clear advantages over the existing systems they met. With Uber, you could finally get air conditioned high grade cars to ride at a price that was cheaper than the old rickety Kabu Kabu and Yellow Taxis.
It is a no-brainer; those who use the cab hailing services for the 1st time can see the clear advantages. The same cannot be said for bike hailing. What real advantages do they bring to the table? Affordability? Not so much without promos. Comfort? I would say no, most normal Okadas are actually more comfortable than the ones Gokada and co-provide. Access? Bike hailing companies are still mostly limited to the same routes regular Okadas ply. Speed of service? They are actually worse off than commercial motorcycles in this. Courtesy of drivers? Perhaps, but a lot of regular Okada riders are ok in courtesy. Safety? This is their biggest selling point, but do we have data to back their claims up? If the difference is not astronomical, it would not matter much to their market, the average working class Nigerian.
In summary, I do not think what the bike hailing companies are offering is really solving a hard problem for people. What I believe they have now is a novelty (with the 3 competing for the very small albeit growing market that buys into it) but it can evolve into something much more. For instance, there are 2 features I am craving for which would make bike hailing a must use for me.
The first is access to restricted areas. One of the ironies of Lagos state is that a lot of properties in high brow residential estates are being used for commercial purposes. From Dolphin estate, to Lekki phase 1, the number of offices and workers therein is remarkable. However, these estates do not allow traditional commercial motorcycles and buses. This presents a blue ocean market for the bike hailing business: serving the workers in such estates. If they can strike a deal with each estate (which should not be too difficult if they pay a sizable fee and have some guarantees on safety and security) they can run a service irresistible to those workers where they pick them up from their houses and drop them off in front of their offices inside the estate and vice versa thereby avoiding the early morning and evening traffic Lagos is notorious for. A person staying in Ketu could wake up at 6:30am and still make it to work before 8:00am in Lekki. There are thousands of workers in Lagos that want this!!!
The 2nd is a subscription based service model. Imagine a subscription service where users pay, let’s say, N3000 to enjoy benefits such as month long discounts, free rides, increased access to routes such as estates, Etc. This would be a viable path to sustained profitability as it ensures a steady source of income, helping segment the user base into regular and premium customers. The company can then focus on growing the customer base for each category of users.
A monthly subscription would be a great way to build brand loyalty by ensuring that bike hailing companies don’t need to resort to crazy timed promos to get people to use their app for a season. The users can be at ease knowing they would be paying, for example, N500 as against say N2000 from Ikeja to Victoria Island every day for the foreseeable future. This would in turn increased daily engagement for the app.
These are just some of the new features that would win me and a lot of people over because they address a pressing problem I cannot solve otherwise. That I think should be what Bike hailing should be all about.