The South African e-hailing economy is growing rapidly with over 70 000 vehicles turning over more than R500 million per month. This e-hailing economy is perfect for a country that has none or very little public transport. Cape Town is the only province that has a working public train system located in the southern suburbs that everyone can use safely to get to and from work in the city.
The public transport for the masses has relied on the privately owned taxi services which is regulated by the Taxi Association which is more like a mafia. The vehicles used are mini vans and the condition of these vehicles are not necessarily road worthy. The e-hailing apps are used mainly for very short trips from home to the shops and back again as very few people own cars.
Our domestic worker travels by the taxi system each and every day with each taxi trip costing R15 whether it is 10km or 2km and she catches 2 of these each day so she spends R30 daily on transport which equates to R600 monthly. There is no other alternative and she cannot even joining a car pool club as these are targeted by the taxi associations by using intimidation and violence. Even school busses are subject to violence as they want the passengers to use their taxis. Police turn a blind eye to these actions which means they are on the payroll.
The e-hailing app In Drive is the third largest driving taxi app in South Africa and they have taken an aggressive marketing approach for the month of August offering a 1% service fee for all trips booked through their app. The drivers keep 99% of their earnings minus the vat. This is for all trips originating in Soweto and not ending in Soweto form somewhere else. Soweto for those that do not know is a township housing roughly 2 million people and covers an area of 200 square kilometers.
When you compare this to what the competition is offering this is actually quite a big deal as the likes of UBER and Bolt chare on average a 25% service fee ride on the total cost of the trip. This can vary between 9% and 49% so the drivers are being screwed over with their total earnings being heavily diluted by service costs.
This approach is being used to grow the number of drivers poaching those working for the market leaders being Uber and Bolt and it has not gone unnoticed. This promotion only runs for August, but directly attacks Uber and Bolt so I expect this to trigger some repercussions and a e-hailing war will kick off. If the e-hailing rides impact the regular taxis in and around Soweto then this will not be a battle they can win because that violence will be on another level.
Last year one e-hailing driver was shot and 3 e-hailing vehicles were torched being accused of stealing the customers from the taxis. The e-hailing drivers need to be careful and to make sure they do not grow and dominate the industry in this area.
No one will be using an e-hailing taxi from Soweto to Johannesburg as the fees are too costly. The normal taxi is R25-R30 whilst an Uber is R350-R370 so this is not the market they are attacking and is local rides in and around Soweto. Very few people have cars so they rely on the local taxis travelling to hospitals or the shopping center and this is what the e-hailing apps are hoping to change. All I can say is good luck on this venture and is not going to be easy.
