His rationale was simple: he would make more money via the Uber booking.
Taxi app services have been expanding in Singapore, offering low fares to consumers and higher kickbacks to drivers as they seek to capture the wallets of wealthy Singaporeans and foreign visitors.
The launch of well-funded services like GrabTaxi, Easy Taxi, Uber and Hailo is timely. Singapore’s leading taxi company, ComfortDelgro, has about 22,000 taxis, but they are not easy to come by. The market for third-party apps is in an extremely nascent stage. They’re taking baby steps to push commuters to adopt their services and are making fast inroads into the market. But a dominant player has yet to emerge.
What the experts say
Shailesh Iyer, senior digital strategist at Leo Burnett Singapore, said that although no third-party app is making a profit yet, the belief is that the high-margin model is the future of the category. “This is what Uber, Easy Taxi and GrabTaxi are clearly aiming to do,” Iyer said.
Nick Pan regional planning director at VML Qais, believes Uber might have nailed it with its mobile payments. “By connecting usage to your credit card at the signup space, they have created an ecosystem where users can really go cashless,” Pan said.
While other players have also begun adding a mobile wallet payment option, usage hasn’t picked up. Where the other apps are winning out is in access to a much larger taxi fleet, trumping Uber’s limited supply and giving them a competitive edge.
Differentiation hasn’t been much of a priority for providers, who are focused mainly on giving cost benefits, ranging from Uber’s ‘Free Ride Day’, to Easy Taxi’s ‘no booking fees’ promo.
Here’s a sample of some of the more recent marketing initiatives:
Uber pays drivers S$5 for every trip they complete, and passengers get a 25 per cent discount off the metered fare. Uber also ran a no booking fees scheme from 24 November to 31 December. It’s other slightly more innovative marketing push has been around delivering on-demand ice cream to users in summer months. Boosting in-car personalisation, the San Francisco startup also lets riders play their music through the car's stereo system via their Spotify accounts.
GrabTaxi and Easy Taxi are trying to stand out with commuters through seasonal offers and promotions and also strengthening the fleet of drivers on board. Plus, commuters can use GrabTaxi and Easy Taxi in most cities in the region without having to download a local version of the app.
GrabTaxi offered drivers S$100 worth of cash, credits and giveaways. It also offers priority rates from time to time. Easy Taxi pays drivers S$50 for 25 trips, S$150 for 50 trips, and S$300 for 100 trips per week.
New kid on the block Hailo has embarked on an aggressive launch marketing spree, partnering with smaller taxi operators SMRT and Prime to tap into a market hitherto less explored. The UK-based company is believed to have given drivers S$10 per trip when it was testing its service before the official launch in November.
“Ultimately, it boils down to being the first app on the lock screen, and for each of the providers, the race is not based on marketing effectiveness, but who has deeper pockets and bigger backers,” Pan pointed out.
The Uber business model is admittedly clever but not revolutionary, said Landor’s Simon Bell. “Technology allows them to bring customer and car together and take a percentage without having to employ staff or buy a fleet of vehicles,” he observed. “But this business strength is also a brand weakness; the brand has little control over their product and overall brand experience, they are reliant on the driver and vehicle.”
According to Bell, the big opportunity for the brand is to transcend journeys and to become the ‘on demand’ brand. “Occupying this position is potentially very exciting if it can be applied to multiple new industries,” he noted, adding that for now there appears to be too much hysteria about the brand, both positive and negative.