Driving Forward for Uber South Africa

Signal ConsultingKate Boland | Nick Lane | Greg Piercey | Stephanie Daley

Memorial University

Agenda

Main Challenge Kate Key IssuesObjectives Recommendation Analysis Nick Alternatives Greg Implementation Steph Risks and Mitigation KateQuestions

Main Challenge

What business strategy should Uber adopt to address the South African market place?

Key Issues

Passenger & Driver SafetyPayment

Perceptions affecting rider traffic SafetyUndercuttingNationalism

Aggressive Competition

Objectives

Improve passenger and driver safety

Improve local perception of Uber

Increase ridership and profitability

Recommendation

Adopt a tailor made strategy to address safety and local perception of Uber in South Africa

Analysis

South Africa

One of the most economically developed country in Africa

Economic conditions push people to public transitAlso provides entrepreneurial opportunities

High levels of crimeHigh levels of unemployment

Target customer

An alternative to:Owning-transportationPublic transportation

Main target market for Uber:

1 Taxi passengers

2 Bus riders

Uber market by income

Highest “taxi” and “bus” usage amongst lower income

However, 2/3 of “Quartile 4” are still in the target market

85.8% 83.5%77.3%

66.1%

34.1%

Quartile 1 Quartile 2 Quartile 3 Quartile 4 Quartile 5

Penetration of "taxi" and "bus" transit by income level

Size of the market

Mode of transportation Total market size

Taxi 7.1M customers

Bus 2.5M customers

2% share

5% share

10% share

192,000 users 480,000 users 960,000 users

What cold this be worth?

192,000 users 480,000 users 960,000 users

Revenue to Uber

Revenue to drivers

$1.1M $5.8M $11.5M

$20.7M $51.9M $103.7M

Low-end Moderate High-end

Alternatives

Alternative Strategies

Status Quo

Withdraw from South Africa

Modify strategy to address local challenges

Why is “Status Quo” not an option?

Media attention is causing a negative perception and will affect ridership

Competitors are capitalizing on Uber’s challengesMarket has high potential

Status quo will limit ridership and ultimately affect revenue potential

Why is “Withdrawing” not an option?

Large country populationHigh taxi usage in country (>50%)Johannesburg is first city in South Africa

The South African market is to big to ignore

Recommendation

Adopt a tailor made strategy to address safety and local perception of Uber in South Africa

Implementation

Uber JoziIntroduces Prepaid Cards Leeker for YouLeeker for Local

For Immediate Release: Uber to Eliminate Cash Payments

Uber is committed to providing South Africans with affordable and safe transportation, while providing new employment opportunities.

We consistently evaluate our business strategy and will no longer be accepting cash payment. We will however offer prepaid cards through corner stores to offer customers a convenient way to continue to Uber around Johannesburg.

Implementation

Short Term (1 Month)•Announce no cash & use of cards

Medium Term (6 Months)•Launch cards & free card promotion•Local messaging

Long Term (12 Months) •Additional card promotion if required•Evaluate Uber in Cape Town

Prepaid Cards

Similar to cards used for long distance calls $20 & $50 options Wide availability - Corner Stores Store receives 5%

Free Card Promotion

$100,000 investment 5,000 cards Drive awareness of cards Trial of Uber

Local Messaging

UBER JoziLeeker for You

Leeker for Local

$20

Your Driver:Trever Noah

Proudly From Cape Town

Budget

Assumptions:5,000 cardsTeam of 5 to distribute cards

Card Promotion $100,000Card Distrbution $100,000App Update 10,000

TOTAL $210,000

What does great look like?

Successfully launch pre-paid cards Eliminate cash handling without financial impact 80% of free cards utilized for trialRobbery attempts lowered

Improved local perceptionMarketing campaign successfully executedRidership increased to between 5% share of taxi and bus

marketRevenue to Uber of $5.8M

Risks and Mitigations

Risks and Mitigations

Risks

Regulation

Competition

Probability

Medium

Medium

Mitigation

Use Uber approach

Increase marketing

Conclusion

•Prepaid cards•Eliminate cash handling

Improve passenger and driver safety

•Local messagingImprove local perception of

Uber

•Marketing campaign•Expand operations

Increase ridership and profitability

Questions