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Why do Taxi Apps like Uber Fail?

Why do Taxi Apps like Uber Fail?

Taxi apps are practically ruling the market these days. No matter how many of them there are these days, you still want another one. Users want more options today. This is in a situation if they don’t like one they don’t waste time thinking what they do next. They can simply switch to a different app and hire a cab. However, even though it does seems a pretty foolproof plan to success, there are a few exceptions in every industry. There are few taxi apps like uber that failed miserably in this domain and we are trying to examine why.

taxi apps like uber

The best case study is that of an app called Hailo.

About Hailo

Hailo is a smart phone operable app that (as the name suggests) is used to HAIL cabs. Hailo has a very peculiar feature that it only hires yellow cars. It did enter the American transport space sometime back with an investment close to $100 million, however, it had to retrace its steps and curb operations almost entirely from the North American Continent (with the exception of Toronto).

So what was the problem? What went wrong with this app that it couldn’t sustain itself in a market that was clearly in need of more and more taxi apps like uber? Here’s what happened:

The Problem

The problem with this app isn’t a very black and white one. It is at multiple levels and is in multiple layers. This app is essentially a good one, but the biggest hurdle in its own path was itself. However, there are 2 major reasons:

The business model

It is not a surprise that the business model of any business is the deciding factor for the success and development of any organization. The app itself has to be well made but the generation of revenue will depend on how the layout of the plan is.

Basically, when you start any business, you make a plan of how you plan to get back the money you have put into it and then how are you further going to make a profit after breaking even.  Now, one has to understand that the way a business operates is much different in different parts of the world.

So, if a taxi business works in a particular way in one country it is not necessary that it will work out in the same way in another country. The whole premise of Hailo was to help CABBIES find bookings. See, London is a city with lots of small streets and alleys.

Reliable Source of Information for Hailos

Mostly cabbies become the reliable source of information to find out which the right corner is for what and how one can get to one place from another. Now, having said that, this is London.

The situation in the US is very different from this. Taxis have no problem finding riders. In fact, here the focus of the operation is to ensure that you can help the Riders to find taxis on time. Also, the lack of streets and always make it extremely simple for people to walk from one place to another, thereby completely omitting the requirement of hailing cabs for a short distance.

In order to capitalize on this market, the focus of the app should be more towards customers. So, the cabbies should have more incentive to take up the ride requests that come. Since Hailo failed to do that, it had to steer out of the place.

The scope of competition for Taxi apps like uber

There is no doubt about the fact that there is tremendous competition in the world of taxis. There are too many apps out there vying for attention. All of them trying to bring something different to the table to grab the attention of the people. So that they use their services instead of someone else’s.

So, now the market is customer-centric. Hailo missed a step in understanding that. While keeping its focus entirely on the taxi drivers instead of the Riders, Hailo missed out on ensuring that it could increase its popularity by giving offers and other benefits.

Solution to Handle Any Business

The best way to have handled this situation would have been to ideally go through the business models of the existing competition. Research is the best tool to handle any business. But research has to be methodical and meaningful.

Had they spent a little time and money in trying to understand what the business model of this location truly is, what are the challenges and the advantages of being in this market and other such features then the app could have been quite successful?

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