Bocconi-Ke Ya Rona-New City Growth
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Transcript of Bocconi-Ke Ya Rona-New City Growth
May 21st 2015
Ke Ya Rona meets the world - - - Ke Ya Rona‘s International Expansion PlanKe Ya Rona
Dario Trindler – Minh Huynh– Dorian Meyer – Germana Romano– Sidhanth Madan
In the prior months we have done a through and very practical analysis on what countries and more particularly cities Ke Ya Rona should conquer next regarding its international expansion plans.
The basis of the analysis was a three-step funnel approach that was based on certain quantitative criteria (such as GDP per capita) as well as on subjective judgement. The result of the analysis based on the funnel approach was to build up Ke Ya Rona‘s business in the following four cities:
- New Delhi- Bangalore- Nairobi- Lagos
New Delhi is part of the Indian market which is considered as Uber‘s second biggest market in terms of geographic presence and growth. The chosen cars for New Delhi are Toyota Etios and Toyota Innova mainly due to its higher fuel efficiency.
Bangalore on the other hand shows a very good case for especially Uber Black with Nissan Sunny as main vehicle. The latter is cheaper than other Uber Black car options and therefore easier to finance.
The main reasons for Nairobi were its status as central hub regarding major businesses in East and Central Africa and the continuously increasing smartphone penetration. The target customers are business customers and corporate account sin general who will be served by a Toyota Fielder 2008 as main car of service.
Lagos is particularly interesting due to .its high digital literacy. The target group covers both expats as well as middle-class Nigerians. The car fleet to use will be Toyota Amry and Toyota Avensis.
Future OutlookBangaloreNew DelhiLagosNairobi Funnel
Explanation
Outline of the Presentation
Personal Learning
Executive Summary
Personal Learning
Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
ion
Personal Learning
Dario
Personal Learning
Minh Dorian Germana Sidhanth
To work for Ke Ya Rona in the context of the CEMS Business Project was a very interesting experience. On the positive side it has been a challenging and very interesting project based on a truly innovative business model and unknown environment. An interesting insight was also that it made me realize that despite of all the new technologies we can use it is not completely easy to organize the work within a team that is spread over different continents
This project was my first choice because I wanted to get insights into the thinking-process of a social start-up company. Soon after the project ignited, I realized that we were given a lot of freedom to decide on how to reach the expected result. This entrepreneurial freedom was quite new to me. I have never worked on a project without guidance. In the end however, I felt that I have learnt a lot about teamwork, risk analysis and especially lean management.
The Ke Ya Rona project was my first choice among all the suggested CEMS Business Projects. Since the beginning I was really exited about working with Ke Ya Rona. This was my first project related to the social business and also the first time within a start-up. My experience within the team has been extremely positive, we were able to create a good work environment, constructive communication and proactive approach.
My intrinsic motivation for this project is to gain further insight into the for-profitable aspect of a social enterprise like Ke Ya Rona. Not only was I empowered by my amazing team during challenging times, I was very happy to receive tremendous support from local experts who believe in the good purpose of Ke Ya Rona, whom I’ve never met in person before. A personal insight: It is extremely important for me that my works have a good purpose.
Entrepreneurship and social enterprises have attracted me throughout my masters and having had the opportunity to work with a project like Ke Ya Rona has been amazing. The one major learning apart from the lean start-up is the importance of my network and how it can be leveraged in the work environment. Secondly, I now truly understand the potential my country holds and this BP has challenged me to create something of my own in the near future.
Team CEMS Ke Ya Rona
Every team member profited in a different way from this project
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Personal Learning
Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
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Funnel Model OverviewIn order to expand Ke Ya Rona’s business internationally a three-step approach was used to identify and select the most attractive cities
Determination of several regions & listing of all Uber
cities
Analysis of all cities based on given criteria and
determination of 3 best cities per region
Comparison of the best cities per region and selection of the
3-5 most promising cities
Selection of finally 3-5 target cities using a 3-step approach
I. Region Clustering II. Selection of best cities per region
III. Final City Selection
Funnel Approach
Selection of major regions of interest: Africa South-East Asia India Eastern Europe & Middle East South America
Listings of all Uber cities, sorting out those in uninteresting regions (e.g. North America) and allocate the remainder to the regions of interest
Criteria used to investigate all the Uber cities: GDP per capita Unemployment rate Political stability # competitors Smartphone penetration Population
We aimed to find cities that seem attractive for Ke Ya Rona based on the criteria listed above and which therefore resemble Johannesburg
Best cities per region were all listed together and compared
Based on the criteria already used in step 2 Legal issues in the country Uber competitor analysis Quality and quantity of the contact persons’
information
Based on the four different aspects listed above and our own critical and subjective judgement we chose the cities we would recommend Ke Ya Rona to conquer
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2
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New DelhiLagosNairobi Bangalore Recommendat
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Funnel: Step 1In order to start the selection process all Uber cities worldwide were grouped in different geographical regions and only those with similar characteristics as South Africa were considered
I. Region Clustering
Funnel Approach
DIVI
SION
OF
REGI
ONS
Africa Dario
South-East Asia Dorian
India Sid
E. Europe + M. East Minh
South America Germana
AFRICA
NairobiCape TownLagos
Cairo
SOUTH-EAST ASIA
Bali
Bangkok
Hanoi
Ho Chi Minh
Jakarta
Kuala Lumpur
Manila
Phuket
INDIA
BangaloreNew Delhi
Mumbai
ChennaiPune
Hyderabad
EASTERN EUROPE + MIDDLE EAST
Prague
Bucharest
Sofia
Budapest
Tel Aviv
Dammam
BeirutAbu DhabiDoha
SOUTH AMERICA
Rio de Janeiro
Belo HorizonteMedellin
Cali
Sao Paulo
Santiago
Lima
Bogotá
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New DelhiLagosNairobi Bangalore Recommendat
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Funnel: Step IIIn order to find the best cities per region we analysed the situation in all the Uber cities in the respective regions based on six core criteria
II. Selection of best cities per region
Crite
ria GDP per
capitaUnemploymen
t ratePolitical Stability # CompetitorsSmartphone
Penetration Population
Example: Assessment of cities in South-East Asia
Resu
lts p
er
regi
on
Afric
a
Nairobi
Lagos Sout
h-Ea
st
Asia
Johor Bahru
Kuala Lumpur
Sout
h Am
erica
Santiago
Indi
a
New Delhi
Bangalore EE
+ M
iddl
e Ea
st
Dubai
DohaLima
Bogotà
Funnel Approach
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Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
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Funnel: Step IIIIn order to find the best cities out of the final 10 cities a mix of a quantitative and qualitative assessment was used which led to New Delhi, Bangalore, Lagos and Nairobi as final cities to target
III. Final City Selection
Matrix of Final Cities to consider
Final result: 4 cities chosen
Six Core CriteriaGDP per capita, Politiical Stability, Smart phone penetration, Population, Competitors, Unemployment rate used to evaluate the cities on a quantitative basis
Legal Issues & ContactsIn addition to the quantitative data, legal issues are seen as crucial for a market entry. Contacts gave us fruitful insights into the markets
LowLow
High
High
LagosLegal issues & contacts
Six
Core
Crit
eria
Nairobi
Determining the Choice IAttractiveness Analysis
I. Six Core criteria: New Delhi is politically stable and it demonstrates a rather higher smartphone penetration. Also, the GDP per capita is increasing. II. Legal issues & contacts:Due to Sidhanth’s multiple contacts we managed to get detailed insights in the whole Indian market including New Delhi. Legal issues are low compared to other Uber cities. Determining the
Choice IIAttractiveness Analysis• I. Six core criteria: Nairobi is a key
business hub in the 4th largest sub-saharian region. Also, smartphone penetration is one of the highest in Africa which makes it to a highly interesting market
II. Legal issues & contatcs:With Marius, Isaac and Ato we had 3 contacts that provided us with very rich insights.
Final Cities to considerNairobi
Bangalore
New Delhi
LagosJohor Bahru
Kuala LumpurSantiago
LimaBogotà
New DelhiBangalore
DubaiDoha
Kuala LumpurNew DelhiBangaloreLagos
Nairobi
SantiagoLima
BogotàJohor Bahru
DubaiDoha
Funnel Approach
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Nairobi
Personal Learning
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New DelhiLagosNairobi Bangalore Recommendat
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Mobile payment preferred
over credit card
Higher revenue potential per capita
Financial inclusion only for
middle and upper class
Entrepreneurial mind-set of taxi-
drivers
Key Take-Away
Driver: Starting with 1 Driver Driver Profile: Experienced from taxi companies, who
have a stable customer base, entrepreneurial mindset Customer Target: Business customers, corporate
accounts in general customers with access to credit card, i.e., middle-class -> Aim for Uber for Business
Preferred car: Toyota Fielder 2008
Ke Ya Rona Market Entry Strategy
Uber Update• UberX, Uber for Business•~30 registered members in Nairobi• Rumors: $20mn budget• Restriction: Card Payment• Consider Mpesa intergration, cash• Allowed cars: from 2008
Country Overview• 4th largest Sub-Saharian economy• Nairobi as key business hub in East and Central Africa Corporate business travel retail • High increase in mobile phone penetration (est. >80% of the population) - one of the highest in Africa• Kenya leads the world in mobile payment • Relatively low card penetration: 0.22/capita (38.2 in SA;12.0 in Nigeria)
Competitors
Taxi
Nairobi: Country OverviewBusiness Customer Segment offers the highest potential for UBER
Nairobi
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Main Insight Main Insight Main Insight
Marius Declerck
CEMS NetworksContact: Marius.Declerck
Isaac HunjaUBER Marketing Manager Kenya
Ato Quansah(Former) EasyTaxi Marketing Director Ghana
• Former driver for taxi companies
• Now independent drivers with own fleet (3-5 cars)
• „M-Pesa is the most important payment system in Nairobi“
• „Uber‘s demands are mainly from business customers and upper-middle and middle class“
• „UBER has strong intentions to penetrate the Kenyan taxi-hailing market“
• “Weekend days are no peak-times for taxi drivers, but week days”
• Sparring partner for P&L calculation
• “Uber is definitely aiming at upper-class people as Easy taxi owns the middle-class market”
Main Insight
General Insights Uber Expert Taxi Entrepreneur
Easy Taxi Expert
David & Sam
Nairobi: Expert ContactExperts confirmed local demand for Ke Ya Rona‘s business model, especially in Nairobi
Nairobi
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Local Incorporation Procedure Bank financing for used cars
• Reserve a unique company name • Stamp the memorandum and articles of association, and a statement of the nominal capital• Pay stamp duty at a designated bank• Sign the Declaration of Compliance before a commissioner of oaths• Register with the Registrar of Companies at the Attorney General Chambers• Register for taxes at the Kenya Revenue Authority • Apply for a business permit • Register with the National Social Security Fund• Register with the National Hospital Insurance Fund • Make a company seal Minimum duration: 30 days, cost: 30,000 KSHhttp://www.doingbusiness.org/data/exploreeconomies/kenya/starting-a-business/
• High loan amount of KSH 5M for used cars.• Required minimum downpayment: 20%• Max. Repayment period: 5 years• Financing Package: Vehicle value, cost of
insurance and car tracking device
Tedious application procedures; Financial options from commercial banks are only offered to individuals who can already with higher social status
Nairobi: Legal Affairs
Vehicle Registration
• Documents required by the Kenya Revenue Authority/ Road Transport Department [16]
http://www.kra.go.ke/roadtransport/roadsvehicleregistration.html
• Salaried with a minimum gross salary of KES 75,000 per month
• Salary account with Standard Chartered Bank before the loan is disbursed.
https://www.sc.com/ke/borrow/loans-auto.html
• Introduction letter from employer on company letterhead
• Proof of income (certified copy of pay slip) and last 6 months bank statement (for new accounts)
• Copy of ID / passport• 1 x passport sized photograph for new
customers• PIN certificate• Proforma Invoice
Additional requirements for used vehicles:• Log book• Valuation report• Sale agreement
Feat
ures
Elig
ibilit
yDo
cum
ent r
equi
red
Nairobi
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New DelhiLagosNairobi Bangalore Recommendat
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Car Categories for UberX Recommendation
Revenue of DriverIdentical revenue scheme applied for UberX
Usage in the marketTaxi business requires a strong, durable and stable car
Nairobi: Car models suggestionToyota FIELDER is the best choice within UberX category to target Business Customers
Toyota BELTA Year: 2008Market Popularity √Market price:• 900,000KSh
Attractiveness AnalysisSelf-imported from Japan
Pricing Scheme:- CIF ∑(Cost, Marine Insurance, Freight)- Import Duty: 25% CIF- Excise Duty: 20% ∑(CIF, Import Duty)- VAT: 16% ∑(CIF, Import & Excise Duty)- IDF: 2,25% CIF or 5000KSH, whichever
higher
Purchase from local market
Toyota BELTA
Toyota FIELDER
Toyota ALLION Toyota FIELDER
Year: 2008Market Popularity √Market price:• 1,150,000KSh
Toyota ALLIONYear: 2008Market price:• 1,250,000KSh
970,000 KSH(Calculation based on avg. market price)Duration: 6-12 weeks from Purchase Day1,150,000 KSH(Avg. Market price)Custom paid
Why ToyotaMany taxi operators prefer TOYOTA Models NZE, Corolla, Succeed, Allion and FIELDER as the most popular model.Advantage:• Not expensive• Durable & stable• Easy to maintain & sold• Spare parts readily availbeT oyot a Nissa n Suba ru
85.9
12.5
1.6
Why Toyotay FIELDERToyota FIELDER perceived as higher class than COROLLA with higher market popularity than ALLION More eligible for Uber for Business
Nairobi
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New DelhiLagosNairobi Bangalore Recommendat
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Nairobi: FinancialsEven under the very conservative assumptions of the Base Case, Ke Ya Rona driver’s profit is slightly above local upper salary of taxi drivers
Driver’s Profit per Month (KSH)NormalBase Case
RevenueBooking FeeKe Ya Rona
FuelMaintenance
Driver
150,900 225,00030,180 45,00045,270 67,50030,180 45,00015,000 15,000
30,270 52,500
Assumptions25 work days per month
Per day: 2 airport trip + 3 inner-city trips
Fuel: 20% of revenue
Monthly Revenue Simulation
Revenue Simulation Base (UBER Rate) min
KSH/min (UBER
Rate) kmKSH/km
(UBER) Price/RideRide/Day Monthly
Airport UBER Flat Price 3000 1 75000
Business center: Expathub 100 33 4 13 60 1012 3 75900
Revenue 150900
Feasibility CheckNormal taxi driver monthly income is btw.30,000-40000
KSH
Currency: KSH
Currency: ZAR 3,723 6,458
Base Case
Avg. Price Ride/Day
RevenueMonthly
1500 6 225,000
Normal Case
Insurance: 10% Car Value p.a.
Normal Case6 Avg Rides/Day for 1500KSH/Rides
Base Case
Nairobi
11
Exchange rate KSH/ZAR
0.123
Personal Learning
Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
ion
Normal CaseBase Scenario (Conservative)
Nairobi: Ke Ya Rona expected profitProfitability among all case, higher profit potential for normal case, in particular with a self-imported vehicle from Japan (Common in the market)
Ke Ya Rona Monthly Profit Calculation (KSH)
Principal per VehicleTerm
Monthly Repayment +
Interest
Ke Ya Rona min. income
Repayment * Interest
Min Operating Profit
970,000 1,150,0004 4
22,633 23,958
InsuranceTracker
45,27022,6335,658
45,27026,8336,708
2,460 2,460
14,518 9,268
970,0004
20,208
67,50022,633
5,6582,460
36,748
1,150,0004
23,958
67,50026,8336,7082,460
31,498
Uber Type 2Uber Type 1Uber Type 2Uber Type 1Toyota Fielder Self-
ImportedToyota Fielder from
KenyaToyota Fielder from
KenyaToyota Fielder Self-
Imported
Income Statement per vehicle
Currency: ZAR 1,786 1,140 4,520 3,874
Nairobi
12
Lagos
Personal Learning
Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
ion
Government plan: issuing
15m Credit Cards until
2018
The competitor “Easy Taxi” is seen as
local company
20% drop in UBER prices = increase of revenue & demand
Credit-Card penetration in Lagos:
high
Key Take-Away
• We advise Ke Ya Rona to use the existing model to enter the car-financing market in Lagos
• Start with 1-2 Uber X cars to get a feeling for the market
Ke Ya Rona Market Entry Strategy
Competitors• Services: UBER X / UBER Black• UBER X is cheaper than regular taxi services• Rich Nigerian‘s usually have their own chauffeurs• Target group for UBER are expats & as middle-class Nigerians• Expected implementation of “Uberpool” a car-pooling service which aims at reducing traffic jams•Most UBER drivers are employed
Uber Lagos Update
Easy taxi is perceived as local company.
Tranzit charge the driver a flat fee where as Easy Taxi / UBER charges 10-20% of the revenueAccept both, credit-card and cash payments
Lagos: OverviewAfrica’s power house offers Ke Ya Rona growth opportunities, especially in the middle-class market
Lagos
Result: 30% increase in earnings, 23% in demand, more trips, more car utilization
Pricing
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Personal Learning
Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
ion
• “Private people have a really hard time to find financing, especially for cars. We are very happy to work with Ke Ya Rona. Currently, most drivers are employed by partners (car hiring companies). It would be great to see more private drivers on the street”
Sola LawalJoseph Fakayode
Insight• “Try to get as less
attention from CAC as possible when entering the market: Hire a professional to handle the bureaucratic stuff”
• “Taxi is this is the main transportation method in Lagos. Public Transport is very weak”
• “Traffic jams are unpredictable and will become worse in future”
• “Every taxi driver wants to become an entrepreneur”
Insight
CEMS Networks UBER Operations Manager
Insight
Entrepreneur UBER Expert Legal AdvisorAdawale Fajana
International Lawyer
Lagos: Expert ContactsAll experts are eager to help Ke Ya Rona to prosper in Nigeria as the business model is perceived as highly fitting for Lagos
Lagos
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New DelhiLagosNairobi Bangalore Recommendat
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Local Incorporation Procedure Car Ownership & Registration
Market entry as “For-Profit-Organization”1. Reserve a unique company name at CAC2. Prepare the requisite incorporation documents / pay
stamp duty 3. Sign declaration of compliance (Form CAC 4) before a
Commissioner for Oaths or notary public 4. Register at the Corporate Affairs Commission / Pay the
fees at the bank desk of CAC 5. Make a company seal 6. Register for income tax and VAT at Federal Inland
Revenue Service 7. Register for personal income tax PAYE at the State Tax
Office 8. Register business premises with the Lagos State
Government and Pay the business premises levy at a designated bank
The CAMA (The Companies and Allied Matters Act 1990) CAMA requires a minimum of two directors and two shareholders to form a company. The directors and shareholders can be of any nationality, and need not be resident of Nigeria.
• Ordinary people cannot register a company by themselves, only lawyers and chartered secretaries are allowed to do this at the CAC in Lagos
• CAC is giving foreign “for-profit” organizations a hard time in terms of staying in line with regulations, bribing (which is a common part of business in Nigeria)
• The incorporation fees cover application forms, stamp duties, incorporation documents and filing
• The owner of the Vehicle has to change ownership of registration with the inspector of Vehicle Offices in Nigeria by law.
• A Compulsory Third-Party Liability (CTPL) insurance is required before the Government agency will approve of the change of ownership.
• This insurance is supposed to compensate the family of any person who will become a casualty of a vehicle accident.
• An inspection report which details the specifics of the vehicle and the corresponding emission test done to check the vehicle is in a good condition before it is permitted to be transferred into the names of the new owner
• Visit federal website at www.nvisng.org and completes online registration (MVA01 form)
• Print the completed form and attach all relevant vehicle documentsProceeds to SBIR/MLA (State Board of Internal Revenue/Motor Licensing Authority) office and collect the allocation of plate number form, Plate number Tag, CMR and information required issued by the police
• Pay for vehicle number plate at SBIR/MLA and collect your vehicle number plate.
• Take your vehicle to Vehicle inspection Office (VIO) for physical inspection and collect a Road worthiness certificate, if VIO is satisfied
• Now go back to Road safety for the verification of documents provided.
• Here, the verified documents are Driver’s License: Insurance Policy Number, Means of Identification, and Proof of Address (e.g. Utility Bill)go back to SBIR/MLA, where you will be given the following registered vehicle documents: Proof of Ownership Certificate (POC) numberProof of Ownership Certificate,Vehicle Number Plate, Vehicle Identification Tag (VIT)
Proc
edur
e
Proc
edur
e/St
ate
of b
eing
Risk
Car
Hire
Tran
sfer
of
owne
rshi
p
Incorporating a company and registering a car is tedious and a bureaucratic challenge
Lagos: Legal Affairs
• A company, which has registered cars in its name and which have the main purpose of transporting people, must obtain a “Car Hiring License”. This license can be obtained at the “Enterprise Development Centre” in Lagos Co
s t Depends on the vehicle. A saloon car is usually between N35k – N45k
Lagos
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New DelhiLagosNairobi Bangalore Recommendat
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Product Attractiveness Matrix
Deeper Offering Analysis
Revenue of DriverInformation taken from interview with Sola – UBER Operations Manager Lagos
Models in the marketUber X: Toyota Camry, Honda Accord, Hyundai ElantraUber black: Toyota Prado, Toyota Avensis,, Ford Escape, Mercedes ML class
Lagos: Car models suggestionToyota are by far the most used cars in the transportation business due to their fuel economy, ruggedness and very low maintenance costs
LowLow
High
High
Uber Rikscha• XXXXXXXXXXXXXX
Uber Black• Toyota Prado
Uber X• Toyota Camry
Usage in market
Reve
nue
for d
river
Uber SUV• XXXXXXXXXXX
Uber Lux• XXXXXXXXX
Determining the Choice IUber X Attractiveness
AnalysisI. Revenue for driver: • Uber assures partners a minimum income of
1250₦ / hr when driving• In the market entry phase, UBER assures
partners to make a minimum of 300’000₦ / month
II. Usage in the market: Fuel economy and ruggednessare the most important features of a taxi car. Honda civic and city are the compact cars with good fuel economy but they are way too fragile. Accords are stronger, but fuel economy and maintenance is higher than Toyota. The Toyota Camry is very rugged, has good ground clearance for bad roads, has a very spacious interior. Parts availability high, a considerate fuel economy. Maintenance is cheap, but a good mechanic must be found. Overall, the Camry is the most efficient car to use in Lagos
Uber Black Attractiveness AnalysisI. Revenue for driver:
• Uber assures Uber Black partners a minimum income of 1750₦/hr
• In the market entry phase, UBER assures partners to make a minimum of 350’000₦ / month
II. Usage in the market: Also here, fuel economy and ruggedness are the most important features of a Uber Black car. Furthermore, the 2008-2014 Toyota Prado models is widly perceived as very safe car. Even tough a Ford Escape or Mercedes ML models seem more luxurious, the maintenance costs are about 10% higher than for Toyota models.Therefore we strongly advise Ke Ya Rona to go for Toyota Prado’ model.
Lagos
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Driver’s Profit per month (in ₦ ) NormalBase Case
RevenueBooking FeeKe Ya Rona
FuelMaintenance
Other
Driver(in ZAR)
350,438 450,00070,088 90,000105,131 135,000 70,088 90’00029’203 37’500
75’9284’480
97’5005’753
0 0
Assumptions (price per ride)25 work days per month
Per day trips:2 Airport – Island I 4000₦ / ride3 Airport – Jakanda I 4000₦ /ride1.5 Short city trip I 8km/ 20min I 1345₦ ride
Yearly maintenance cost: 1 driver’s monthly revenueFuel: 20% of Revenue
Revenue Simulation (Conservative)
Base (UBER X) min
NGN/min(UBER Rate) km
NGN/km(UBER Rate) Price/Ride Ride/Day Monthly
AIRPORT--> Islands UBER Flat Rate 4000 2 200000Airport --> Jakande VGC AJAH
UBER Flat Rate4000 1 100000
Short City trips 400 25 9 8 90 1345 1.5 50437.5Monthly Revenue 350’437.5
According to expert: 450’000₦
Normal Case Monthly Revenue
Lagos: Uber X drivers performanceUber X is the most profitable option for Ke Ya Rona to enter Lagos
Lagos
18
Revenue Simulation
NGN/ZAR: 0.059
Exchange Rate
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New DelhiLagosNairobi Bangalore Recommendat
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Lagos: Uber Black drivers performanceUber Black cars are less profitable than Uber X – mainly due to higher demand for UBER X cars
Driver’s Profit per month (in ₦ ) UsualBase Case
RevenueBooking FeeKe Ya Rona
FuelMaintenance
Other
425,000 500,000 85,000 100,000
127,500 150,000 106,250 125,000 35’417 41’667
70’8334’179
83’3334’917
Assumptions (price per ride)
25 work days per month
Revenue Simulation
0 0
Per day trips:2.5 Airport – Islands I 4000₦ ride0.5 Vic. Garden – IKOY City I 6000₦ ride
Yearly maintenance cost: 1 driver’s monthly revenueFuel: 25% of Revenue
Revenue Simulation (Conservative)
Base (UBER Black) min
NGN/min(UBER Rate) km
NGN/km(UBER Rate) Price/Ride Ride/Day Monthly
AIRPORT-> Island UBER Flat Rate 6000 2.5 375000
Vic Garden - IKOY Area UBER Flat Rate 4000 0.5 50000Monthly Revenue
425000
Driver(in ZAR)
Lagos
19
According to expert: 500’000₦
Normal Case Monthly Revenue
NGN/ZAR: 0.059
Exchange Rate
Personal Learning
Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
ion
Normal CaseBase Scenario (Conservative)
Lagos: Ke Ya Rona expected profitThe conservative Uber Black case shows a loss, whereas the normal cases are both profitable – also here Uber X is the most profitable option
Ke Ya Rona Monthly Profit Calculation (₦)
Principal per VehicleTerm
Monthly Repayment
Ke Ya Rona min. income
Repayment * Interest @ 15%
Min Operating Profit
2,500,000 3,500,000 3 3
69,444 97,222
InsuranceTracker
105,131 79,861 14,583
127,500 106,944 20,417
5,366 5,366
5,321 -10,088
2,500,000 3
69,444
135,000 79,861
14,583 5,366
35,190
3,500,000 3
97,222
150,000 111,806 20,417 5,366
12,412
Uber BlackUber XUber BlackUber XToyota Camry Toyota Prado Toyota PradoToyota Camry
Income Statement per vehicle
Currency: ZAR 314 -595 2’076 732
Nairobi
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New DelhiLagosNairobi Bangalore Recommendat
ion
Just 2 % of the whole population has access to credit card payment. Cash plays a relevant role in this market
Users can only pay through Google wallet, PayPal or a credit card added to their Uber account. Cash payment has been introduced for UberAuto
Main Players in the market: Ola, Uber, Meru, TaxiForSure
India is the second-biggest market in terms of geographical presence and growth. Uber estimate the market to be worth $40 billion
Car ownership: low rate of car ownership (24 cars per 1.000 people). The Indian market represent a huge opportunity for the taxy industry
Uber is carrying out pilot project to test the cash payment in India. Cash payment could open its service up to potentially millions of customers who wouldn’t be able to use it
Pune, Bangalore, New Delhi, Kolkata, Mumbai, Hyderabad, Chennai
Future Trends
Uber Payment System
Uber presence
Uber growth
Uber in India
Car ownership
Credit Card penetration
Taxi Industry
Despite the low level of credit card penetration, India represent the second biggest market for Uber
India: Country Overview
India
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Service: economic options and luxury service Reservation: website, mobile app call center. Payment: The cab service supports both cash
and cashless payment options with Ola money.
Average Bookings: 150,000 bookings per day Cities: 67 cities in India with more than
100.000 vehicles Ola has recently acquired TaxiForSure. The
two companies will continue to operate as separate entities
Service: premium service (BMW, Mercedes..) and low cost alternatives
Reservation: Website page, Mobile App and Callcenter
Payment: Cash payment and Credit Card Avarege trip: 60.000 rides per day Cities: 46 cities in India with around 20.000
cabs
Service: Meru Genie (low-cost taxi) and Meru Plus as a premium brand
Reservation: Mery mobile App, Website and CallCenter
Payment: Cash, Debit card and Credit Card Average Bookings: 20.000 trips per day. Cities:more than 15 cities and 1.000 cans per
city Service: UberX (low-cost), UberBlack
(Premium), UberAuto and UberGo Reservation: Uber App Payment: Credit Card and Online payment
. Cash accepted just for Uber Auto Cities: 7 cities in India served by a total of
15’000 cars Uber is evaluating the alternative of
acquiring a majority stake in Meru CabsOla Cabs
Meru Cabs
Uber
TaxiForSure
Market Share
The market potential is high considering the number of cab booking services offered, consolidation of the market has already begun
India: Competitive Environment
India
22
Personal Learning
Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
ion
• UberBLACK• UberX (low cost)
Uber takes 20 % commissions
Car Models
Revenue
Pricing Uber X:• Base tariff: 40INR• Per min Tariff: 1 INR• Per Km Tariff: 8 INRUber Black:• Base Tariff: 60INR• Per min Tariff: 2 INR• Per Km Tariff: 13 INR
• UberBLACK• UberX (low cost)• Uber Go (auto
prices)• Uber auto (cash
only)
No profit, zero percent commissionCar Models
Revenue
Pricing Uber X:• Base tariff: 55 INR• Per min Tariff: 1 INR• Per Km Tariff: 9 INRUber Black:• Base Tariff: 85 INR• Per min Tariff: 1.50 INR• Per Km Tariff: 12 INR
• 2/3 days training for each driver.
• Coaching: how to behave and talk to customers in order for the him not to feel insecure in
using Uber.
Driver training process
• Background check: the screening process includes address verification, national criminal database search
• Partners with registered for-hire drivers who have undergone the commercial licensing process
• Hold government issued IDs
• State-issued permits• Carry full commercial
insurance
Uber drivers requirements
New Delhi Bangalore Additional Information
Although requirements and training for Uber drivers are similar in the two cities, most elements of the Business Model are different
India: Target Cities - New Delhi and Bangalore
India
23
Personal Learning
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New DelhiLagosNairobi Bangalore Recommendat
ion
Pranav BhaskarApaar JulkaSaad Ahmed
Insight InsightInsight
-UBER Head for Marketing & Partnerships
-Apace cabs, operating in New Delhi, Bombay & Bangalore for the last 3 decades
- Practicing law for 10 years
- Validation of ke ya rona business- Financial exclusion and market gap- Uber training 50,000 women to be drivers, who have no access to capital
- Cost and revenue of taxis in India and Bangalore.
- Taxi companies sub-let some of their cars to UBER/OLA
- How much money drivers make.- Entrepreneurship tendencies/ risk taking abilities of drivers
- Legal issues and complexities that might arise- Incorporating a company in India
Insight
India UBER Expert
Industry Expert Taxi Drivers Legal Advisor
Param Gupta
Vicky
Our contacts validated our findings about Uber’s potential and market attractiveness for Ke Ya Rona Business Model
India: Expert Contacts
India
24
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Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
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Local Incorporation Procedure Car Ownership & Registration
• Register as private company with two directors as it is the easiest and fastest.Registeration is easy and can be done online at http://mca.gov.in/
• Get Director identification number (DIN cost – INR 100)
• Form 1A – to block the name of the company.
• Fill the following forms – 1,18 & 32 (cost INR 2500)
• Forms - http://mca.gov.in/MinistryWebsite/dca/downloadeforms/Download_eForm_choose.html• Can be time consuming, multiple steps and travelling to various offices.
• Bribing at different stages
To simplify use external consultant – http://www.indiafilings.com/partnership.php, cost INR 6000
• Vehicle Registration is mandatory under the law and essential to prove vehicle ownership.
• It is also required during the sale of a vehicle and transfer of its ownership.
• Form 20, duly filled.• Form 21 (sale certificate) issued by
manufacturer.• Attested copy of valid vehicle insurance
policy.• Attested copy of address proof.• Form 34, duly signed by owner and the
attested copy of pan no. of financier.One time road tax + registration fee.
vehi
cle
regi
stra
tion
• Registration certificate in original.• Form no.29 duly filled in duplicate (attested
one copy).• Form no.30 duly filled in duplicate.• Attested copy of valid insurance, in favour of
buyer.• Attested copy of address proof of buyer.• Attested copy of valid pollution-under-control
certificate.• Prescribed fee.• For commercial vehicles in addition to above• Permit surrender slip for S.T.A.• Challan clearance from Traffic Police &.• Tax clearance report from Accounts.
Proc
edur
e
Proc
edur
e/St
ate
of
bein
gRi
skM
itiga
tion
Tran
sfer
of o
wner
ship
Incorporating a company can be tedious but procedures are becoming more streamlined
India: Legal Affairs
India
25
Personal Learning
Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
ion
Partnership with State Bank of India Eligible drivers who are willing to be
part of the program, will be connected to SBI by Ola
Down payment is around 10% of the car value
Interest rate on the loan: 13% (3% more than the average)
The loan repayment is structured in a way that the driver can pay it back on a daily basis (no EMIs since the drivers in India are more comfortable in disposing their loans bit-by-bit).
India is the only country in Asia where Uber has introduced this program.
Already 100 drivers in India are part of this program.
Financial scheme: - The driver register trough the Uber
platform- Low down payment - INR 60.000- Superior finance rates - Exclusive discount on vehicles for Uber
partner drivers (thanks to Uber partnership with auto making companies)
- Access to capital through Uber’s financial partners.
- Uber ensures enough business to drivers so that the vehicle is fully utilized thus assuring the EMI payment (monthly payment)
Issue: a big proportion of the Indian population do not own fixed assets or cash for the required down-payment and as a consequence can not access to vehicle financing. Ke Ya Rona
could capture this opportunity to fulfil the market gap.
Vehicle Financing program Vehicle Financing program Ola CabsUber
Both Uber and Ola already provide financing program to drivers but a gap in the market does exists
India: Vehicle Financing Alternatives
India
26
New Delhi
Financial Analysis and Choice of Cars
Personal Learning
Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
ion
Driver’s ProfitNormal CaseBase Case
RevenueBooking FeeKe Ya Rona
FuelMaintenance
Other (Parking)
DriverIn ZAR
83,125
1,00,0000
24,938
30,00024,938
30,000333 333
31,4175,969
38,1677,251
Assumptions25 work days per month
7 trips/day, from business center – central Delhi
Revenue SimulationRevenue Simulation
(Conservative)Base (UBER Rate) km Rs/km
(UBER Rate) minutes Rs/min Price/Ride Ride/Day MonthlyTrip: from Gurgaon to
central Delhi 55 40 9 60 1 475 7 83125
Usual Revenue Revenue/day Days Monthly
4000 25 1,00,000
1500 1500
Driver revenue is 4000/ day.Fuel 30% of revenue.Parking is hard to find, maintenance is cheap as dealership offer 2 years free.Driver average salary – 15,000 to 20,000Maintenance includes only servicing and not repairs.
0Usual Case (conversation with cab
operators)
New Delhi: Uber X drivers performanceDriver revenues and related profit are considerably high in Delhi as Uber does not take any commission on bookings yet
New Dehli
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New DelhiLagosNairobi Bangalore Recommendat
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Driver’s ProfitReal CaseBase Case
RevenueBooking FeeKe Ya Rona
FuelMaintenance
Other (Parking)
DriverIn ZAR
1,14,625 1,50,0000 0
34,388 45,00034,388 45,000750 750
43,6008,284
57,75010,972
Assumptions25 work days per month
7 trips/day, from business center – central Delhi
Revenue SimulationRevenue Simulation
(Conservative)Base (UBER Rate) km Rs/km
(UBER Rate) minutes Rs/min Price/Ride Ride/Day MonthlyTrip: from Gurgaon to
central Delhi 85 40 12 60 1.50 655 7 1,14,625
Usual Revenue Revenue/day Days Monthly
6,000 25 1,50,000
1,500 1,500
Driver revenue is 6000/ day.Fuel 30% of revenue.Parking is hard to find, and expensive.Maintenance includes only servicing and not repairs.Driver average salary – 15,000 to 20,000
Usual Case (conversation with cab operators)
New Delhi: Uber Black drivers performanceUber Black appears to be more profitable for the drivers compared to UberX
New Dehli
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Personal Learning
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New DelhiLagosNairobi Bangalore Recommendat
ion
Real CaseNormal ScenarioKe Ya Rona Profit Calculation
Uber BlackUber XUber BlackUber X
Cost of vehicle after Uber discount
Down payment @10%
PrincipalInterest @12%
Ke Ya Rona min. inc.
Repayment + Interest
Min Operating
Profit
7,30,000 13,00,000
6,57,0001643 2925
InsuranceTracker
24,93815,3301,667
34,38824,3753,167
317 3177,624 6,529
30,00015,3301,667317
12,687
45,00024,3753,167317
17,142
Toyota Etios Toyota innovaToyota EtiosToyota innova
7,30,000 13,00,00073,000 73,0001,30,000 1,30,000
6,57,00011,70,000 11,70,00029251643
Monthly payment + interest 15,330 15,33027,300 27,300
Uber partners with dealerships to provide discounted vehicles, 12% nominal interest rate
New Delhi: Ke Ya Rona expected profitIn both the considered scenarios, Ke Ya Rona will be profitable with both car models.
New Dehli
Income Statement per vehicle
Currency: ZAR 1,449 1,240 2,410 3,256
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New DelhiLagosNairobi Bangalore Recommendat
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Product Attractiveness Matrix
Deeper Offering Analysis
Revenue of DriverBased on interviews with Saad, Apaar & Vicky
Usage in the marketUber X – Toyota etios, Maruti swift dzireUber Black - Toyota Innova, Mahendra Xylo, Suzuki ErtigaUber Go – Maruto Alto, Toyota LivaUberAuto – Bajaj, piaggio
LowLow
High
High
Uber Auto• Bajaj auto• Piaggio
Uber Black• Toyota Innova
Uber X• Toyota etios
Usage in market
Reve
nue
for d
river
Uber Go• Maruti alto• Toyota live
Determining the Choice IUber X Attractiveness
AnalysisRevenue for driver: • Low monthly payments by leveraging the
partnership between UBER and Toyota, the car gets a Rs 60,000 discount.
• Higher fuel efficiency than competitors + 2 years of free maintenance leads to higher profit margins..
Usage in the market: • Etios is not perceived as a taxi, but is now
gaining traction due to its price and features.
• Does not need specialized mechanics and parts are easily available
• Toyota is preferred over Maruti by customers as it is a “Japanese” automaker
Uber Black Attractiveness Analysis
Revenue for driver: • Low monthly payments by leveraging the
partnership between UBER and Toyota, the car gets a Rs 1,00,000 discount.
• Higher market traction, “the taxi that is preferred”.
• Higher fuel efficiency than competitors + 2 years of free maintenance leads to higher profit margins.
Usage in the market: • Is the premier taxi in the market due to its
comfort and performance and is used for long distance travel.
• Does not need specialized mechanics and parts are easily available.
• Toyota is preferred over Maruti by customers as it is a “Japanese” automaker.
New Delhi: Car models suggestionBoth UberX and Uber Black would be profitable, Toyota Innova could be a good fit considering the high demand in the market for it as a taxi
New Dehli
31
Bangalore
Financial Analysis and Choice of Cars
Personal Learning
Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
ion
Bangalore: Uber X drivers performanceDespite the 20% booking fee applied by Uber, the driver’s monthly profit with Uber X would considerable
Driver’s ProfitReal CaseBase Case
RevenueBooking FeeKe Ya Rona
FuelMaintenance
Other
DriverIn ZAR
54,250 62,50010,850 12,50016,275 18,75016,275 18,750
333 333
9,9171,884
11,5672,197
Assumptions25 work days per month
7 trips/day, 20 km average distance travelled
Revenue SimulationRevenue Simulation
(Conservative)Base (UBER Rate) km Rs/km
(UBER Rate) minutes Rs/min Price/Ride Ride/Day MonthlyBusiness district - center 40 30 8 30 1 280 7 54,250
Usual Revenue Revenue/day Days Monthly
2500 25 62,500
600 600
• Driver revenue is 2500/ day.• Fuel 30% of revenue.• Maintenance is cheap as dealership
offer 2 years free.• Maintenance includes only servicing
and not repairs.
Usual Case (conversation with cab operators)
Bangalore
33
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New DelhiLagosNairobi Bangalore Recommendat
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Bangalore: Uber Black drivers performanceUber Black in Bangalore appears to be more profitable for the drivers if compared to Uber X
Driver’s ProfitReal CaseBase Case
RevenueBooking FeeKe Ya Rona
FuelMaintenance
Other (Parking)
DriverIn ZAR
89,250 1,00,00017,850 20,00026,775 30,00026,775 30,000
334 334
16,9163,214
19,6003,622
Assumptions25 work days per month
Revenue SimulationRevenue Simulation
(Conservative)Base (UBER Rate) km Rs/km
(UBER Rate) minutes Rs/min Price/Ride Ride/Day MonthlyBusiness district - center 60 30 13 30 2 450 7 89,250
Usual Revenue Revenue/day Days Monthly
4,000 25 1,00,000
600
• Driver revenue is 4000/ day.• Fuel 30% of revenue.• Maintenance is cheap as
dealership offer 18 months free.• Maintenance includes only
servicing and not repairs.600
7 trips/day, 20 km average distance travelled
Usual Case (conversation with cab operators)
Bangalore
34
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New DelhiLagosNairobi Bangalore Recommendat
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Real CaseNormal Scenario
Bangalore: Ke Ya Rona expected profitGiven the considered assumptions, Ke Ya Rona will reach profitability only with Uber Black
Ke Ya Rona Profit Calculation
Uber BlackUber XUber BlackUber XCost of vehicle
after Uber discount
Down payment @10%
Principal
Interest @12%
Ke Ya Rona min. incomeRepayment + Interest
Min Operating
Profit
8,01,400 9,10,000
7,21,2601803 2048
InsuranceTracker
16,27516,8291,667
26,77517,0632,500
317 317-2,538 6,896
18,75016,8291,667317-63
30,00017,0632,500317
10,121
Toyota Etios Nissan SunnyToyota EtiosNissan Sunny
8,01,400 9,10,00080,140 80,14091,000 91,000
7,21,2608,19,000 8,19,00020481803
Monthly payment + interest 16,829 16,82919,110 19,110
Uber partners with dealerships to provide discounted vehicles, 12% nominal interest rate
Bangalore
Income Statement per vehicle
Currency: ZAR -482 1310 -11 1,932
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New DelhiLagosNairobi Bangalore Recommendat
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Product Attractiveness Matrix
Deeper Offering Analysis
Bangalore: Car models suggestionAmong the Uber Black car models, the Nissan Sunny is the perfect fit due to low monthly payment & cross platform use
LowLow
High
High
Uber Rikscha• XXXXXXXXXXXXXX
Usage in market
Reve
nue
for d
river
Uber SUV• XXXXXXXXXXX
Uber Lux• XXXXXXXXX
Determining the Choice IUber X Attractiveness
Analysis
Uber Black Attractiveness Analysis
Revenue of DriverBased on interviews with Saad & ApaarUsage in the marketUber X – Toyota etios, Maruti swift dzire, Mahendra veritoUber Black – Toyota carolla Nissan sunny, Mercedes e-class
Uber Black• Nissan Sunny
Revenue for driver:• Cheaper option than other Uber black
vehicles and easier to finance.• Discount on vehicle due to
partnership between Uber and Nissan. .
• Higher fuel efficiency than other Uber black vehicles
Usage in the market: • Can be used on both Uber platforms.• Viewed as a spacious and comfortable
class of vehicle.• Parts made in India hence easy to
find.
Uber Black• Toyota Etios
I. Revenue for driver: • Toyota etios to leverage the partnership
between UBER and Toyota, the car gets a Rs 60,000 discount.
• Higher fuel efficiency that competitors + 2 years of free maintenance leads to higher profit margins.
• Toyota is preferred over Maruti by customers as it is a “Japanese” automaker.
I. Usage in the market: • Etios is not perceived as a taxi car, but is
gaining traction now due to its price and features.
• Does not need specialized mechanics and easy availability of parts.
Bangalore
36
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Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
ion
• Uber wants to hire 50,000 women drivers in India and helping them with commercial driving licenses, access to various financial programmes and continuous training.
• The main obstacle for these women to own their own vehicle is the initial investment (down payment - ±$1,000) as they don’t have personal assets that cane be used as collateral or sufficient working capital
India Africa (Kenya)
New Opportunity Identified
• Minimum yearly income must be higher than 75,000 KSH, to get financing from a bank.
• 20 % down payment on second hand vehicles.
• About 30% of the population does not belong to this category and hence are financially excluded
• Since the lack of financing, perspective entrepreneurs do not get a chance
The inability to pay a down payment in India as well as the financial exclusion to qualify for a finance-scheme in Kenya, open a finance opportunity for Ke Ya Rona in those markets
Recommendation
37
Personal Learning
Funnel Approach
New DelhiLagosNairobi Bangalore Recommendat
ion
Dear bank, can you please finance this car for me?
We surely will finance 90% of it, but you have to pay a 10% down payment first
How can I possibly pay a 10% down payment? We are
happy to help you out here Madame.
Business Model Re-inventionBasics• Down payment fulfilled by Ke Ya Rona• Prerequisite that Uber payments come to Ke Ya Rona
account
Repayment• During months of profit Ke Ya Rona takes – principal +
interest• The payment depends on driver P & L and interes
ratet is flexiblePayment is ongoing till amount is recovered (no time frame)
FutureAfter repayment the contract can be • Terminated• The driver can choose to work with us.• Entrepreneurial training
1.
2.
3.
Example India Bracket (New Delhi)
<20,000 = 20%10,000 – 20,000 = 10%>10,000 = 5%
Business Model Re-inventionKe Ya Rona can enter potential markets with an adapted business model which specially fits the local needs of clients
Recommendation
38
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New DelhiLagosNairobi Bangalore Recommendat
ion
Final RecommendationAccording to our analysis, three out of four cities show great business opportunities for Ke Ya Rona
City Recommendation
New Delhi
• Leverage on the no profit Uber business model, which will stay the same in the near future
• Uber is willing to spend big to gain market share• High incentives for drivers • New Delhi actually is a cluster of 3 big cities, making the average car ride long • Strong contacts in the city, willing to help on a multiple fronts • Wheels are already in motion, quick entry is possible
Nairobi
• High potential market, identified as one of the key market of UBER in Africa• Low competitive intensity in the segment of Business Customer switch is also the
recommended segment with the relatively high profit both for Driver and Ke Ya Rona
• Ke Ya Rona offers exactly the right business model to close the market gap for financially excluded entrepreneurial-minded taxi drivers
Lagos
• After prices dropped by 20%, a 30% increase of earnings by Uber drivers was noted, and a 23% in demand
• Uber will not introduce the cash payment system in Lagos as there is no need for it. Lagos’ credit-card penetration per capita is very high
• Currently, most Uber drivers are employed by “hailing-businesses”. Private drivers are in minority due to lack of financial access. Micro-finance institutes are generally not financing cars. Employed drivers usually get their fix payment of 50kN per month low incentive.. Private drivers however are more motivated to generate money
Bangalore
• The financial analysis shows that although drivers' achievement in terms of profit is positive, Ke Ya Rona does not achieve high results.
• Both, in the normal scenario and in the real scenario Ke Ya Rona does not reach profitability with Uber X while Uber Black is performing better and it's profitable.
• Despite Uber Black’s profitability in Bangalore, the result achieved appears to be way lower than the selected cluster's average for this reason we suggest not to prioritize Bangalore
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Recommendation
39
Thank you for your attention!
Q&A