I remember when Easy Taxi launched in Ghana. I was still head of products development at Ringier. We were having our fair share of competition already and having yet another Rocket Internet backed venture launch in Ghana made me want to shoot myself in the foot!

But why Easy Taxi? Before they came, I did a bit of research in this kind of service and didn’t find any motivation for building one. What kind of knowledge did Easy Taxi acquire that I missed? I told myself “ah well, they have enough money to splash around and wait for adoption to increase and become profitable”. And they did! Offering exclusive rides to some events, partnerships here and there, adverts on TV, radio, online, etc … It was all guns out, let’s make it work no matter what.

Then all of a sudden, nothing! I was going on about my normal day when my girlfriend pinged me on telegram and said: “EasyTaxi has shut down!”. “Really?” I replied. “Yes, their twitter account @EasyTaxiGH doesn’t even exist anymore!” She replied back.

Wow! Very interesting because, this is a Rocket Internet backed venture! They have loads of money and it’s working quite well in other countries. They could have sustained it for a while if they wanted but they closed shop and left like a thief in the dark without even saying goodbye to some of their loyal fans.

So why did they leave? Everyone was confused. The topic even became a hot argument at #TechRepublicGh and I was reading the tweets thinking “hmmm maybe I need to dig deeper”.

 

As to why Easy Taxi decided to close their operations in Ghana, we will never know the real reason why but after doing some research in the countries where Easy Taxi does work, here’s what I found out.

Great transportation and address/location system

See, EasyTaxi is very popular in emerging markets but one thing all these markets share in common? A great transportation system! Trains, Buses, Taxis with good roads and minimal traffic. Also all these emerging markets somehow actually have great addressing systems. Well named streets, buildings and houses with numbers, etc … So then, using EasyTaxi becomes a convenience for those times you don’t have the time to wait for a bus. Or you are going out at night and getting back home will be impossible with a bus. And the average wait time from when a taxi accepts your request to actually getting 3 to 5 minutes max. Compare that to Ghana. You are thinking of calling a taxi but taxis usually roam on the main streets. Very few areas have tarred roads which means the closest taxi to almost anyone’s location is a main road away. Let’s take even Nyaniba Estates. You may call a taxi and it will be in Osu. But the traffic alone will make him spend 15 minutes to get to your place. Why won’t you just walk to the roadside where there’s no traffic and pick your cab? They are roaming around town all the time! Or you request for a cab and because we have no serious addressing system it becomes a “Hello madam, please where are you? I don’t know that place oh!” … Sighs, this is supposed to be a service that makes your life easier, not give you headaches!

Taxis charge per distance using a meter, no negotiations whatsoever

The other thing all the countries where EasyTaxi works really well have in common is this: Taxis do not charge whatever fee they like. They all have a meter and in some of these countries, if you get overcharged, you can sue because it’s illegal. So for the user, it doesn’t make any difference whether he’s using an EasyTaxi cab or a regular cab. He’s getting charged whatever he’s used to. But in Ghana? I’m not sure why the assumption was that “If I call a taxi with my phone then I have more money than the regular person” so they charge you more for that! Like seriously? This I believe became a huge turn-off for most customers so unless Easy Taxi was doing one of their “grandiose” promos, nobody bothered to use them.

Owning a car is outrageously expensive and most people get around without one

Last thing: Owning a car in some of these emerging markets is really expensive.  A lack of trade agreements with car-exporting countries means even a second hand car can cost 2 to 3 times the normal price. So if the transport system is good (no stinking troskis, no crazy traffic, etc ..) why would anyone feel the pressure to buy a car? So for these markets, Easy Taxi can expect massive growth for their services. But in Ghana, ask any young university graduate: “What is the first expense you will make when you start working?”. Most will tell you they will buy a car first. That means, there’s really no room for growth for Easy Taxi in Ghana. The customer you had yesterday will buy a car today and stop using the service.

Then you go to another fresh customer who is looking to buy a car. One rule in business to grow is to keep your existing customers buying your stuff while acquiring new ones. If you can’t do that, you are doomed.

So there you have it! I hear Uber is coming. Do you honestly think they will succeed where Easy Taxi failed? Let me know in your comments.

Guest Author: Edem Kumodzi is a Software Engineer with keen interest in enterprise information systems, Web & mobile applications. He currently works as a consultant at ThoughtWorks.

Opinions expressed by the author are his and his alone.

10 COMMENTS

  1. Should have also added the potential/current market size. There’s a lot of bang & noise about 100%+ mobile penetration in Ghana and how mobile is driving web use in Sub-Saharan Africa but look at the internet penetration rate (have we pushed past 15%?) I love internet based solutions as much as anyone that can fully make use of that convenience but currently our population doesn’t back me on that.

    • You are very right Michael. But what many of these startups have realized is that if they want to wait for the penetration to be decent before entering the market, it will be too late. They want to have the "First mover advantage" and grow with the market. Even if they market size was small but at least showed potential for growth, it would have been interesting. But there was no potential for growth anyways.

  2. What a shame. The model is a brilliant one however the environment this model choose to sow its seeds in was not the right one. I have never taken a ride in Easy Taxi, although it was a "to do" item on my GTD app. An eye opener of an article, although I must mention that ventures are not successful based on the amount of cash thrown into them. Had a brief chuckle on ""left like a thief in the dark"".
    Uber? Absolutely no chance. I am not 100% familiar with the model on which Uber works on, but I have read to some extent on their how their operation works. The metrics, however you look at it for them succeeding in Ghana will never work.
    Thanks for sharing!

    • Thanks for reading! I agree that ventures aren’t successful based on the amount of cash thrown into them but that’s a pattern that Rocket Internet has used for many of their ventures (HelloFood, Jumia, EasyTaxi, etc …). It’s kinda like "let’s push it really hard and sustain it for as long as we can, the users will eventually come". It works in some places but doesn’t look like it’s working in Ghana. Google did the same thing with Google Trader and eventually shut it down too … Very important lessons to learn for upcoming startups.

  3. There is a model that could have been explored;
    http://accradailyphoto.blogspot.com/2011/01/welcome-to-latest-entry-of-taxis-in.html

    The conditions mentioned above are not enough to have shut down EasyTaxi. There was a marketing strategy problem, I believe.
    1. The reliance on apps: mobile strategy should have targeted feature phones, like mobile money. To order a taxi, send a message to a shortcode.
    2. Taxis: not sure how this strategy was implemented, but there should have been an active partnership with GPRTU or similar unions; they have ‘stations’ all over Ghana, and have a strategic presence in most vicinities. They would patronise a service that guaranteed them more income.
    3. EasyTaxi Premium: could have taken the GoldCab strategy; have premium service for high-end need; companies, event partners, etcetera.

    It’s always easy to think about these things when you are outside of the realities of it; when you are thinking in retrospect; but I believe EasyTaxi was a business with potential. It needed a different implementation, not a replication of its model in other emerging markets.

    • I love your proposed model and I think it could have worked. But you know Easy Taxi answers to their backers. And their backers (Rocket Internet) have a very simple philosophy: Build, Grow, Conquer and if it works, Repeat! Because they have replicated this in so many countries and it’s worked for them, it’s just cheaper to go with that strategy. It’s kinda like how when designing a new car, you would spend a lot to get every detail right until the first unit is produced. Once that’s done, machines can be automated to build thousands of that model quickly and cheaply. But that wonderful car may be fit for Roads in Europe and not in Africa. Does that make the car bad? No but they can’t make a one car fits all markets so they don’t bother … That’s how the german cars manufacturers operate and ironically Rocket Internet is from Germany so no surprise there 🙂

      As for the reliance of apps, I doubt it is doable with feature phones. The app needs your gps coordinates the find the closest taxis. It also needs drivers to have gps enabled phones to be matched to customers closer to them. Gps is the only system that can accurately give you that information in real time. So even if they create a feature phone thing, the experience won’t be great and prone to many errors. It also requires partnerships with Telecom companies for shortcode access. That makes them dependent to something they don’t control. Germans don’t like that 🙂

      Partnerships with GPRTU absolutely. I wonder why they didn’t do that but they are smart. I’m sure they’ve thought of it and if they didn’t it’s probably for a good reason.

      EasyTaxi Premium? Yes that would work too but is that high-end taxi market that big? Would you rather make 1 million GHS from one company or make 1 ghs from 1 million people? I’m not sure … Just speculating.

      Well let’s just hope that Uber and whoever decides to try this business gets more creative with their model …

  4. Hmmmm partnership with GPRTU? I am not too sure. How does them having "stations" all over enable EasyTaxi boost their operation? The moment EasyTaxi was set up in Ghana, they become another business in competition with GPRTU and any other Taxi service in Ghana. I doubt GPRTU would be willing to patronise them, because they already have members they need to look after. Edem, you raised a good point with GPS; one thing that wasn’t mentioned was an essential tool of the trade – the use of VHF Taxi Radios.
    Great comments and ideas being thrown here, lets keep the debate going.

  5. I used Easy Taxi a few times. One of my biggest problem was that even though the app came with google maps, most of the drivers couldn’t read the map so in the end u have to resort to the usual Ghanaian method of giving directions.
    Also sometimes i couldn’t get a taxi at all and sometimes when i did the driver would say because of traffic, he’d rather not come.
    I actually felt bad for those running the business. The few times i got a ride, the drivers were quite nice and drove well.
    The charges were a bit higher than usual though

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