If you tried traveling around Metro Manila in the past few days, you may have run out of luck finding a route, because as much as 90 percent of the megacity was submerged under floodwater from tropical storm Maring (international name: Trami), which pulled in monsoon rains from the southwest. Now that the floodwaters are clearing, it’s back to business for most residents.
This means rush hour traffic once again, however, and for the working class who would rather take a taxi cab than ride the train, bus or jeepney, this also means tough competition hailing a cab.
I’ve written quite a few pieces on transport apps, and whether these can really help solve the traffic woes of big cities like Metro Manila. It seem that we get a validation of the importance of this sector, with Rocket Internet recently launching its foray into taxi apps in the Philippines, with Easy Taxi.
Easy Taxi drives to the Philippines
We earlier featured Easy Taxi’s expansion outside of its home Latin American region, and we also highlighted how this could be a sign that the market for taxi hailing apps is ripe for the picking in Southeast Asia. In the region, other players like MyTaxi, which has renamed to GrabTaxi, have started gaining traction. In some markets, this has actually caught the attention of the authorities, such as the Chinese government, which earlier banned taxi-hailing apps due to regulatory concerns (taxi apps are now allowed again, using a new centralized brand prefix).
Is now the right time for transport apps to step up? e27 got some insights from Mario Berta, managing director for Southeast Asia, who says he is bullish on the Philippine market, which is a market he knows very well, having lived here for three and a half years. Mario says that with Easy Taxi’s entry into the Philippines, Rocket Internet wants to “create the whole taxi IT ecosystem and re-brand this industry.” He notes that the transport industry in the country “suffers from very bad press domestically and internationally.”
Mario adds that expansion to the Philippines is the right step for Easy Taxi, because of “great economic development and the increasing smartphone penetration” in the country. The move to the Philippines is actually part of Easy Taxi’s recent US$ 15 million financing round, meant to launch and sustain the service toward Africa and Asia.
To date, Easy Taxi operates in Metro Manila, although the company wants to expand to other major cities soon, such as Cebu and Davao.
Surprisingly, Mario stresses that having competition is actually helpful, especially in emerging markets, because this helps raise awareness. For example, GrabTaxi is already a competitor in Malaysia, and Easy Taxi is already familiar with the company.
Mario actually believes that competitors help educate the market even before Rocket Internet comes in.
“I believe that having up to three [competing] apps in one market is good, as it will educate the market (passengers, drivers and taxi companies),” says Mario. “Every Rocket Internet venture in this region has disrupt the market: we created entire ecosystems in countries that did not know the existence of e-commerce before, so for us having someone that educates before us is a good thing as will save us time and money.”
The problem, though is “when it gets too fragmented.” It helps to differentiate your product from the rest of the pack. In Easy Taxi’s case, I asked what particular characteristic differentiates the company from its competitors. Mario says Easy Taxi operates pretty much the same way as the likes of GrabTaxi. You use the app to indicate your pick-up and destination point, confirm the trip, and monitor your taxi as it drives to your current location.
“Where we would like to differ is on the consumer side (passenger),” he says. “All our companies are extremely focus on consumers.” With this, perhaps Easy Taxi wants to focus on convenience and a great user-experience.
Empowering the commuter
Mario says Easy Taxi focuses on empowering the taxi-riding public with its app. “The ultimate goal is to ease life of passengers to get a cab and increase drivers’ income this is what this business is all about. We will be heavily investing on the passenger side, making sure EVERY ride is a great, safe and fast experience, we want our customers to feel empowered by our app. This is our ‘consumer-driven’ spirit.”
Imagine getting stuck in heavy rain without a cab in sight, or getting stuck behind a line of dozens and dozens of taxi-riders at rush hour. Being able to call a cab with your smartphone is truly empowering.
Now as for the B2B side of the equation, Mario says Rocket Internet tries its best to adapt to each market it enters. In the Philippines, for instance, Easy Taxi is free to download both for riders and taxi drivers. But the business model is different. “In other countries we charge the drivers only to give him more passengers. Here we had to adapt the model to the current market conditions. We charge the passenger an extra fee to ride, and we share the extra fee with taxi companies and taxi drivers.”
Does the transport system need an overhaul?
Perhaps it’s important to note the nuances of the taxi industry in the Philippines. In the country, drivers operate on a “boundary” system, which means they actually rent their cabs, paying a certain minimum daily amount to the owner or operator — this is taken from the daily fares they get. Apart from the “boundary” payment, they also have to spend on fuel and other incidental expenses like their daily meals. The net amount is their take-home pay per day. No minimum wage here. No fixed salary. It’s like entrepreneurship, but with your driving skill and energy as your capital.
The same goes for buses, jeepneys, tricycles and other public utility vehicles in the country. Drivers are often left with no choice but to compete with each other for passengers, often becoming an inconvenience to other motorists when they pick up passengers outside of designated bus stops, and when they race with each other in an effort to pick up more passengers.
For taxi drivers, apps like Easy Taxi, Grab Taxi and the like, will help reduce downtime. Sure, rush hours are a great way to ensure demand, but the lull hours (nooontime, midnight) are often spent cruising, waiting for passengers and fuel wastage.
Mentioning competition and the transport app ecosystem, we also asked Mario what he thought about the likes of Uber and Tripid.PH, in particular whether these are viewed as competing services or complementary ones. Mario says the Uber model might not be very easy to apply in Metro Manila, where most middle- and upper-income families drive their own vehicles anyway. “I see the difficulty in applying this model for now, but we are studying something similar — more of a ‘hybrid’ service between Easy Taxi and Uber for Manila.”
As for ride-sharing: “I think is a great model ! But as of now we stick to ours. If you want to achieve great things you need to be focus on one thing before moving to the next one,” Mario stressed.