The last decade witnessed an incessant rise of on-demand taxi booking services all across the globe. Today, taxi-hailing is one of the most prosperous businesses in the personal transport service industry. Booking a taxi has become the most hassle-free way of getting around the city.
While technology is transforming the way humans live and businesses are conducted, it is apparent consumer demands are evolving at a rapid pace. People are connected to the internet through a variety of powerful devices. This has a profound impact on the taxi industry. Taxi customers are provided with a convenient platform like a mobile device to book a taxi.
As per a report, the “global taxi market is expected to grow at a fast pace during the forecast period, 2018-2023, owing to increasing demand for ride sharing and rising online taxi booking System.”
Though this fact indicates a steady growth of the online taxi-booking market, there are many taxi startups and business that failed including TaxiForSure and Hailo among many others. But what caused these startups to fail? Where did they go wrong? What are the missteps and lessons other taxi startups must learn to prevent their taxi-hailing applications from failing? Let’s find the answers to these questions by analyzing the case of Hailo, an on-demand taxi-booking software, that failed in the U.S. taxi-hailing market.
Hailo – A Mobile Application to Hail Cabs
Hailo was a British taxi-hailing application that connects taxi drivers and passengers leveraging GPS technology. The startup was founded in 2011 in London. It was funded by some very-popular A-list investors.
By the end of 2013, Hailo made its taxi-hailing service available in 16 cities. It allowed the registered users to e-hail cabs and pay for cab rides using their credit and debit card information that was stored on the firm’s secure cloud wallet. Their application was listed on both Google and Apple app stores.
Some of the notable features of Hailo included:
- Wheelchair vehicle accessibility
- Fixed price for designated locations such as city landmarks or airport terminal
- Social media features to interact with family and friends
- Alerts for high fare demand locations, traffic updates, road construction obstacles, and speed traps
Anatomy of Hailo’s Failure (Postmortem)
When Hailo first launched their taxi-hailing application in the US, it seemed like a replica of Uber, a US-based and globally popular on-demand taxi booking service. Hailo had planned to launch their taxi app service in New York and entered the city in early 2013. The application was expected to take off well in the US taxi market. However, the US-based e-hailing app firms were not far behind.
Hailo decided to set up a branch office in New York since it already had 2.5 million registered passengers and 30 thousand drivers, along with 100 million dollars in funding from A-listers. So, what when wrong with Hailo?
When entering the taxi market, the company had assumed the New York cab drivers to resemble their British counterparts. While as a matter of fact, the cab drivers were less likely to find a mobile application valuable enough to get fares. As per Fortune Magazine, Hailo could attract only 40 thousand yellow cab drivers, without which it was impossible for the application to initiate operations. Yet, only a handful out of those 40 thousand cabbies signed up for the application.
Thereafter, just when Hailo was about to kick-off, the technical challenges followed. The app needed to redesign its payment processing component to comply with New York cab firms’ legacy technologies.
The major causes that led Hailo to fail in New York taxi market are listed below:
Poor Market Research
The assumption that the New York Cab Drivers are equivalent to their British counterparts was inappropriate on Hailo’s part. Secondly, the aspects the company failed to consider are:
- London is a city with complicated routes. Hence, passengers rely on smartphones and applications for route maps and guides
- Taxi drivers in New York are less likely to rely on smartphones and mobile applications due to the city’s simple route layouts
The company assumed that New York cabbies faced a challenge in finding passengers and appropriate fares. But this wasn’t the case. The taxi business in NY had been progressing well on its own, while Hailo wasn’t really required.
Least Attention to their Application
The Hailo taxi hailing application wasn’t relevant for the specific audience of New York which they thought would be. In addition, Hailo faced technical complications with payment integration with the outmoded payment technologies of NY’s taxi companies. They later had an epiphany that integration with their services was quite arduous.
Neglecting Market Competition
When Hailo prepared to launch its application in New York, there were a bunch of other such services queued up, while Uber was the prime most competitor. Hailo planned to offer competitive prices while focusing on the yellow taxi market, leaving the higher-end market to Uber. This made the company lose the potential consumers, drivers as well as revenue to Uber.
The Takeaways for Newly Minted Taxi Startups
Thorough Market Research is Must
Your application is sure to fail if you proceed without researching enough about the market you will be penetrating. Identify if your business goals are aligned with the market position and demand.
Technical Challenges Can Affect Your Business
Anything that causes your application to crash or perform sluggishly can lead to startup failure if not fixed on time. Ensure the technologies you use are compatible with the services you need to integrate with.
Poor Planning Can Result in No Adoption
Lack of planning can result in no usage, adoption or traction. Hence, it is crucial to packaging your plan in a way that seems appealing to adopt.
If your startup succeeds, you’re quite lucky. This means you have been able to do things right. But before plunging into the cab-hailing market, ensure you conduct research, and anticipate scope and demand. What are the other possible characteristics that differentiate successful startups from unsuccessful ones? Please share them in the comments below.