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How mobile is driving SA’s metered cab market

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Anton van Metzinger, MD of SnappCab. (Image source: SnappCab)
Anton van Metzinger, MD of SnappCab. (Image source: SnappCab)

As Gauteng motorists contemplate life with e-tolls, a Johannesburg-based startup, SnappCab, has emerged to offer a possible alternative. By leveraging off the proliferation of mobile devices and increasing demand for reliable public transport in South Africa, entrepreneurs Anton van Metzinger, Nathan Sasto and David Storey have developed an offering that integrates mobile apps with a metered cab service.

The vision behind the Company is to encourage South Africans out of their private vehicles and into metered cabs, based on the demand for quality public transport at a reasonable cost. The goal is to become the preferred means to order a metered cab, to be the trusted brand for both passengers and affiliated taxi services.

As far as extending the service to Africa is concerned, SnappCab is already in discussion with potential stakeholders in key regions across Africa including Ghana, Nigeria, Kenya and Tanzania.

ITNewsAfrica caught up with Managing Director Anton van Metzinger to discuss how the Company started, its journey so far, its pick-up points en route to growth and what potential destinations they have in mind.

* How did the idea for the business come about?

Some time back my fellow founder, Nathan Sasto, thought that there had to be a better way to order a cab (i.e. avoid the hassle of finding numbers and then having to contact call centres, only to be put on hold). This was based on his own experiences of ordering cabs both here and abroad.  He and other fellow founder David Storey grappled with this, had a look at what was then happening abroad and then entered negotiations with some of the first international players. They then decided to design and develop the technology here in South Africa. At that point I joined the company as MD.

The idea here is to leverage the confluence of two major structural socio-economic changes: the first is the rapid increase in use of (and transacting on) mobile phones and tablets.  The current estimate is that there are now 14 million smartphones in South Africa (a big increase over the number a mere two years ago).  The second major trend is the rapidly increasing demand for- and use of public transport in the country. This is a major trend that is just taking off, and we believe that SnappCab will not only be a catalyst for increased use of the category of metered cabs, but also a force for improvement in standards and reduction in pricing.

* How does the service work? And why is it unique?

The user downloads the app for free (currently from the Play Store or App Store), registers with us and can then immediately SNAPP a cab on demand. Using their GPS location, a user can order a cab in a matter of two clicks. Or the user can enter more trip details, such as specify a destination, which payment method they want to use (cash or credit card) and which providers of cab services they want to include in their search.

When they click the button to order a cab, it goes out to the closest cabs to their position.  The first driver to accept the trip (via Driver Devices provided to them by SnappCab) will connect with the client on a peer-to-peer basis. This means that the user sees the driver’s photo, name, vehicle description and registration number.  The driver sees the users name (and photo if loaded) and pick-up location.  So it is an accurate process.

The user can now track the vehicle on their screen as the driver approaches them – relative to their own position.  We provide a countdown of kilometres as well as time.  This means the user knows exactly where the cab is, and when to expect it.  No more calling of call centers in a panic to find out where the car is!

When the cab arrives at pick-up, the user will get an in-app message, as well as an SMS to say the cab has arrived. They can then take the trip, and at end of trip pay cash, or with credit card that they have loaded in the app.

Our major differentiators from similar offerings are:

  • The app will be available on all four major platforms
  • Pay with cash OR credit card for your ride
  • Use group credit cards (e.g. members of a family can all load the app, and via our website be connected with a single ‘group’ credit card that they can all use for cab trips.  Same applies in the corporate context – an administrator creates the group; loads the card; invites ‘employees’ (whom already have the app on their devices) to join the group and take cab trips by using that single credit card)
  • Very strong ‘history’ and ‘favourites’ functionality to make ordering easier
  • Ability to choose with which cab providers you would want to work with
  • Shortly we will have the ability to pre-book your trip; and we will provide a cost estimate of the fare if you put in a destination address as well (Version 2)

* What have been the main challenges to launching the service?

The first challenge is clearly one of technology.  We decided to have the app available on all four platforms: iOS, Android, Blackberry and Windows.  It is currently already available on iOS and Android, and Blackberry is currently in testing.  A version for Windows phones will follow in a few weeks.  So having a slick, world-class app that functions on the different operating systems, as well as different phone types (different screen sizes etc) has been a technical challenge – but one that we believe we have successfully met head on.  And the good work on the user app needed to be matched by a very robust and scalable back-end (to deal with all the user and trip data) and integrate the user app with our website and back-end in a seamless and user-friendly fashion.  Our technology partners VelvetAnt have provided excellent support here.

The second challenge was to sign up cab companies and their drivers to take part in the SnappCab eco-system.  To many of them this was a radical new concept and a departure from long-standing ways of doing business.  But we are now working with some of the top companies in Johannesburg (including Rainbow Cabs; CitycabSA; Zebra Cabs; Orange Cabs, amongst others) and we have a large number of cabs both signed up and waiting to be signed up.  We will make sure that we balance the supply-demand equation as SnappCab grows: when users click to order a cab, they need to know that there is a cab close by that will be connected them; and signed-up drivers need to see that they are getting sufficient work through the SnappCab channel.

The third challenge – one that we are very actively addressing right now – is to get the product and brand widely known in the market, and thereby driver download and use of the app.

* You have launched in Johannesburg, the Maboneng Precinct … why this area specifically?

We launched in Jozi merely because this was where we are physically based.  We have plans to be in Cape Town and Durban during this summer still.  We are currently in advanced but confidential negotiations with cab companies in those two cities.

* Is there any intention to enter other markets in Africa?

Yes, we are already in discussions with parties in English-speaking Africa (Ghana, Nigeria, Kenia and even Tanzania are the obvious candidates).  We recognise though, in the way that the Cape Town cab market is different from Johannesburg, which, again, is different from Durban. We will have to team up with local partners in each city and make sure that the technology is comfortably situated within the correct legal and commercial context for each city.  We will not try to copy and paste the ‘Jozi’ model.

We are also talking to prospective partners in Portuguese speaking Africa.

All the markets that we are considering are very enticing because they have large populations; increasing use of mobile and indeed smartphone products, and often quite mature metered cab industries.

* What are your short- and long-term objectives?

In the short term we would like to become the preferred means to order a metered cab – whether it is because people have an office party or big night out planned; because they need to shuttle between different nodes/offices of their company, or get to an event or the airport.

Thus we would like to establish ourselves as a trusted brand to both consumers (passengers) and drivers of metered cabs. We hope that consumers (across the three major cities in SA) will rapidly adopt our product as a very efficient, safe and fun means to hail a metered cab.

For the drivers in our eco-system, we hope to bring substantial additional business, by giving them access to the mobile world – a channel which they have not been able to tap into to date.  We will bring new customers to the category, and transfer business from the illegal periphery to those companies and drivers that are appropriately invested in their industry.

In the medium-to-long-term we would like to operate in a number of African cities, and apply the product across a number of categories – i.e. not only ordering of metered cabs, but also limo services; ‘tuk tuks’; shuttle services; drive-me-home etc.

* Sourcing funding is a challenge for startups – how have you managed to fund this venture and why is it sustainable?

As founders we self-funded the early “R&D” stage and development of technology.  This meant that we were able to launch V1 of SnappCab on a self-funded basis.  We have been fortunate to be able to close second round funding with The Innovation Hub, which is a subsidiary company of the Gauteng Growth and Development Agency.  This very valuable second round funding, combined with the incubation support provided by The Innovation Hub, has allowed us to firmly establish ourselves, and expand our product and market footprint.  It has also placed us in a position to negotiate third round funding, which we are in the process of closing.

* The company represents the strategic combination of mobile technology with a physical transport service, with no need for cash transactions (although this is an option) etc. what other advantages does it bring to the transport industry?

There are very specific advantages for metered cabs to be within the SnappCab ecosystem, and that is why they are prepared to pay us a commission for each trip we provide to them.

These benefits are:

  • Efficient matching of supply and demand: because we connect the passenger with the closest cabs to him / her, this means that the cab does not have to drive far to get to the business – which is economically very valuable to them.
  • Reduction in aborted trips:  because the passenger can track the progress of the cab on their device, they are not left in the dark and therefore not motivated to make alternative arrangements and leave the cab driver in the lurch when he/she arrives at pick up.
  • Certainty of pick-up address (as well as destination if the passenger entered this) – this means no more “lost in translation errors” in our polyglot society, where a cab often ends up in the wrong street or even suburb!

Certainly the idea that consumers are able to pay with their credit cards has received very positive feedback.  So we believe this will encourage more people to take metered cabs because of this reason – and this means more business for cab drivers.

* What is your view of e-tolls and do you foresee this having an impact on your business?

Over and above drink-and-drive legislation (and enforcement) there are a range of other structural changes in our cities that will increasingly encourage commuters to elect to take metered cabs. e-tolls is potentially one of these factors that will – for certain trips – convince a commuter that it is more convenient and cheaper to take a metered cab. Other factors that will encourage cab usage are:

Demographic shifts – The middle and upper classes in SA have grown rapidly since 1994 and the emerging Black middle class (defined as black South Africans aged 16 years and over and within LSM 5-7)  is now well over 10m. The concomitant pre-recession consumer boom has increased property and vehicle purchasing and led to new residential patterns and higher congestion levels.

Worsening traffic conditions – Increased congestion in Johannesburg is a daily fact of life. People will elect to improve their commutes by rather spending time in cab and being able to work / converse, than having to deal with worsening traffic conditions themselves.

Access to parking – The majority of commercial development is concentrated in a few commercial centres. This, combined with a shift to open plan offices, has led to an increase in the number of employees per square meter, and to a lowering of the parking bay per square meter ration from 6 to 4. Office parking is at a premium necessitating shuttle services to external parking lots. Increasingly people are also being charged parking fees close to restaurants and bars in the suburbs.

Public transport changes – The Gautrain and Rea Vaya is generating new demand for ‘last mile’ transport coverage, and we expect this trend to continue as these modes of transport are expanded in both Johannesburg and Cape Town.

Chris Tredger – Online Editor

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