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Meet the Companies Trying to Dominate the Latin-American Ride-Hail Industry -- And Edge Out Uber

The land grab for markets in Latin America has commenced for ride-hail companies. Here are the major players vying for market dominance in the region.

Uber

Homegrown and multinational players in the ride-hail industry have spent the better part of the past two years in a furious land grab for markets in the Asia Pacific and Europe. Now, that ride-hail battle is taking root in Latin America — where the priority has quickly shifted from simply being present in certain markets to dominating them.

It’s quickly becoming clear that Latin America, the Middle East and North Africa are the next frontiers for the ride-hail industry.

Being first to market has proven to be a significant advantage for ride-hail players — take Uber in the U.S. and Didi Kuaidi in China as examples. At their core, ride-hail companies are simply intermediaries between riders and drivers. It becomes difficult, then, for a newcomer to upend an existing player’s business, particularly when passengers have come to rely on that company for its affordable, convenient and efficient service.

But these first-movers are facing stiff competition. To prepare for the ensuing battle, EasyTaxi, which has reportedly raised a total of $77 million in funding and is in 18 countries globally, and Tappsi, which only operates in Colombia but has 450,000 registered users, have already formed a significant partnership.

It’s quickly becoming clear that Latin America, the Middle East and North Africa are the next frontiers for the ride-hail industry.

And the land grab has been supercharged by the presence of Uber, which is now in nine countries, including Peru, Colombia, Mexico, Costa Rica and Brazil. In addition to navigating local nuances such as legislation that limits commercial operation of private cars and a low smartphone penetration in some cities, Uber has to face off against regional players like EasyTaxi and local companies like Tappsi and 99Taxis in Brazil.

EasyTaxi and Tappsi have begun pooling resources, and together are in 11 countries; 99Taxis has dominated 70 percent of the taxi-hailing marketshare in Brazil. Uber, however, has quickly dominated Mexico — its third-largest market after the U.S. and China — where peer-to-peer transportation service was recently legalized.

Here are some of the major players hoping to win Latin America, and where they stand on the road to dominance.

99Taxis

20160331-99-taxis-brazil
Market: Brazil

Number of drivers: 150,000 registered drivers

Founded in 2012, 99Taxis is a taxi-hailing app with lofty ambitions of becoming the country’s first-ever unicorn. But with the country’s GDP growth collapsing into the negatives and the presence of stringent commercial transportation regulations, winning over the market in Brazil will not be an easy feat.

The company says it does an average of four million rides a month. Though 99Taxis has faired relatively well in Brazil, the company doesn’t have immediate plans to expand into other parts of the region.

“Brazil is a must-win market in the world,” Peter Fernandez, an angel investor in the company and its newly minted chief product officer, told Re/code. “It has the world’s fifth-largest population. From my perspective, it’s a much more important priority for the company to win in Brazil than it is to peanut-butter our operations across the region.”

The company is only responsible for about 10 percent of the country’s taxi rides, so there’s plenty of opportunity for 99 to continue to scale its business in Brazil.

Though it has yet to be legalized, Fernandez says the future of transportation is unequivocally in peer-to-peer services. So far, the company has largely stayed away from offering services that are still in a legal gray area (like private car-hailing), but has begun experimenting with an UberBlack-like but commercially licensed black-car service.

“We influenced the government to have a new kind of taxi license for black cars,” he said. “To a passenger, they look like a black car, but on our side, it’s a legally licensed vehicle. This is an example of us learning how to influence the government to get legislation that makes sense.”

According to Fernandez, leveraging the existing taxi system gives 99 an inherent advantage, in large part because of the sheer volume of taxis available. The average ETA of a car on 99 is three minutes, and, unlike private cars, taxis are allowed to use bus lanes, in effect circumventing much of the congestion and traffic the country is often plagued with.

99 offers a number of benefits to its drivers, many of whom are unbanked, including the option to have their fares paid out immediately after a ride directly into company-issued debit cards of sorts.

“Twenty thousand of these cards went out in the first month,” Fernandez said. “We’re now thinking about what other financial services you can offer, now that they have the card in the wallet, and the easiest first step is short-term loans, which they can pay back by doing more rides.”

It’s this hyperlocal strategy that Fernandez says makes 99 uniquely suited to be a part of the global anti-Uber alliance between Lyft, Ola, Didi Kuaidi and Grab. Tiger Global is an investor in 99, Ola, Didi and Grab. Fernandez says he has already been speaking with many of the founders of the companies about general learnings from the market, in the hope that someday it could evolve into a formal alliance.

“It’s not up to us, but I’m a huge fan of the idea,” he said. “Now it’s just a knowledge-sharing relationship and general relationship-building. Longer term, I think the network they’re building is interesting and I’m definitely interested in pursuing the possibility.”

Tappsi and Easy Taxi

Brazil
Brazil

Markets: Tappsi is in Colombia; Easy Taxi is in Argentina, Venezuela, Peru, Colombia, Ecuador, Uruguay, Chile, Mexico, Panama and Costa Rica.

Number of drivers: 500,000 globally

After pulling out of Asia, taxi-hailing app Easy Taxi still had operations in 18 countries across the Middle East, North Africa and Latin America.

But the focus of the company, which is fending against Uber in most of the markets it operates in, is Latin America, where 95 percent of the company’s business comes from. To solidify its place in the region, EasyTaxi merged with Colombian taxi-hailing app Tappsi in December 2015.

“We have a talented team here in Brazil, and Tappsi has a talented team in Bogota,” Dennis Wang, Easy Taxi co-founder and co-CEO told Re/code. “It has so far helped us speed up the improvement of our technology — for example, how we search for the closest driver — and how Tappsi does it is different. So the users should see better performance as a result of this merger.”

Easy Taxi started in Latin America in 2011, just two years after Uber had its start in San Francisco, and immediately began building a platform for emerging markets.

“In all the markets except for Mexico, we are five times bigger than Uber in Latin America,” Wang said. “We understand Latin America well, and we understand we have to localize to ensure quality. [Those needs] vary from market to market.”

For Uber and Easy Taxi, both of which are the only regional players in Latin America, navigating the regulatory arena from market to market can be difficult.

Some markets, like Peru, are relatively unregulated, while others like Mexico recently approved ride-hailing legislation. Then there’s Brazil, where the regulations have only budged incrementally, and Easy Taxi is competing against both Uber and 99Taxis.

But with an average of eight million riders per month in the region, and eight million registered users, Easy Taxi says it is flourishing in Latin America.

Now Easy Taxi hopes to take its service to the next step, with a car-sharing service (like UberPool, which is only available in Mexico City) called EasyShare.

“The pilot will start in Brazil and Peru,” Wang said. “One criteria for users is affordability, so we’re reducing the price to 25 percent. This service shows a leap in technology.”

Tappsi, for its part, has 450,000 active users and 45,000 drivers in Colombia, as well as 150 corporate clients.

The company is already seeing 10 percent of its revenue come from its corporate offering, but has also figured out a way to give individual users who might not have a cellphone access to the service. Users who don’t have smartphones or otherwise don’t have the data coverage for their phones can text a specific code to a number and book a ride from their location. Tappsi has also set up physical booking stations in four malls and two universities to help alleviate the low smartphone penetration in the country.

TED

Uber

Markets: Panama, Brazil, Costa Rica, Peru, Colombia, Mexico, Chile, Dominican Republic and Uruguay

Number of drivers: Hundreds of thousands across the region

Uber had its Latin-American debut when it launched in Mexico City in August 2013.

In 2015, Mexico grew to be the company’s third-largest country, after the U.S. and China. And now, after Uber expanded into the rest of the region, Brazil is the fastest-growing market for the company.

The company is launching in five to 10 cities a month throughout the region, according to Andrew Macdonald, Uber’s general regional manager for Latin America, Central U.S. and Canada.

In Mexico, according to Macdonald, the company has 40,000 drivers on its platform, and — though it’s still expanding — has just 18,000 drivers in Colombia.

Given Uber’s rapid growth, it’s clear that Uber is winning in Mexico. According to Fernandez, Mexico is one of the last markets 99Taxis will consider expanding into, if it does, because of Uber’s dominance.

In Brazil, where Macdonald says Uber plans to add 50,000 drivers this year, though the service is still not fully legalized, the company claims to be a welcome presence.

“You’ve got a political and economic crisis and a GDP decline somewhere in the neighborhood of 3.5 percent,” Macdonald said. “And then you’ve got a company like Uber that’s creating tens of thousands of opportunities for partners. And hundreds of jobs in the tech sector, with offices in six cities in the country. We’re also hiring for our partner support centers and our customer support center in Sao Paolo.”

While there’s no dispute that the company is creating economic opportunities for people in Brazil, many of these opportunities are short-term or otherwise contract positions.

But Macdonald says Uber is also working on creative ways to help bring more people in Latin America — where a large percentage of the population performs strictly cash-based and thus untaxed transactions — into the formal economy.

“In Lima, we have cash as an option, but we are also thinking of ways partnerships with banks for credit cards can work,” Macdonald said. “Large grocery stores sometimes will give you prepaid cards with cash, so that’s an option. We’re getting experimental in terms of how we solve the challenges related to credit card penetration.”

Uber has matched its competitors’ hyperlocal approach and rolled out a number of market-specific services, like its designated-driver service called UberAngel in Colombia. Even with services the company offers worldwide, Uber is seeing success: During a three-day environmental contingency period in Mexico City, where the government only allowed certain types of vehicles on the road to try to alleviate congestion, 50,000 people used UberPool.

“We have a great problem in Latin America, which is keeping up with demand,” Macdonald said. “We’re focused on our consumer. The product we have is more affordable and reliable than our competition. The problem you have with the taxi system here is the challenge you see with taxi systems globally — there is restricted supply and high prices.”

This article originally appeared on Recode.net.

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