This week, the Estonian company, Bolt, announced its return to London. Known as Taxify until early this year, the firm first entered the city in September 2017. It was an ill-fated foray, as Transport for London (TfL) objected to its license arrangements, forcing the company to back out after just three days.
Speaking to Reuters, Bolt claimed that its return is not only by-the-book this time, but that its offer to both riders and drivers can compete with Uber: cheaper prices for riders and better prices for drivers. Bolt has previous experience squaring up against Uber, having taken market share in Eastern Europe and Africa.
“Uber is basically a monopoly. At the same time, an average Uber driver makes less than minimum wage,” Bolt founder Markus Villig told Reuters. Instead, Bolt says it will charge drivers just 7.5% of the fare in the first two months, rising to 15% thereafter. By comparison, Uber takes a 25% cut from its drivers.
Unsurprisingly, Uber’s monopoly power and the pressure it exerts on drivers has sparked anger among their number in the wake of the company’s $82 billion stock market valuation. The fact it is a publicly listed company is significant too: as a start-up, it displayed a cavalier mentality when entering new markets under its former CEO Travis Kalanick; its new situation means the rules very much apply.
Though there may be a monopoly, Villig told WIRED that the opportunity to new entrants is not closed. Some drivers use other apps to fill gaps between Uber jobs. It’s been Bolt’s strategy in every city the company is present in. “In most cases we’ve gone to a city with a dominant, greedy player and we’ve found that word of mouth is good enough marketing channel, as long we keep providing better prices,” he said. The company has claimed to Bloomberg that roughly 20,000 London-based drivers are interested.
Meanwhile, Ola, Uber’s main competitor in India is, according to the Financial Times, in “constructive discussions” with TfL to enter the city, a move that could put further pressure on one of Uber’s most important cities.
“Bolt’s move into London will be making Uber – so far largely unchallenged in terms of serious ride-share competitors – a little nervous,” Alyssa Altman, a transportation consultant at Publicis Sapient told WIRED. Though she warned of the unsustainability of a price war: “While Bolt is causing a stir, its key differentiator against Uber is lower fees and commissions. If Uber is unable to make a profit at 25% commission and current fee levels, it seems unlikely that Bolt is putting forward a sustainable model for the long-term.”
The name Bolt reflects the company’s expanding offer of motorcycle services and scooter rentals in select cities, similar to Uber’s plan for growth through new electric bike services and food delivery. In its first quarterly results report, Uber CEO Dara Khosrowshahi spoke about the need for cross-promotion of services to drive greater revenues.
Sourced from Reuters, Financial Times, WIRED, Bloomberg, Slate; additional content by WARC staff