Uber recently created a stir in the digital business landscape of Pakistan by announcing the app’s closure on 18th October 2022, in major Pakistani cities. This move has led to some far-fetched speculations and even doubts about the company’s future.
Some criticized this as a concession to fast-growing competitors such as inDriver and Bykea, while others went as far as to link the move to economic disparity caused by the recent floods.
And as usual, the morally heightened social media warriors took to their battleground to accuse Uber of leaving customers and drivers in the lurch.
“After making profits, these companies leave their staff in the lurch with no compensation at all.”
As if the Uber captains were ever “staff”!
As #Uber shuts its services in Pakistan (except Lahore), captains like Muhammad Shahzad who were the real force behind Uber’s success have lost their job as well. After making profits, these companies leave their staff in the lurch with no compensation at all. #UberPakistan https://t.co/bcw3J5ntSX
— Hasan Naser Khan (@HasanQau) October 14, 2022
Interestingly though, while most major news outlets acknowledged the fact that Uber’s main motivation was to promote Careem, many also made an effort to somehow link the move to Pakistan’s economic condition and the floods. In their articles on Uber’s closure, they tried to set a narrative by mentioning that “the exit comes as the South Asian country faces an economic meltdown.”
#Uber‘s step comes at a time when #Pakistan is facing a massive economic crisis made worse by the devastating floods this summer, killing more than 1,700 people and causing an estimated $30 billion in damage. pic.twitter.com/FdCBxsAMP3
— Chinar (@Chinar07229978) October 12, 2022
But what link does Uber’s closure have to do with the floods, which by the way, did not affect any of the cities where Uber was operating? And if a bleak economic outlook somehow impacted Uber’s decision, then how is InDriver flourishing in the ride-hailing market despite entering after Uber and Careem?
The real reason behind Uber shutting down in Pakistan
As Uber made clear in its statement, its primary motivation is to promote Careem. While Uber has a strong brand name in the global ride-hailing business, Careem dominated the Pakistani and Middle Eastern markets before the acquisition.
Even today, it’s estimated that Careem isn’t far behind inDriver in the local market despite falling into a slight decline.
And the move by Uber was no surprise, as many analysts predicted this months before. Running multiple brands in the same market segment is never a good idea, especially if they’re competing for the same customers.
Uber’s exit: A lesson in evolving brand dynamics
Putting the speculations aside, Uber’s market exit is important in understanding the brand dynamics in the Pakistani digital market. The manner in which Uber approached the exit and their transition with Careem is a masterclass, at the very least.
Traditionally, the dominant brand or parent company will usually promote its brand name after an acquisition. So, why did Uber choose to consolidate its assets with the Careem brand?
Firstly, Careem was already the more established brand in the Pakistani market at the time of the acquisition. But more importantly, it had to do with the brand perception of Uber and Careem.
Uber’s primary target market was the rich and middle class, while Careem initially offered low-budget options as well. Careem was also the first to offer motorcycle ride-hailing, and more drivers meant that they could offer slightly cheaper fares than Uber.
In a market, where the price is prioritized over quality 90% of the time, this made all the difference for Careem.
In an effort to keep up with Careem, Uber did expand their services, and some customers claimed that their rides were cheaper than that of Careem before the acquisition. Unfortunately, the brand perception was already established, and Uber would never be seen as a budget option for Pakistanis.
The lesson?
Cultivating a certain brand perception is easy; changing it is nearly impossible.
So, what was Uber’s response?
Firstly, they acquired Uber, and secondly, they removed the Uber brand from the market. On paper, it may seem like a downgrade for Uber, but it’s really a sensible decision for profitability.
Uber’s move should be a lesson on why ego has no place in business. Uber is still a reputable global brand, and they realized that saving the company is better than “saving face”.
Will they have the last laugh? Only time will tell.
This exit provides space to new players to dominate the international giant
Looking forward how Uber will be pushed to corner by local service provides just like in India as the company is still struggling to be profitable.
As a Lahori I am looking forward for better service and good fare rates from Uber now
Uber was never in competition with Careem or especially Bykea. Both were doing better than it. Uber was worst in In-ride or after-ride customer support and I did not find a single customer happy with it. What I believe, it was better for Uber to leave with dignity then kicked out from market.