Disruptive. It’s a word that I don’t like, but it has become a very common catchphrase these days to describe the now common scenario of a new entrant causing grief for existing players in a market. Right now disruptive new entrants in the market are causing grief for taxi companies worldwide.
I’ve done a lot of travelling in my life, and taxis are something that I’ve used a lot both in NZ and overseas. It’s something where the experience is the very similar right across the world, and mysteriously the instances of highly opinionated middle aged male drivers who love talking about politics while listening to talkback radio isn’t just something that’s unique to New Zealand. In many cities in the world the taxi experience is a unique one – catch a Black Cab in London and you’ll find yourself with a driver who’s spent years learning “The Knowledge” – a test involving memorising over 20000 streets and 20000 landmarks in Central London, and can probably tell you more about London and it’s history than any guide book.
The launch of Uber in the US in 2010 really became the first true competition to hit the taxi market. As the taxi market is often regulated or tightly controlled in many countries, the market in many ways mirrored that of a monopoly. While multiple companies may exist in these markets, pricing, and in some cases vehicle requirements are set by authorities, meaning the price and experience is often essentially the same, no matter what company you pick. Uber’s entry into the “rideshare” (as they call it) market was resulted in a product that very different to what already existed. Rather than the old school experience of hailing a cab in the street (something that can prove very difficult in the US) and then having to have cash to pay for it, the whole experience could be done straight from your mobile phone.
I started to write this blog post last month after having used Uber a handful of times in recent trips to the US. Since then I’ve used Uber a couple of times in Auckland, and we’ve also seen the launch of Uber in Wellington a couple of weeks ago. I’ve loved every Uber experience so far, and it’s something I’ll be happy to continue to use in the future.
What I do need to make clear at this point is why I (and plenty of others I know) share this support for Uber. Right now if you’re like many people out there you’ll immediately be thinking the sole reason is price. If you did, you’re wrong. Yes UberX may undercut existing taxi offerings, but Uber Black also exists offering a premium transport solution in luxury vehicles. Why do I really like Uber? The answer is really quite simple – Uber are using technology to let me interact with them, and that’s something that existing taxi companies seem to be largely ignoring.
I love being able to open up the Uber app on my phone, see where the nearest vehicle is, see an estimated quote for a journey, order my ride, see the details of the driver and his vehicle, and then watch in real time as the driver comes to pick me up. The Uber driver sees all this data on a mobile phone and gets GPS based navigation to the destination. Once my journey is over I can literally hop out of the vehicle with payment for the ride being automatically deducted from my credit card with no expensive “electronic card convenience fee” surcharges which most taxi companies in NZ charge. I’m then prompted to rate my driver, and likewise the driver is prompted to rate me as a passenger. Uber really is the perfect product for today’s market and delivers a customer experience that other companies simply can’t offer.
So how are taxi companies in NZ competing against Uber? Improving their service? No. Creating apps to order a taxi? Typically no. Waiving “electronic card convenience fees”? No. The New Zealand Taxi Federation who represents most taxi drivers and taxi companies in NZ are simply spreading FUD (fear, uncertainly and doubt) in the hope of discrediting Uber, with stories such as this on stuff.co.nz on the weekend. I’ve also heard from a couple of taxi drivers in recent months that “Uber is illegal in NZ”, with the Taxi Federation claiming that many drivers are not legally licensed. It’s a requirement to hold a passenger service endorsement to carry passengers for payment here, so my challenge to the Taxi Federation is to front up with some facts to back their claims or to retract them. If drivers are operating illegally it’s the job of the New Zealand Transport Agency to enforce the law, so they should be approaching them with evidence, not bleating to the media and trying to spread mistruths.
So why aren’t taxi companies in New Zealand simply working on the whole customer experience issue and giving customers the ability to book a taxi online or via an app? That really is the million dollar question. Most large taxi companies in NZ all use a taxi dispatch system created by Australian company MTData, who are now one of the largest suppliers of taxi dispatch hardware in the world. In car terminals integrate tightly with their back end system meaning that a taxi company knows exactly where every car is and can dispatch jobs direct to the drivers screen. MTData provide an extensive API meaning that building an app to deliver 100% of the Uber functionality can easily be built. Hutt & City Taxis and Auckland Combined Taxis have launched iOS only apps within the past couple of years based on MTData source code that offer basic booking functionality, but the fact most people have never heard of these really sums up how popular they are. The lack of Android versions of their software also shows it’s not a market they’re serious about, and they also lack any ability to pay for your ride using the app.
The NZ market has seen the introduction of Zoomy, a 3rd party app that tries to replicate the Uber experience by equipping regular taxi drivers with mobile phones running the Zoomy app. An individual can book a taxi using the Zoomy app and pay for this with their credit card. Zoomy however is in my view a dead loss and I don’t see much of a future for it as it relies on convincing regular taxi drivers to sign up for the service, and with so few of them interested in this you’ll typically find that there may not be a Zoomy driver available if you want to order a taxi. Zoomy is also disliked by many large taxi companies and with little hope of getting these on side, it’s probably facing a pretty bleak future.
All of this really poses the question of why organisations such as Blue Bubble Taxis, New Zealand's largest affiliated taxi group which brings together 16 different taxi companies from across NZ, aren’t interested in the app market. My understanding is every single one uses the MTData dispatch system. Why haven’t Blue Bubble built an app (especially when MTData themselves are willing to provide support) to easily allow passengers in any of those markets to order a taxi, pay for that taxi using the app, and more importantly stand out from the market by offering a solution that their competitors don’t offer? Instead of wanting to compete with new entrants, these taxi companies seem stuck in the 1980s mindset believing that there is no need for innovation or change, which in this day in age is a perfect recipe for failure in any industry as new players are certainly more than happy to trample all over your existing business and steal your customers.
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Comment by freitasm, on 30-Sep-2014 07:50
Interesting to note that many Uber drivers in Auckland are actually taxi drivers, driving taxi vehicles, picking up rides when free - basically a modern version of the old "hail a cab" but using technology. If dispatch doesn't send anything their way they get someone from Uber.
Comment by Jaxson, on 30-Sep-2014 15:25
Thought of the Cinema/Movie and Music inudstries.
Comment by bongojona, on 1-Oct-2014 11:19
I've wondered who these Uber drivers are - having never used them myself (I seldom need to travel)
thanks for confirming that many Taxi drivers register with Uber, makes sense
Comment by Scott3, on 1-Oct-2014 23:04
Overseas Uber sidesteps a lot of regulation, particularly the laws requiring a medallion that many city's have.
For example in new your taxi's must own or (typically) rent a medellian to operate. These were created and sold to limit the number of taxis, and can cost $1m+. As you would imagine the taxis with high regulatory cost of operation are upset about being undercut by a competitor with a lower cost of operation due to dodging the regulation.
In NZ there is minimal regulatory advantage (i.e. Uber drivers must have p endorsements just like taxi drivers). I have taken a few uber rides in Auckland, some are ex-taxi drivers (already have p endorsement) who work weekend evening peaks to top up there income from there new full time jobs. Many are drivers from second tier taxi company's who will take fares on UBER as well as curb hails on there regular meters.
By the way co-op taxis has a somewhat advanced android booking app. (gps track taxi on its way to pick you up), but it doesn't do payment.
I really like just getting out of the car at the end of the ride rather than making a transaction. Fumbing with cash sucks, as does slow eftops payments with a $2 extra fee).
Comment by McNulty, on 4-Oct-2014 21:57
At least one taxi company is going for it...
The app would enable customers to order a taxi without ever having to talk to dispatch, Hannah said. "You will just push the app and the taxi will come straight to your phone's GPS location, and you can see on your phone where the taxi is and how far away it is.
Comment by n4, on 6-Oct-2014 17:02
Auckland Co-op Taxis have an Android app that has just come out of beta. Its on the Play store.
Comment by Kyhwana, on 6-Oct-2014 20:29
Opp, after auckland power outage, now getting this:http://www.speedtest.net/my-result/3811643309(62/9.7 mbit, still over 5ghz 802.11n wifi, ~67mbit sync)
Comment by Marty, on 6-Oct-2014 22:37
I am a taxi driver have MTData and i use Uber and Zoomy. But in a good Friday or Saturday night i dont need none of them.
The taxi companies wont have to change their mind sets until the contracts with corporate companies where threatened by technology, thats where the main business happening for taxis.
Comment by Dave, on 8-Oct-2014 13:24
There has been an App for android and I phone out for months now and i have used it too book taxis in New Zealand and it gives you updates on how far away your taxi is. As of now I believe it is only available in Auckland, New Plymouth, Wellington and Timaru.http://smarthail.com/
Comment by Phil, on 12-Oct-2014 12:18
"Why haven’t Blue Bubble built an app (especially when MTData themselves are willing to provide support)"Answer: Last year I researched into this as a client wanted to build such an app integrating with MTData - Taxi Federation wouldn't allow it.
Comment by Matt, on 17-Oct-2014 23:37
The taxi companies are owned/run by a bunch of taxi drivers who can barely manage to agree on how to staff a call centre properly. And what margin they make they need to pay the bills. Getting them to invest in an app and the infrastructure and marketing behind it.. No chance. Heck they don't even understand their market if they're doing Android first (as mentioned for Co-Op above).
Uber is run by modern "lean startup" techies who understand the customer and have a wad of VC cash and brains behind them.
Not a surprising outcome to me.
But yes it's blindingly obvious how easy it would be for taxi companies in NZ to disrupt the disruption given it's a pretty level playing field since our market was fully deregulated. Innovator's Dilemma strikes again!
Comment by J Wright, on 4-Dec-2014 12:25
Worth mentioning that as of November Blue bubble have put out a Taxi ap. Looks to be getting good reviews.Check it out:https://play.google.com/store/apps/details?id=com.smartpay.bluebubble&hl=en
Comment by C Lyall, on 24-Feb-2015 23:06
My friend who is a taxi driver looked into Uber and was told that he could not work as a taxi driver and Uber driver and this was in Auckland.Not everyone has smart phones so a good old fashion taxi will have to do for the ludites. Will the Uber drivers be able to make a living wage?