Uber vs Careem: A Look From Both Sides

Uber vs Careem: A Look From Both Sides
April 29, 2017 K Compare

Careem Vs Uber uber - Careem Vs Uber - Uber vs Careem: A Look From Both Sides

It is safe to say that Uber has revolutionised taxi service since its inception in 2009. It is one of the most commonly known apps in the world today and has been tremendously successful despite many regulatory issues across the world. Uber entered the Pakistani market in March 2016, launching in Lahore and later expanding to Karachi.

Careem, its main competitor in the region was established in Dubai in 2012 and now operates in 6 cities, Lahore, Karachi, Islamabad, Hyderabad, Peshawar and Faisalabad. Careem does not have nearly the same amount of financial muscle as Uber but has been putting up stern competition in the MENA region.

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The Consumer Perspective:

As a consumer, there’s very little to choose from between the two service providers. The price point is competitive for both companies, although Uber holds the edge as their rates can be up around 10 to 20% cheaper than Careem. This is probably down to the financial strength of the company since it can afford the billions of dollar worth of losses it is incurring worldwide. The two competitors are constantly slashing rates and introducing discounts so prices are continuously varying. From personal experience though, Uber tends to have surge pricing more often than Careem. Surge pricing is when the cost of your trip is multiplied by a factor from anywhere between x1.2 to x2 or even x3 depending on the demand and availability of cars in your area and the traffic on the roads. Maybe it’s just the areas that I have been in, so your experience may be different.

Most cars that I have sat in, the drivers have signed up for both Uber and Careem and use them simultaneously so, once again, there isn’t much to choose from between the two.

The key advantage that Careem holds over Uber is that it has a local helpline that is available 24/7. This has been particularly useful to me in a few situations where I have had to cancel rides due to reasons beyond my control. If you cancel a ride 2 minutes after the rider has accepted it, you are charged Rs. 150 as a penalty. Once, a rider had gotten into an accident on the way to my pick up location and I had to cancel the ride. I called their contact centre and they were able to assign a new driver without any charges. Uber also charges Rs. 150 for cancellations after 5 minutes and do provide refunds and credits but you have to instead write an email. It is always better and more personable to receive assistance over a telephone call rather than have an email exchange, which can obviously take much longer to conclude, too.

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Careem also provides you with the option of paying extra for a ride and having the balance added to your Careem wallet to be used for future rides. For example, if your ride costed Rs. 150 and you pay Rs. 200, the balance of Rs. 50 will be added to your wallet which will be deducted against your next ride. You get an SMS confirmation of this payment immediately in case there are any discrepancies in the future. This option is particularly helpful if you or the driver does not have exact change to give you back. Unfortunately, Uber has not introduced this option yet. In most parts of the world, Uber does not even allow you to pay for rides with cash – only debit/credit cards.

Both companies offer various discounts and deals every now and again which they notify you through their app or via SMS. They are quite competitive but in my experience, I have received more offers from Careem over the last 9 months or so.

Personally, I prefer Careem – mainly because I like supporting the underdog. It also helps that it was co-founded by a Pakistani. But that’s just my opinion.

The Drivers’ Perspective: 

Whether you do it part time or full time, both companies offer an attractive source of income. Many have even hired drivers and bought or leased a car solely for this purpose. When Uber launched in Pakistan, the Country Head at the time claimed that riders that earn over Rs. 100,000 per month as a rider. As I conducted my research, it turns out he was not exaggerating.

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The signing up process for both companies is very similar. You must submit your identification documents, car registration along with a character certificate verified from the police as part of your application. Your car must meet their requirements, but these days they have expanded their fleet to cars of all shapes and sizes ranging from a Suzuki Wagon R to a Toyota Corolla. One key difference that drivers speak about is that Uber has a more sophisticated training procedure that riders must go through before they hit the roads. Potential drivers must go through various trainings around customer service, sexual harassment and professionalism. Careem also trains its drivers but it seems more casual. I have not gone through the process myself, this is a conclusion based on conversations with a decent sample size of drivers from both companies.

So, you’ve signed up. What now? Well, you’re given your mobile device and can take rides straight away! Careem charges the drivers a commission of 20% of all rides, whereas Uber charges 25%. You might think this automatically gives the edge to Careem, but many drivers have said Uber is more popular with customers (unfortunately, my research is also restricted to Lahore). It could be because many people who have travelled to places such as the US and Europe might already have the app installed on their smartphone when Uber launched in Pakistan – I know this was exactly why I used Uber before Careem. So, the volume might justify the 5% extra you pay in commissions.

Just as they are offered to customers, both companies also offer various bonuses to its drivers on a regular basis. They regularly set a target number of rides to be completed on a certain day or few days and offer bonuses in the range of Rs. 1,000 to Rs. 3,000. Drivers tell me that Uber tends to offer bonuses more regularly to its drivers than Careem.

When both companies launched in Pakistan, they incentivized drivers a great deal, but it has reduced in recent months. For example, Uber was offering its drivers a minimum guaranteed amount just for being active and on the roads for 8 hours in a day, rides or no rides. This minimum guaranteed amount increased to around Rs. 3,000 if 10 rides had been taken during a day, even if your total revenue was below that. Careem was also offering guarantees up to Rs. 3,500 per day if certain timing and minimum ride conditions were met. There were reports of drivers earning over Rs. 100,000 when these guarantees were in place. This was a strategic move by both companies to grow their fleet of cars, and as of now, there are no more guarantees. The driver has the freedom to decide how many hours he or she plans to be active per day and there is no minimum requirement.

That being said, my research tells me that it is still possible to make anywhere around Rs. 80 – 90,000 in revenue every month. That’s assuming a Rs. 300 average ride and making 10 rides every day without a day off. Taking out the company’s commission, as part of Uber you would receive Rs. 67,500 and with Careem would receive Rs. 72,000. If you drive around this much, you would end up spending at least Rs. 30,000 on fuel, depending on which car you have. You can add another Rs. 10,000 or so for running repairs and maintenance of the car, which is variable depending on how you drive and what the present state of the car is. I am not claiming this to be a very accurate calculation but rather a rough approximation, under which you could potentially net around Rs. 30,000 in profit if you drive full time, i.e. 8 to 10 hours a day. It is difficult to put a number on the regular bonuses being handed out by both companies but I am told that they can be significant. Most drivers that I have interviewed as part of this research say that they are able to make around Rs. 50,000 in profit every month by driving full time. It all obviously depends on how many rides you are able to take – the above estimate is quite conservative.

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Uber settles its accounts with drivers on a weekly basis whereas Careem does so every two weeks. The account is reviewed and you must pay whatever you owe in commissions unless you have had more credit card rides or your bonuses are more than the commissions, in which case the company will pay you the balance.

Both companies operate a 5-star rating system for their drivers. At the end of each ride, the customer must give the driver a rating and future customers can see your rating when you accept their request. Both companies require certain rating criteria to be met – which is a minimum of 4.5. If your rating falls below that, your account may be deactivated or you may have to meet with the company’s representatives to discuss the matter. Uber calculates your average rating from the last 500 rides, and Careem does so on a monthly basis.

There is also something called your acceptance rate – which is the number of rides you accepted out of the total you had been requested. Careem allows you to only decline 2 requests per day, and if you decline any more you are charged a penalty or may be deactivated. For Uber, the minimum acceptance rate is 95%, which means you are only allowed to decline 5 requests in every 100 or face the possibility of deactivation.

Money matters aside, there is also a difference in how each company treats its drivers. Neither Uber nor Careem actually employ the drivers – they are simply freelancers. Careem refers to its drivers as “Captains”, while Uber calls its drivers “Partners”. Both companies strive to be more inclusive and make their drivers feel more appreciated. Unfortunately, the drivers that I interviewed did not speak positively on the support being provided to them by either company. For example, during the recent issues with the Government, riders were not provided with any compensation if their cars or licenses were seized by Government officials. They were simply told to carry on and that both Uber and Careem are working with the Government to come to an agreement. On the other hand, I personally experienced a similar situation in Dubai 2 years ago, when the UAE Government also outlawed Uber and Careem. Traffic police were handing out fines as large as AED 5,000 (Rs. 150,000) to riders who were using Careem or Uber. I witnessed such a fine while sitting in the back seat. I would be distraught at being fined that amount, but the driver was calm, because the drivers were given instructions by the two companies to simply take the fine without argument and that the company would provide them with a refund. Seems like both companies were not ready to take similar fines in Pakistan.

The bottom line is, there’s very little to choose from between the two competitors from a customer or driver perspective. This is supported by the fact that most riders have actually signed up to both companies, and most people using these facilities have both apps on their phones and do not have much of a preference. As a driver, it can prove to be a great source of additional income if you decide to do it part time on evenings and weekends. One thing is for certain, these companies have proved that the sharing economy is the way forward and this model can and will be used in different industries in the years to come.

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