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Home Business News

Gokada returns amidst price war, market expansion and government regulations 

Fakoyejo Olalekan by Fakoyejo Olalekan
August 27, 2019
in Business News, Company News, Spotlight
Gokada, Gokada, MaxNG slam Lagos government, says okada ban insensitive, calls for sector regularization

Gokada riders

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When ORide entered the bike-hailing market, its competitive pricing threatened a price war among market competitors and this possibility excited the customers and other stakeholders; however, Nigerians might not eventually get that battle which the country experienced three years ago with the cola-war. 

ORide’s entry strategy was a wish come true for many Nigerians, and while the expectation is that market rivalry will drop prices to keep their customers from porting to ORide, Gokada has distanced itself from such a move. 

Gokada had been the player expected to lead the charge against ORide, but the company has other plans and it doesn’t involve the Chinese bike-hailing company. Gokada told Nairametrics that the company’s activities are not being determined by its rivals’ operation. 

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How Gokada’s contract works: The company bears the cost 100% upfront, and then the GPilots (riders) pay a fixed amount from Monday to Friday for a 2-year period. When they are done with the payment, they own the asset and can decide to stay on the platform at a reduced cost or leave. 

[READ MORE: Gokada suspends operation in Nigeria two years after establishment]

Gokada isn’t stepping into the ring: The pioneer of bike-hailing business in Nigeria said that it has built a brand over the years that attracts customers without having to offer discounts, and intends to build on it. Recall that Gokada had previously shut down operations on August 14, 2019, and resumed on August 26, 2019. 

Gokada shutdown

According to the company’s Co-CEO, Ayodeji Adewunmi, engaging in a price war is not a sustainable strategy, “I think like a brand and a company, we are not going to get into a price war. We don’t think this is a sustainable strategy. We would rather focus on the experience, and the reason we think this is important is that currently today, for every order we are fulfilling, we get about 15 additional orders we can’t fulfil. So it clearly shows that the market is there.  

“We are also positioning the brand as a premium brand and we believe that once the experience is in place and as we keep growing, we will definitely be able to meet the current demand. Overall, we believe the market will grow. 

“So for us, it’s not about offering discounts to be able to attract customers, because we already believe that we have a brand that attracts enough customers. Even with more brands (competitors) on the road, demand will continue growing,” Adewunmi said in a discussion with Nairametrics. 

Market expansion and rival’s pace: With ORide already in three more states apart from Lagos, Gokada insists on making Lagos its fortress rather than allowing the expansion of ORide across Nigeria to dictate its pace. Gokada says that it’s not in a hurry to expand like its competitors; rather, it prefers to do the bike-hailing service better. 

While users of Gokada have not been complaining of the app’s functionality, complaints about ORide’s app have been on the rise. However, ORide has over a million downloads, while Gokada has only managed over 100,000; although this doesn’t determine the number of rides ordered on both hailing apps. 

[READ ALSO: Why Gokada should be worried about shutdown]

But for Adewunmi, the revenue potential of the bike-hailing market in Lagos is enormous, so there’s no need to rush to conquer new grounds. “We will not go to other cities because competitors are in other cities. We believe that Lagos is a massive opportunity, Lagos is approximately 750,000 okada market and on the back of the 750,000 okada, we are talking about 4 to 5 million rides a day. 

“And on the back of that, we are talking about 3 to 4 and 5 billion dollar revenue opportunities. So we are not in a rush to be everywhere at the same time. Also, we are careful about how we deploy our capital because, at the end of the day, we believe that will be what differentiates us. Lagos State’s potential upside is really tremendous.” 

Gokada

Gokada open to regulation: While the talk of possible regulation by the Lagos State Government has drawn criticism and also been described as a threat to the growth of the bike-hailing market, Adewunmi says that regulation of the business will create an advantage for players in the market and attract needed investors. 

“I think regulation will create a lot of advantages for the business. It will create the enabling environment for even more investment to come to space. So it’s something that we 100% embrace.” 

He also added that the company is working with the executive, and legislative arms of government to ensure that whatever the conclusion is, “we can contribute to the regulation.” 

[READ FURTHER: Is ORide behind Gokada’s shutdown of operations?]


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Tags: GoKadaORide
Fakoyejo Olalekan

Fakoyejo Olalekan

Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ). In the era of media convergence, Olalekan is a valuable asset, with ability to curate and broadcast news. His zeal to write was developed out of passion to shape people’s thought and opinion; serving as a guideline for their daily lives. Contact for tips: fakoyejo.olalekan@nairametrics.com.

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