Economic Analysis of Ride

Sharing Services in Nepal

Sushmita Jha
Sushma Baral
Smita Nepal
Smriti Poudel
Sujata Neupane
Babin Boyaju
 Contents
• Introduction
• Brief History of Ride Sharing
• Different Ride Sharing Services in Nepal
• SWOT Analysis
• PESTEL Analysis
• Porter’s Five Force Analysis
• Impact of Covid-19 on Ridesharing Industry
• Future of Ridesharing and its Impact
• Conclusion
 Introduction
• It is an opportunity for public to connect with ordinary drivers
in real time for ride arrangements through online platforms
using mobile apps.
• Tootle was the first to introduce the ride sharing services in
Nepal in January 2017.
• In September 2018 Pathao acts as the mediator for a multiple
of services including ridesharing.
How can it function?
 Brief History of Ridesharing

 First started during World War II where U.S Authorities used ridesharing for the transportation of rubber for the
duration of war.
 Introduction of Carpooling in the mid-1970s due to the 1973 oil crisis and the 1979 energy crisis.
 In the 1990s, Carpooling was popular among college students, where campuses have limited parking space.
 Uber was founded as Ubercab in 2009.
 Lyft was launched in the summer of 2012.
 In 2013, California became the first state to regulates such ridesharing companies, they are regulated as public utilities
by the California Public Utilities Commission and the legal term used as “transportation network companies”.
 In context of Nepal Tootle was the first to introduce the ridesharing concept in Jan 2017 and in Sept 2018 Pathao acts
as the mediator for a multiple of services including ridesharing.
 Different Ride Sharing Services in Nepal
1. Tootle
12. Filili Ride
13. Superpartner
14. Motar Ride
2. Pathao 15. Carpoolworld
3. Sarathi
16. Indriver
4. Easy Taxi Nepal
17. Shree Vahan
5. Eddy Cab
6. Kawa Ride 18. Taxi Mandu
7. Onver Smart Taxi 19. Pokhara Taxi
8. Super App 20. Sawarima
9. Lozoom 21. Metro Online Taxi
10. Hoop Rides 22. Sahara
11. Sarara
 STRENGTH WEAKNESS
1. Lower Cost 1. Case of accident
2. Simple Process
2. Available only in limited area
3. Cashless payment
4. Option for specific vehicles 3. Depending on internet

SWOT
ANALYSIS

THREATS
OPPORTUNITY 1. Increasing Competition
1. New Market
SSS 2. Low profit margin
2. Business diversification 3. The impact of pandemic
3. Revenue Growth
PESTEL Analysis of the Ride
Sharing Services in Nepal
 Political/Legal Factors
• No integrated law that includes e-commerce, transportation and
related activities
• Ride sharing services registered with the Office of the Company
Registrar and not with the Department of Transport Management but
provide public transportation using private vehicles
• The existing Motor Vehicles and Transportation Management Act-
1993 prohibits the use of private vehicles to carry passengers on
fares leading to the controversy about the legality of these services
• The Bagmati provincial government introduced legal provisions that
allow private vehicles to operate for public purposes in the specified
areas by taking a fixed fare which contradict the federal law
• Ambiguous laws leading to never ending controversies
 Political/Legal Factors
• These services running freely at the present with no
hindrances from the government
• But in the future, the government may heavily regulate it and
may impact negatively
• Overall Impact in the Industry – NEUTRAL to
NEGATIVE
 Economic Factors
• Improve or decline in economy especially consumer spending
being positively correlated with revenue growth of ride
sharing services as the fares come from the disposable income
of people
• Nepal’s economy anticipated to grow by 4.1% in fiscal year
2022 and will continue to grow but at a slow rate
• Disposable income of people slowly increasing
• Overall Impact in the Industry – POSITIVE
 Social Factors
• Ride-sharing platforms have created hassle-free journeys in the
city’s narrow alleys
• Became an alternative for many who lost their jobs during the
pandemic
• Provided crowd free services which have become very crucial
during this pandemic
• Riders able to make money at a time convenient for them. So one
can utilize his leisure time or take rides on the way to destination.
• Introduction of insurance facilities for both the rider and the
customer and ride tracking features have made these services safer
and popular among its customers
• Overall Impact in the Industry – POSITIVE
 Technological Factors
• Technology drives this industry
• Uses computer algorithms combined with GPS tracking in
both the driver and customer’s phone to ensure people get
rides within minutes
• The main technological impact has already occurred
• Improved accuracy, location tracking and other new features
positively contributing to this industry
• Overall Impact in the Industry – POSITIVE
 Environmental Impact
• Increasing popularity of ride sharing services discourages the
use of public transport resulting in more vehicles running in
the roads
• Leads to increase in traffic congestion and increased emission
• The industry is still very small. So the impacts are minimal.
• Overall Impact in the Industry – NEUTRAL
Porter’s Five Force Analysis
 Competitive Rivalry Within an Industry
• Several huge companies already competing for the same small
market share
• Services are identical and can be easily substituted
• Low customer loyalty
• Rivalry among existing competitors - HIGH
 Bargaining Power of Suppliers
• Many exact same substitutes available
• Cost of customer switching: LOW
• Bargaining power of supplier: LOW
 Bargaining Power of Customers
• Buyer market relatively LOW
• Customer switching cost-LOW
• Identical substitutes available
• Customers are price sensitive
• Bargaining power of the Buyer-VERY HIGH
 Threats of New Entrants
• No government regulations
• Amount of capital required-MEDIUM
• Entry barrier-MEDIUM
• Switching cost of customers- LOW
• Products IDENTICAL
• Threat of new entrants-MEDIUM
 Threats of Substitute Products
• Any huge company can come up with the same services and
provide better facilities and attractive prices any time and
sway the whole market
• Buyers can switch with no cost at all
• Threat of Substitutes- HIGH
 Impact of Covid-19 on Ridesharing
Industry
• During the lockdowns, the industry heavily suffered like every
other industry due to the complete lockdown
• But after the lockdowns ended, the industry boomed
• Passengers opted ride sharing services to avoid crowd of
public transportation
• People loosing their jobs due to COVID 19 also turned to this
industry as it proved to be a good source of money
 Future of Ridesharing & its Impacts
• Promote digital marketing
• Employment Opportunity
• Competitive market
• Safety concerns
• Economic upliftment
 Conclusion
• Ride Sharing Services – Very competitive market
• Customer switching cost is zero
• New companies can sustain only if they can provide better
prices than existing companies and provide better services
• Utilizing the customer emotions to favor a new entrant like
providing shares to the riders instead of just taking
commission, providing certain percentages of profit to charity
or other Unique Selling Proposition can be the only way to
vastly capture the existing market share
• Huge capital investments and aggressive marketing seems
inevitable to enter as a new entrant and sustain in this market