In July, Uber slashed the prices of rides in Nairobi by 35%. The move was seen as reactionary as the ride-hailing company was increasingly under intense competition from new entrants such as Safaricom and Craft Silicon’s Little. In addition, sources intimated that growth of the service in Nairobi had plateaued and the price slash was meant to ignite growth in the Kenyan market. In the new order, Uber slashed the charges for every minute spent on the ride from Kshs. 4 to Kshs. 3; charges per kilometre from Kshs. 60 to Kshs. 35 and dropped minimum charges from Kshs. 300 to Kshs. 200.
In a move that will likely ignite a price war, Little has announced new price changes to its offering. Initially, Little charged no base fare but charges a minimum fare of Kshs. 270 and a cost of Kshs. 55 per kilometre and Kshs. 4 per minute. Under the new regime, Little has slashed the minimum fare for rides to Kshs. 200, which matches Uber’s prices in Nairobi. At the same time, the cost per kilometre charges has dropped to Kshs. 30 from Kshs. 55 while ride per minute charges remains the same. An interesting addition to the new price changes was the introduction of a base fare of Kshs. 100, which Little says was meant to take care of ride cancellations.
According to Maureen Chege, Little’s head of Sales and Marketing, driver earnings will remain intact despite the price slash. “We shall reimburse our drivers the difference in earnings resulting from the price changes meaning they will continue to take their earnings as was the case before”. Little currently completes 3,500 rides a day and that the price changes will be effected in Nairobi and Mombasa. Little has recently ventured into Thika town.
The price in effect one-ups Uber’s previous changes and it will be interesting to see what the San-Francisco based company does to counter this aggression by Little. Little has also been keen to innovate around its product which saw the firm launch a USSD front, for users who do not have smartphones. It also has Lady Bug, a service that primarily targets female customers.
