Feasibility of starting a sharing economy motorbike venture in Pakistan

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6.2. Feasibility of starting a sharing economy motorbike venture in Pakistan

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Ahmed further mentioned that the comment made by Uber’s CEO’s Dara Khosrowshahi (2019) about Pakistan stating “(…) now Pakistan is one of our fastest growing markets in the world (…)” just days before the meeting between the management of First Round and Airlift made things much easier for Airlift in acquiring funds.

“That statement alone made a huge impact and changed the direction of all search engines. The investors started focusing that this small country next to India is quite important (…) So due to Uber, Airlift came under the radar of major investors” (Interview 2: Ahmed Ayub).

Moreover, another leader from LinkedIn US, Atif Awan, VP, Growth and Internationalization (until March 2018), and few other leading national investors approached Airlift’s management in desire to invest in the firm as the global investors had started viewing Pakistan based tech startups very keenly. Airlift has been able to raise funds much faster, easier and much larger in amount than the initial expectation of the founders. Therefore, the Primary data reinforces that the political standing of Pakistan is optimistic.

The political outlook of Pakistan appears positive and supports the idea of starting the sharing economy business.

Economically, Pakistan is facing a tough year due to several reasons stated in the economic section of PEST. However, the nature of this motorbike-based sharing economy business idea is such that a downturn in economy, further leading to a drop in car sales, may result as an opportunity for this business.

There is a huge population in Karachi and Lahore that commutes to work or college/university on daily basis. Public transport services are available, but they are not enough to support the number of daily commuters, which is why according to a survey in 2010 around 40% people in Lahore commuted to work by foot despite the unavailability of proper infrastructure in some areas i.e. properly made footpaths (Appendix 15) (Malik, Majid & Vyborny, 2018). If there is a motorbike-based service available in the city, it has the potential to help many people specially those belonging to the lower to middle class.

Moreover, the economic condition of Pakistan is expected to start getting better from 2021 onwards (World Bank, 2019b) as explained in the PEST. The economic indicators are directing in a positive direction in the long run which is why the country is expected to be among the top 20 global drivers of economy by 2024, according to IMF (Business Insider, 2019). Primary data also supports that people are looking for an economical solution to their everyday commute, primarily the middle class in these metropolitan cities.

Despite the economic downturn, due to the nature of business and high demand to commute, economic situation favors the motorbike-based sharing economy business idea.

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Among social factors, primary data has been the most crucial determinant due to the city’s culture and due to practical insights gained by the interviewers. Socially, the metropolitan cities are ready for sharing economy which is evident by the growth of Uber and Careem etc. The challenge, however, resides in the nature of business (motorbike, instead of car) and its suitability for male and female userbase due to cultural reasons, as well as the choice of the most suitable city to launch the business.

Response of potential female users: According to primary data, while motorbike related business appears to have huge potential to grow, however, the idea may not attract the female target market in the beginning. In Pakistani culture, females ride a motorbike when accompanied by a male driver. Females rarely drive motorbikes in Pakistan due to which the idea may lack acceptability by the larger female segment due to reasons such as feeling awkward socially and due to fear of harassment. According to a regular user of Careem and Uber in Lahore, Azka, she would never use a motorbike to commute in Lahore as she expects harassment from other bikers during her ride, and especially when the bike stops on road signal where many other bikers also line up closely side by side. She was not comfortable with the idea of riding the bike herself such as mobike users or even if accompanied by a male or female driver. Azka stated

“(…) if you stop somewhere and they see a woman riding a bike, let’s assume the driver is a female in this scenario so there are going to be chances of harassment even then because now there are two women on the bike. That’s quite a sight for Pakistanis”.

Similarly, the other female user Laraib Fatima answered to a question related to using motorbikes as, ”I just think that it is unsafe and I would be a laughing stock for people travelling by (…) it happened twice to me that I was touched inappropriately while simply walking on road with my friends. A person going on motorbike just slowed the bike, hit me with hand and went away. See. It can also happen to me if I am travelling on a bike openly. You know the problem even bigger than the driver is the other male travelers on the road. I would feel very exposed and vulnerable in this heavy traffic of Lahore among other male bikers and car drivers.”

Despite these interviewers belonged to highly modern, educated and liberal family backgrounds, they were not comfortable driving the bike themselves, or riding a bike with a male or a female driver.

Moreover, this was validated by the industry expert that bringing the female segment onboard may require some further analysis. However, while stating that, Khawar further mentioned that the business still has huge potential to succeed even with only male customers due to limited commuting options available, huge male user base and a huge population ready to use the motorbike as means of income.

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The Cofounder of Airlift, Ahmed Ayub validated that the idea has a lot of potential even if females are not using it in the beginning. He mentioned that Careem identified the social issue and the business potential associated with women motor bikers and in order to address this, Careem has started a new campaign in January 2020 by the name of “Careem WoW” (Careem Women on Wheels), in which both the captains and customers would be women (Interview 2: Ahmed Ayub). Careem is training women how to drive motorbikes in Karachi, Sindh and program is set to expand its reach to other parts of the province (Dawn, 2020). In a question regarding women fearing harassment travelling on motorbike, Ahmed pointed, “(…) Harassment would happen to women bikers, but for how long, one month, two months, when the number of women bikers would increase, then you will stop looking unique. For the first time when a woman would have wore jeans in Lahore, the same might have had happened to her too but now it’s a norm. So it’s for companies to figure out how to make it possible (…).

Therefore, it is plausible to state that currently while there is a social taboo associated with women driving motorbikes, it is expected to fade away soon as a result of efforts by Careem and when people become used to of seeing the women driving the bikes.

Choice of Karachi (instead of Lahore) as the launching city: Regarding the feasibility of starting the business in Lahore, according to both the industry expert, Hasaan Khawar and the Cofounder of Airlift, Ahmed Ayub, Karachi appears be a better market in order to launch the motorbike-based business followed by an expansion to Lahore in the next step, due to the following reasons.

Firstly, people from Karachi are less status conscious than people from Lahore and using a rented bike to commute would not be an issue of prestige as it may be for people belonging to Lahore (Interview 1:

Hasaan Khawar). Ayub mentioned that in Lahore people think it is “(…) associated with a lower status to ride or travel in a bus. People are ashamed of travelling in a bus.” (Interview 2: Ahmed Ayub).

Secondly, Karachi has a much larger population base (14.91 million) than Lahore’s (11.3 million) (PBS, 2017) which means a larger market with greater business potential, however, Ahmed stated, “(…) there is only 11% of population in Karachi that is using the public transport. Rest everyone is using their own car or motorbike or finding some other personal arrangement.” Third, Karachi is huge geographically with extremely dispersed population spread miles apart, distances are large and therefore the need to travel is even higher in Karachi than Lahore. Finally, Lahore is much better than Karachi in terms of infrastructure development and in terms of availability of travel options, in comparison to the availability of these services in Karachi, and therefore the demand for travel related services is much higher in Karachi than Lahore. Emphasizing upon the importance and need for the travel-based services in Karachi, Ayub

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mentioned, “we started Airlift in Lahore. But in all honesty, if we had planned things better, it should have started first in Karachi. It was actually, somewhat a mistake to start from Lahore”.

These factors make Karachi as the best option to launch the setup, and the services can be expanded to Lahore in the second step, like Uber did (Interview 1: Hasaan Khawar, Interview 2: Ahmed Ayub).

Socially and culturally, the idea of motorbike-based sharing economy business has great potential of success, even if the female segment is not onboard from the start. Moreover, the setup should be launched first in Karachi and services should be expanded to Lahore.

In terms of technology related global rankings, Pakistan may appear behind most of the developed nations, however, the profound success of Uber and Careem are evident that in certain geographical clusters, technological situation is much advanced than the rest of the country. Pakistan is one of the fastest growing markets for Uber, and one of the highest revenue generation markets for Careem as stated in PEST. Moreover, when Careem launched in Pakistan in 2015, they launched their services simultaneously in Karachi and Lahore with quick expansion to other parts of the country and is now present in 15 cities. Similarly, when Uber launched its services in Pakistan in 2016, it picked Lahore as the first city to enter with plans to increase its services to Karachi and Islamabad within one year of launch (CNN, 2016). Both the companies, now owned by Uber, are growing at a very promising pace in Pakistan which reflects that the technology required for such a setup to operate, i.e. primarily the mobile phone ownership, cellular subscriptions, 3G/4G subscriptions is already in place, in the metropolitan cities.

Moreover, nationwide, there is a four times growth in the number of 3G/4G subscriptions in the last three years and around 5 times CAGR increase in number of cellular subscriptions since 2010. The researcher further tried to probe for data pertaining to Lahore specifically, however, the information could not be found. Nonetheless, the available examples and information demonstrates that the large cities of Pakistan are well equipped technologically, and users are well versed to start using a ride hailing service.

Regarding mobike based business model, the technological issue identified which makes the model questionable is the user’s lack of traceability in Pakistan. According to Khawar, the accompanying driver is mandatory requirement for any such business due to the fear of theft. Unless there is a captain (another human involved), Pakistan is not ready to for mobike based driverless model (due to lack of trust). There is a huge market in Lahore named “Bilal Ganj” where the stolen autos, or their spare parts are sold and repurchased by other walk in customers at a much cheaper price (Interview 1: Hasaan Khawar).

In case of “mobike” or “Drive Now”, the users themselves are the drivers. Firms like Drive now first attain access to the user’s credit card information, a mandatory requirement for making a user account, in order

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to be able to use the service. The cars are either insured or the user pays for the amount required on top of insurance amount in case of accidents. In Pakistan, there is a high risk of theft if the bike is left on the disposal of users. In addition, there are hardly 2% people in the country who use credit cards (Interview 1: Hasaan Khawar, Interview 2: Ahmed Ayub). Even the insurance firms are reluctant to provide insurance in that case, as stated by Khawar (…) an insurance provider will come when he knows that the person is traceable and he has kind of grip on his financials which in other words turns out to be a credit card. Now in Pakistan you know the kind of financial equations that are present, credit card penetration is very less.

So, without credit cards even if you trace that person you are not sure of recovery, even if you take their CNIC and the person turns out to be poor, what are you going to do then?”

As mentioned before, when Uber was launching in Pakistan, realizing that it is a cash economy, Uber had to include the option of payment by cash (Fortune, 2016). Most of the transactions to Uber, Careem and other ecommerce companies take place through cash upon completion of user’s journey, or in the latter case, at the arrival of order. There are several COD (Cash on Delivery) firms now operating in Pakistan which keep a certain fraction of transaction as the share and act as the delivery service between the online retailers and the buyers. COD is the most commonly used medium of payment even for the orders placed online, as most of the customers lack credit card ownership, and even the customers who have a credit card are hesitant sharing the information online due to fear of hacking, or by fear of making the advance payment and not receiving the service or product for which they have already paid. Therefore, in a country where the credit card ownership (usage) is highly limited, making traceability of users a huge issue, the idea of driver less business model, such as mobike, will not be suitable. For any such idea to function successfully, a custodian is required in the form of a driver who takes care of the motorbike and ensures safety of the equipment from the service user. In other words, the business model has potential to succeed if it follows the model of Uber or Bykea, where the owners of the bike act as the captains, but the driverless ride hailing business is a big no for Pakistan in the current circumstances (Interview 1:

Hasaan Khawar).

Technological condition of Pakistan supports partial aspects of the business idea. Metropolitan cities of Pakistan are technologically advanced and ready for sharing economy, but the business model of mobike is not possible due to lack of user’s traceability and lack of digital payment systems. Considering Pakistan is largely a cash economy, the idea needs to be altered by keeping cash payment option, following the business model of Uber where the driver (partner) is the guardian of the vehicle.

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