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Impact Of Covid-19 And Future Of Mobility Startups

The impact of Covid-19 and the future of mobility startups is a necessity for government and individuals companies to look into. More consideration should be given to the Mobility sectors. However, as countries are opening up during long months of locked down because of the COVID 19 pandemic. Businesses and workers are afraid, especially on Mobility. Over the past months over 40 million U. S workers have lost their jobs. According to researchers at the University of Chicago estimate that 40% of these jobs are gone forever.

Impact Of Covid-19 And Future Of Mobility Startups

This is the first part in a series of features examining the impact of Covid-19 on the region’s transport and mobility startups. But as entire cities underwent a lockdown with movement restricted, it was the mobility sector that came to a grinding halt with it. Keep reading on to see the Impact Of Covid-19 And Future Of Mobility Startups

Impact Of Covid-19 And Future Of Mobility Startups

From records, the Mobility sector is among the sector with the hardest hit. The transit system has seen up to 90% drops in ridership. Massive revenue losses and serve interrupted. According to The Verge, Uber reports that passenger bookings have dropped to 70%. Dockless e-bike and scooter sharing and, ridesharing services have suspended services in some cities, and Uber unceremoniously sold its e-bike service.

Dubai’s Road and Transport Authority (RTA) had partnered up with US-based Via to offer its own on-demand bus service, but as governments issued lockdown orders and schools were closed and people began working from home, traveling by bus became a dangerous adventure.

In a Wamda report looking at the impact of Covid-19 on startups in the region, it was the mobility sector that was affected the most, with business demand dropping to zero and investors shying away from the sector entirely.

The high cash-burn nature of mobility startups put them at odds with the new world that emerged, one that values a clear route to profitability. The pandemic presented a devastating blow to the bus-related apps in particular, which had prior to the pandemic been one of the fastest-growing segments in mobility.

Careem, which had reported an 80% decline in revenues during the lockdown, end its bus service in Egypt, Jordan, and Saudi Arabia not sure if the service will resume. The company now is embarking on its super app strategy and have others have offered to fall back on, but other mobility and bus startups had no such cushion.

Business Now Takes a New Strategy

The shift in consumer behavior forced startups operating in the bus-hailing and booking space to evaluate alternative operating models and revise their growth strategies.

According to Amr El sway, founder of Egypt-based Buseet, a bus shuttle service “We had to rethink our strategy to become more cost-efficient so we can have a longer runway in the coming period,” Also, “Internally, we had to make some tough decisions as we had to let go of about 25% of our manpower and impose salary cuts.” The company shut down its business to consumer (B2C) segment, a high cash-burn model with very low returns, and instead readjusted its focus on leveraging the business to business (B2B) model.

Also, El Sawy said “We have decided to start targeting factories and companies, particularly these that operate in sectors that have been thriving during the lockdown like food and beverage,”

Similarly, Egypt-based startup Seater, which initially started off as a B2B platform that specialized in transporting students and employees to their places of work (companies or factories) had to shut down its school-related operations and relied only on companies. As a result, Seater claims to have achieved 20 percent growth over the past three months due to these changes.

“Around EGP90 million ($5.6 million) is spent on mobility by 25 million students and 20 million employees combined every day,” says Ahmed Hammad, chief executive officer (CEO) at Seater, who is banking on the potential of the B2B segment and claims that SWVL has also opted for the same strategy to cash out.

In Oman, Muscat-based transport startup eMushrif has leveraged its Internet of Things (IoT) technology to pivot into new sectors.

“After schools shut down due to the Covid-19 outbreak, we had to come up with new solutions utilizing our existing technology stack in order to guarantee long-term profitability until schools are reopened,” says Hassan Abkar, country manager at eMushrif.

MOVING WORKERS

The need to move workers is essential to bring life back to the region’s economy, especially for jobs that cannot be done remotely. While demand slowed dramatically in the first couple of months of the lockdown, it is picking up once again.

According to Syed Karim, CEO, and co-founder of Caravan, which operates as an aggregator of privately-run buses in the UAE. The situation is also similar in the UAE, where there is still a need for higher quality bus on-demand services The company provides shuttle bus solutions for employees commuting to and fro work.

“We had a good interaction before the crisis. Our business as a whole went from literally hundred to zero overnight,” says Karim. There is still a need in the market for private bus transportation, but it cannot be like how things were before. Now people are looking for clean, hygienic, and sanitized buses with reliable operations.

As restrictions on movement were gradually lifted in Dubai and the government decreed that employees could go back to their offices, Carvan began to receive a high volume of inquiries asking for transportations solutions.

The Impact of COVID 19 on the Future of Mobility on Workers and Users

For those low-income workers who cannot work remotely, they contribute to an addressable market size of $1.3-1.5 billion according to Karim, and has great potential for growth despite the fact that in the UAE it is primarily B2B bus aggregators that are currently allowed to operate.

As for Caravan, Karim expects that the demand will see a slow pickup but it might take a bit longer. People are of the view that, while people are growing more conscious about their own safety, bus hailing services operating in the B2C model will struggle for a long while. It is expected to revive gradually by the time universities and schools are reopened

However, as the result of the Covid-19  pandemic, it will take a while before investors begin to invest in mobility startups. Many of these bus-booking startups rely heavily on laborers and service sector workers for the B2B segment of their business and unless the economy improves and projects continue, the rise in demand will likely below.

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