How Did Careem, a UAE-Based Ride-Hailing App, Become the First Unicorn in the Middle East?
According to Statista, the global ride sharing market is expected to grow by 40% between 2023 and 2028. The market revenue is expected to reach $216 billion by 2028.
The advent of ride hailing app development has indeed revolutionized travel, especially in the urban lands. The United Arab Emirates has embraced shared mobility in its unique way, projecting a total of 5312k users by 2028.
Amidst the diverse players in the UAE market, Careem emerged as the first company to grace the unicorn status in the tech segment.
This success story is a testament to the region’s growing influence in global entrepreneurship. So, what led to Careem’s meteoric rise? It is crucial to understand the strategic decisions and milestones that helped them attain the unicorn status.
This article will largely explore the insights that will help build a roadmap to transform any company into achieving unicorn status. We will look at the unique blend of innovation and strategic foresight that led to the company’s achievement. You will also learn how you can adapt these learnings to your business.
Brief Overview of Careem
Careem was founded in 2012 by Mudassir Sheikha, Magnus Olsson and Abdullah Elyas with a single-minded goal to redefine transportation in the Middle East. They began with an idea to make ride sharing safe and convenient while keeping in mind the unique cultural aspects of the region.
The key element that differentiated Careem from others was the localized approach it took to build the business. They understood the diverse preferences of the users and the infrastructural complexities within the region. As a result, they were able to personalize their services to meet these unique needs.
This core strategy helped with personalization and fostered credibility among the users. This led to increased use of this ride sharing service. Additionally, they also used technology to connect with their users.
For example, they were able to optimize the route algorithms, ensuring fastest route to the destination every single time. They implemented safety protocols within the application for a seamless experience.
As they were able to use technology efficiently, the company ably differentiated itself from the competition. This led to increased efficiency and scalability.
Careem’s strategy also included defined partnerships with the local stakeholders (governments, businesses and transportation authorities). This also helped them traverse the regulatory hurdles efficiently. These partnerships also helped with gaining the right insights and support networks for exceptional market understanding. Let’s look at the key challenges the company faced and how it overcame them.
#1. The Regulatory Issues
Let’s understand this issue in depth and how Careem overcame it. The government regulations on transportation services were different in the different cities/countries. This could pose a challenge, especially if you are planning a single service application for different needs.
Careem had constructive dialogues with the different stakeholders and authorities. They created a business model that helped in managing the diverse regulations while keeping up with the innovation.
#2. Global Competition
Careem faced global-level challenges when it presented itself amidst heavy players. There were giants like Uber already grabbing half the market.
The only way Careem could overcome this challenge was by building on localized solutions. They knew the Middle Eastern market and could offer a solution that meets the diverse needs. Moreover, they were able to understand the users better in this way.
#3. Cultural Aspects
The Middle East houses diverse cultures, customs and languages. It is crucial for a business to stay true to the numerous cultures while being consistent with the brand’s values and culture.
Careem embraced the cultural sensitivity at the core of its operations. They ensured they were catering to multiple languages and customs via their business application. This user-centric approach earned them maximum conversions.
#4. Security Challenges
It was crucial for any ridesharing business to ensure they keep the drivers and passengers safe and secure. This meant stringent measures while checking the background and implementing data safety protocols.
They used in-app safety features like tracking and emergency assistance that helped them overcome security concerns. The entire app has built itself on trust and credibility.
The Business and Revenue Model
While Careem has adopted a similar model to most ridesharing companies, they have embraced the unique things that define the Middle East culture and users. Let’s look at the model in detail.
#1. Ride Hailing Services
This is basically a ride booking service using which the users can connect with the drivers. They can go with real-time or scheduled booking in this model. They get maximum flexibility and convenience with this model.
In this model, the ride cost is calculated using factors like distance, time taken and the demand for cabs at that hour.
#2. Driver Commission
The other revenue generating model for Careem is by charging commission from the drivers. This commission is generally a percentage of the ride fare. This will depend on the location and services delivered by the driver.
The driver gets access to a steady revenue stream for the percentage they pay the platform. It also includes insurance coverage and vehicle maintenance for the drivers.
#3. Surge Pricing
When the demand is high, the cab company will automatically implement the surge pricing model. This allows them to incentivize the drivers to pick up the customers during peak hours. It also helps manage the demand-supply for the cab-sharing company.
#4. Subscription Services
There are subscription models that are designed for customers who frequently use cabs in this region. The subscription plan offers discounts, priority booking and other exclusive features. It comes with several benefits by prioritizing the user’s benefits.
#5. Delivery Services
Careem has gone beyond the cab sharing solutions to include delivery services as well. they have adopted the food delivery model as well to increase their revenue stream. This is a great way for the company to capture a greater market.
Top Ways Careem Became the First Unicorn
Careem has not just revolutionized the ride hailing app development segment; it has also transformed the startup space. Here are all the ways in which the business managed to achieve it.
#1. Taking the Localized Approach
When you understand your local customers’ requirements and culture better, you can offer them more personalized services. Apart from their culture, it is equally important to know the legal norms, licenses and permits required to operate in the country.
That’s what Careem did as soon as they hit the big idea. They understood the culture and infrastructure complexities in detail. Once they had complete knowledge of how these countries operated, they began defining the marketing, sales and operations team for the business.
They went on to hire mobile app developers in UAE to build an app that synced with the nuances of the tech and culture of the Middle East.
Their in-depth understanding of the region and culture set them apart from the global players. This is what helped them achieve maximum share of voice in the startup space.
#2. Forging Strategic Partnerships
This was the second move that enabled them to stand apart amidst competition. They realized the importance of strategic partnerships with government and the businesses. They also considered entering into a partnership with the local stakeholders that can provide them with the essential resources.
These partnerships enabled them to further their growth. It also established an environment of trust and credibility. They were legitimate with these pointers.
#3. Taking the Customer-first Approach
Careem prioritized the customers when planning their services and technology. This allowed them to choose the services that were satisfying and in sync with their customer’s requirements.
This also helped them plan their expansions into different segments, including food delivery and courier. They also managed to use technology in the best possible ways to transform the transportation segment for their users.
#4. Unique Business Model
The multiple and diverse business models that help the business generate revenue are also one of the core reasons it attained unicorn status. They managed to introduce a variety of models that promoted the customer and driver’s cause.
They also offered incentives and discounts via their models, which helped the driver earn better and customers save more. This allowed the business to generate revenue with a sustainable growth-profit model.
#5. Cultural Sensitivity
This demonstration was one of the many reasons why Careem gained unicorn status. They were able to recognize the cultural diversity in the Middle East and could showcase sensitivity in their business approach.
They planned a model that resonated with the multiple languages and customers. They also established a stronger understanding of customers and communities, which helped them be more credible and reliable in the user groups.
#6. Growth and Expansion
One of the approaches that effectively converted them into a unicorn was their aggressive growth strategies. They invested in the right technology, called for data-backed insights and made strategic investments.
This enabled them to understand the market better, send out personalized messaging and improve their operations. It also helped them scale to meet newer demands and enhance customer acquisition. They were able to grow into a dominant ride-sharing player in the Middle East.
#7. Recognition from Investors
Careem received recognition and validation from investors that helped them gain the requisite funding. They also helped them build the roadmap for growth.
This recognition earned the company investors from venture capital firms and sovereign wealth funds. Eventually, it also helped them gain credibility and improve their visibility.
Here’s a look at the funding that helped this initially bootstrapped company the validation and recognition from investors.
- In 2013, the company received seed money of $1.7 million from STC Ventures. In the very next year, they were able to get funding of $10 million from Al Tayyar Travel Group, in the series B round.
- In a series C round in 2015, the company secured $60 million from The Abraaj Group. This is also the time when they collaborated with the regulators in Dubai to ensure all taxicabs and limos are booked via their app.
- They raised another round of funding of $350 million in Series D in 2016. The Saudi telecom invested 10% of this money. In 2018, they again managed to gain a good amount from their existing customers.
- In 2019, the company gained unicorn status when Uber acquired it for $3.1 billion.
#8. Empowering Local Talent
This strategy helped them discover the local talent that can help them grow the business. they chose people from diverse backgrounds to help with the innovation. They collaborated with different players to drive inclusivity.
They leveraged the rich talent pool of Middle East countries and their expertise. This helped them build a solid team of passionate people, which improved their growth opportunities.
The 5 Features That Set Careem App Apart
#1. The Go Feature
This is the flagship feature introduced by the application, which allows users to book their rides with just a few taps. It also enables real-time tracking and helps understand the estimated arrival time. they would also learn the basis for the pricing, which makes it transparent. This feature can enhance the user’s experience.
#2. Captain Ratings
The app introduces a specific feature known as “captain ratings.” This is basically the feedback and ratings the driver receives for each ride completed successfully. The rider can also rate their customers, which will help other drivers take up the ride. This rating system helps improve service quality.
#3. In-app Wallet
With the world going cashless, this is an excellent step towards this future. The wallet allows you to move around without carrying your card or cash. It also provides a safe and reliable method to complete the payments.
#4. Careem Rewards
These reward programs can be compared to loyalty programs. In this case, the user will earn points for every transaction or ride taken. These points can be redeemed as discounts or offers within the application. It helps incentivize the customer to make repeat purchases.
#5. Diverse Services
Careem has enrolled multiple services, alongside their ridesharing solution, which has become an instant hit. It enables convenience to the users by offering courier and delivery solutions. They are expanding their markets to meet the customer needs and preferences.
Conclusion
Careem’s journey is a testament to innovation, resilience and strategic vision. They didn’t go the “me-too” way while creating a ride-sharing application. They took a more localized and unique route that helped them position their services better and improve acquisitions.
They adapted cultural sensitivity and approached the market with a unique business model and customer-first strategy. They also managed to emerge as the trailblazer in the Middle East market for their tech solutions.
Whether it is the cashless payment solution or the rewards feature, they made sure to improve engagement via their app.
If you want to build a Careem-like application in the UAE market without taking the “me-too” approach, you can connect with Expert App Devs. As one of the leading mobile app development services in UAE, we can assure reliable and tech-savvy app solutions that offer sustainable growth.
Jignen Pandya
Vice President at Expert App Devs
Responsible for creating a sales funnel, attracting top-of-the-funnel customers, and converting the target market.
