PRICE DRIVEN: Ridehail industry facing growing consumer frustration over prices and loyalty decline

Consumers are becoming increasingly discontented with rising global ridehail prices, leading to a notable decline in brand loyalty, according to the Obi Global Rideshare Report 2024.

The report, which provides a comprehensive analysis of the current state of the ridehail industry, highlights a significant shift in consumer behaviour driven primarily by cost and a demand for greater transparency.

The most pressing issue identified in the report is the cost of rides. A substantial 48% of respondents pointed to high prices as the primary reason they do not use ridehail services like Uber, Bolt and Lyft, more frequently.

This growing concern over fares is not just about the absolute cost, but also the perceived lack of transparency in how those fares are calculated.

Consumers are said to be becoming more aware of the breakdown of costs and are demanding clearer insight into how much of their fare goes to the driver, how much is retained by the rideshare company, and what portion is consumed by taxes and fees.

This concern over pricing is closely linked to a decline in customer loyalty within the industry. The report reveals that 37% of consumers are less loyal to ridehail operators than they used to be, a trend that has significant implications for the future of the market. Furthermore, 31% of respondents stated they were never loyal to any particular provider. This suggests that for a significant portion of the market, the choice of ridehail provider is driven almost entirely by cost rather than brand loyalty or service quality.

This trend towards price sensitivity and away from loyalty marks a significant shift in consumer behaviour, particularly in the context of the post-pandemic landscape where ridehail usage patterns have been disrupted. Before the pandemic, many consumers might have favoured a particular operator based on perceived reliability or a preference for the app’s interface. However, the current landscape shows a more competitive environment where consumers are increasingly prioritising cost over these other factors.

The findings from the Obi report highlight the importance for ridehail companies to reconsider their pricing strategies and transparency measures. As consumers grow more price-sensitive and less loyal, operators may need to innovate to maintain market share. This could include more dynamic pricing models, increased transparency regarding fare breakdowns, or loyalty programs that offer tangible benefits.

Additionally, the report touches on other critical areas such as driver pay, which remains a contentious issue, and the rise of green rides as consumers show growing interest in environmentally friendly options. These factors, combined with the current pricing concerns, suggest that the global ridehail industry is at a crossroads, with the need for strategic adjustments to address shifting consumer demands.