China's ridesharing company Didi has just bought out Brazil's rideshare company 99 for $900 million. The amount is being split into two sections, $300 million for investment in the company and $600 million to buy out 99 investors. This completes a $1 billion that Didi has invested in 99, after their $100 million in January 2017.
To understand what companies such as Didi and Uber are in a global war for gig economy domination, we have to understand the mechanics of the market. Gig economies power is derived from the number of customers they can reach through their app. The number of operators magnifies their reach each app can provide. In the case of ridesharing, the larger the market of drivers using the Didi app the greater their reach to customers. This not only translates into direct income from service fees but also in secondary apps and products that Didi can offer.
The main function of rideshare app is to provide a transportation service that competes with conventional taxi and public transport. However, apps are also digital marketing platforms and can be used to sell door to door deliveries, and courier services for documents and parcels. While these are the main features, the large number of drivers using an app can be converted into trusted service buyers for car insurance, car maintenance, car loans, leases, gadget sales, clothing, etc. Also, customers, which can reach the millions, are also a perfect target for marketing other products and services.
While Uber initially set its eyes on Asia, Didi grew up fast and challenged Uber, buying out their China-based services and taking over the market. They did not stop there, and invested in Singapore's Grab as well as spreading out in the area. While Uber fights Ola in India, and Lyft fights Uber in North America. Didi has started to expand its influence in Central and South America as well as looking at Africa and Europe.
Globalization is the name of the game in gig economies, and currently, there are four giants and hundreds of small companies in the market, all vying for the same pie. The main characters to watch are Uber, Lyft, Didi, Grab and Taxify (Estonia). Uber is the initial globetrotter that could have cornered the market had their previous CEO managed the company in a more ethical manner. Lyft has now left the US border and traveled north to Canada. Grab is situating itself around South East Asia, and Taxify is expanding across Europe, the Middle East, and North Africa. The one common denominator that all have is Japan's SoftBank that is invested in Uber, Didi, Ola, Taxify, and Grab.
However, if you thought it was that simple, guess again, Uber is invested in Didi and Grab, Didi is invested in Grab, Lyft and 99, so we do not know what the global market will look like in the future.
With so many billions being spread around on an annual basis, the gig economy market is still expanding and finding new ways to express itself. Uber provides UberEats, Didi has bike sharing, and all companies are heavily invested in the driverless car sector.
Currently, Didi reaches up to 60% of the world's population and is found in over 1,000 cities. They claim that over 450 million people use their app. We think that's correct. However, we expect that most of their customers are in China since it is the world's largest population and Didi is a Chinese monopoly.