Ronald Hakiza lost a relative and was to attend the burial in his village. However, due to a busy schedule, he got to the bus park late and could not get a ticket on time.
Standing there confused, a gentleman walked up to him claiming he could sell him a ticket at a relatively higher price. Without hesitation, Hakiza bought the ticket and boarded the bus.
Some minutes into the journey, inspection of tickets commenced and when it was his turn, he was told his ticket was fake. He had two options though; get kicked off the bus or pay extra to continue the journey. Of course, he chose the latter.
“I had been constantly fleeced by con men at bus stations in Kampala who acted as bus touts [sic], and I knew the ticketing system was broken, but this particular time, something had to be done,” Hakiza remarks.
Upon returning to the city, Hakiza wondered if there could be a better way people like himself could search for, compare, and book authentic bus tickets online. He couldn’t find any, so he decided to pioneer one.
“Marvin and I have been friends for some time, with ambitious career goals. Of course, at the time, we did not have the idea of Ugabus, but we both knew that a career in entrepreneurship was what we wanted.”
Hakiza would go on to acquire more business skills after attending the 12-week-long mentorship training in business and entrepreneurship at Young African Leaders Initiative (YALI).
This experience would help the co-founders launch their startup.
Growing the business
The pair started Ugabus in 2015 as an online ticketing company for buses to enable travellers within East Africa buy bus tickets. From Hakiza’s experience at the bus terminal, the startup set out to solve the problem of having long queues and falling prey to sellers of fake tickets.
According to Hakiza, bus tickets are cheaper when purchased on the Ugabus platform. Users can also make informed decisions on which bus to use, price, and departure time.
“We created Ugabus.com to democratize travel, make it more authentic and reliable. We strive to be closer to the customer each day, improving customer experience and respond to queries in real time. But also, we promise and deliver.”
Along with the business-to-consumer (B2C) product that allows travellers book tickets on the go via the mobile app and site, the startup offers a business-to-business (B2B) product to bus owners. This bus management system, which includes features like employee management and e-ticketing inventory, allows owners to digitally manage the day-to-day affairs of their bus business.
Onboarding bus owners has not always been easy as Hakiza speaks about a time when they did not welcome the idea, and told the startup to prove the solution worked before they paid for it.
“We started out by using the system to book tickets for ourselves. In case a friend was going to travel, I would encourage them to use the platform to secure themselves a seat in a bus of their choice. After using the system, they would also recommend it to other people,” Hakiza says.
Large market share plans
After running for a few months without collecting commissions from bus owners, Ugabus started generating revenue in July 2016. As a few of these bus companies became more receptive to the solution, Hakiza says the startup began charging 5-10% commission on every bus ticket sold and in the process, made $21,000 the past year.
With no venture capital yet, Ugabus has been heavily reliant on revenue generated from operations but it has received support from organisations like the United States African Development Foundation (USADF) in the past. This hasn’t deterred the startup as it boasts of 5,000 users so far — a figure Hakiza believes will double before the end of next quarter.
Like any indigenous startup in the Eastern part of Africa, Ugabus has encountered its own set of challenges. One is in the place of sales and revenue, especially as the customer is not required to pay for using the service.
“In Uganda, things are different from other countries. Here, we have a certain number of sales we must make for us to make any money per week. Falling short of that number means it’s a wasted week. Remember, we never charge the user anything,” Hakazi says.
Another is customer acquisition and retention.
“Customer acquisition and retention stand at the heart of our day-to-day hurdles. This makes the cost of growth so high. However, to solve this, we have strengthened our customer experiences so as to increase referrals, and streamlined our marketing plan to enable us to build sustainable results while remaining profitable.”
Even with these challenges, Ugabus has managed to provide its customers with bus routes to 60 destinations around East Africa with more than 1,000 bookings done month-on-month.
As a result, Hakazi believes this is just the very beginning for the startup as they have plans to get the lion’s share in this space.
“By 2020, Ugabus should be a strong force to reckon [with] across the region. We have plans to launch in more than 6 countries especially the B2B model which we believe bus operators in these countries should find very reliable and user friendly.”
Nigerian startups raised $55.4m in Q1 2020; over 99% of which came from foreign sources. Find out more when you download the full report.
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