Ride Hailing Co. Comes to Mashhad, With a Caveat

Following success in Tehran and other major cities, Iran’s first low-cost ride hailing app, Snapp, has started offering services in the northeastern shrine city of Mashhad, capital of Khorasan Razavi Province.

To promote its services, Snapp is currently offering Mashhad residents several incentives, like a first free ride. In addition to Tehran and Mashhad, the business currently operates in Karaj, Isfahan and Shiraz.

However, it is not certain how long the company will be allowed to operate in Mashhad. Earlier, another Iranian ride-hailing app, Tap30, started offering services there; however, after two weeks it was shut down by judicial order.

In this regard the hHead of Mashhad Taxi Guild, Mahdi Alavi, said, “The business did not have permit to operate in Mashhad and was stopped.”

Later CEO of Tap30 accused the Iran Chamber of Guilds of delaying its permits intentionally “in favor of other companies.”

Milad Monshipour said the guild refused to grant the necessary licenses to Tap30 leading to disruption of the company’s operation.  “Tap30 had applied for the permits long before its rivals. While they received the license long ago we are still waiting.”

So far Tap30 cannot operate in Mashhad. This is while two other companies, Cheetax and Touchsi, are up and running there.

In other cities traditional taxi services have become disconcerted as ride-hailing services become popular and hamper their business.

Affordable fares, at least so far, could be named as the main reason why traditional taxi services have lost market share to their Internet-based rivals.

Given the legal vacuum regarding Internet-based services, the ride-hailing companies’ fight for survival will continue in the foreseeable future, so it seems.

 Expanding Market

Co-owned by Germany’s Rocket Internet and MTN-Irancell through its holding company, Iran Internet Group, Snapp has been expanding gradually.

In addition to Snapp, Iran Internet Group owns Zoodfood.com, Iran’s largest online food delivery service. In July the company rebranded Zoodfood, and now offers food delivery services under the new name ‘Snapp Food’.

Snapp is visibly aiming to increase its presence through such moves. It is likely that the company will merge its two applications (food delivery and ride-hailing apps) easing customers access to the services.

Moreover, the business has added an option for motorbike delivery services to its ride-hailing app. Dubbed “Snapp Box” the service is set to compete with other companies offering parcel delivery services, like Hamloo and Alopeyk.

Like the already established apps, the service locates the closest driver in the vicinity of the customer, thus reducing a significant amount of waiting time.

Relying on MTN-Irancell financial and technical backing, Snapp has been able to grow significantly. However, when it comes to transparency and opening the books it lags behind – a critical issue if not addressed in time could well emerge as challenge for its senior management.