New entrant seeks to reduce fraud in car hire business

Several years ago, Rawlings Otini booked a vehicle online to get him from Kisumu to Nairobi. He was excited about the trip, so when the car owner asked him to pay a deposit first, he quickly obliged.

When he arrived in Kisumu and tried to reach the car owner, the call kept going to voicemail, and after several attempts, it became clear to Otini that he had been conned.

This experience is what inspired him to launch Zuru, an online car rental platform which matches car owners with people in need of a car for hire, and acts as a guarantee between the two parties.

To start off, Otini consolidated his savings with money he borrowed from friends, raising Sh700,000 which he used to develop a working prototype of the platform, as well as finance other administrative tasks.

“I built the platform in such a way that when the customer pays the deposit, the money remains in the platform until the customer gets the vehicle,” explains Otini.

Registration

Once a user downloads the Zuru app on Google Play Store or visits the website, one is required to register on the platform using details such as their ID number, photo and driver’s license.

One can then enter their location, and all the vehicles available in that area will be listed. Currently, the app focuses on small vehicles.

Before loading their vehicles, car owners are required to produce information such as their logbook and vehicle registration for purposes of security. Users can then enter the pick up and return date. The app then shows the amount it would cost for that duration of hire, and if the car owner accepts their bid, then clients can make a deposit of half of the amount they are to pay.

“The app is integrated with an M-Pesa system which acts as an escrow account. When a client meets the car owner and is satisfied that the car is in good condition, the Zuru team releases the deposit to the car owner and takes a commission of 10 per cent on that deposit,” said Otini.

Being a new product, Otini says it was not easy to convince people to load vehicles onto the platform initially, and clients would move to their platform only to find that there were no vehicles available.

Build confidence

“We got rejected many times when we started, we would call 30 prospects and get accepted by only three, so we had to operate for free for a long time just to build the confidence before we could integrate the payment system where we charge a 10 per cent commission,” he says.

With time, individuals and car hire businesses started considering their product. However, there was yet another challenge. People who would want to hire out their vehicles were afraid that the vehicles would not return in good condition. To get rid of this apprehension, Otini approached two insurance providers who offered a product where a customer can pay for a cover that is active for the number of days they have hired a car.

Currently the platform serves an average of four customers a day in the areas of Nairobi, Mombasa, Eldoret, Nakuru and Kisii. Thursdays and Fridays are the busiest when the demand is more than the supply.

Otini says a car owner who does not frequently use their car can use the platform to generate an extra source of income. Car hire businesses can also leverage the platform to scale their operations to expatriates, for instance those who come into the country for just a few months and therefore don’t need to buy a car, or individuals who use alternative modes of transport to work, and therefore only need a car occasionally to drive friends and family around.

“There are two to three million vehicles, and about nine million driving licenses available. Car owners either leave their cars at home due to traffic or they drive to work, park the cars for eight hours, and use them for 45 minutes to return home – what if your car could earn you money during the eight idle hours?” poses Otini.

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