Disruptive Market Entry Strategy – case study of OPAY

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OPAY ORide business entry strategy - SMEs

Opay by Opera is Pulling off the most Aggressive Market penetration STUNT in Nigeria. 

UBER currently has 9,000 active drivers, and monthly passenger base of 267,000 and that is just 0.2%  penetration rate in Nigeria.

Can you Imagine just 0.2%. 

This Poor penetration rate is largely due to poor infrastructure ranging from bad roads and accessible Serviceable road networks..

If you are resident in Lagos, you would agree with me that the level of traffic jams in Lagos is alarming. 

People going to work on the Island from the mainland spend more than 4 hours of their life everyday on traffic. 

According to research, roughly about 1 million people migrate into Lagos annually.

Now think about it. 

With that population, and the unavoidable traffic jams, it was clear that something had to be done. 

Metro Africa Express (Maxng) had the first mover advantage in coming up with a bike hailing app which promises comfort and safety considering the level of hazardous accidents occurring daily with the local (Okada riders). 

However, due to their unstructured business model at the time, it became easy for the market entry of Gokada

With the motorcycle industry having a fragmented informal market of a 100 billion dollars in Africa. 

Gokada saw the market entry gap and exploited it voraciously, displacing Maxng in a short time.

Both competitors has more than 1000 riders on their respective platforms, while Maxng boasts of completing a whooping 850,000 rides so far since launch. 

In retrospect, putting into perspective that both Maxng and Gokada have received rounds of funding with the recent ones being $7 million and $5.3 million respectively it is not advisable to play in the pool of red ocean dominated by sharks with deep pockets. 

However, in a short while Opay pulled off a massive brand penetration STUNT barely within 2 months of operation in the market. 

I will broadly highlight their penetration strategy and explain how you can apply them. 

You see,

China’s WeChat allows users to do just about anything in China. The Tencent backed platform has over 900 million active users daily, powers over 806 million monthly users for WeChat Pay in 25 countries, sees 205 million connected calls every day and 68 million videos are posted every day.

The platform also has over 50 million active senior users and sees 38 billion messages sent every day and users sent 6.1 billion voice messages every day. Weixin as its favourably called in China is now a fully-fledged ecosystem offering chat, in-store payments for goods and services, food ordering and table reservation, fitness tracker and games. 

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With that observed, Opera software the makers of Opera mini who recently celebrated 100 million daily users of their browser in Africa have a vision to replicate the success Wechat has in China in Africa starting from Nigeria. 

Launching Opay is considered their move to achieving their vision. 

Opay is digital bank where you send and receive money from your accounts, pay for utility bills, top up your data and airtime, pay for online and offline purchases with their Opay Mastercard and Visacards, while you can also order for food from Ofood a section on the app. 

ORide is also a section on the app that allows the customers use bike rides across the country starting from Lagos . 

It is one of Opera’s investments in an attempt to run the full-fledged digital community. 

ORide by Opay was launched on the 27th of May 2019. 

Its barely 2 months old,  but they have enjoyed a massive brand penetration rate in the midst of two fiercely dominated and recently funded competitors. 

How did they pull it off? 

What I will be sharing with you from their penetration strategy will give your businesses and brands a quantum leap. 

Proper Branding

In building a formidable business your brand representation is part of differentiation strategy if done properly. 

Opay got their branding right and I particularly enjoyed their choice of brand color, it’s catchy, homely and signifies growth, which subconsciously and psychologically is what people can relate with. Understanding color psychology is key when developing your brand identity. 

When entering a saturated or fiercely battled market sphere, your brand color should directly differentiate you. 

Example: Coca-Cola and PepsiCo red and blue. That’s pure differentiation. 

For you to standout in your market and industry your branding has a role to play. 

Cost Leadership Marketing Strategy

In as much as you want to stay profitable, getting your products and services used and tested by your potential clients and customers is a route to building a sustainable business. 

When you have other players in the industry, the best way to get your products and services into the minds of customers is by giving them opportunity to experience it a little or at no cost. Only then will they place your products or services as possible options when it comes to making a buying decision. 

Opay did just that, In their first month they charged a flat fee of 100 naira to any destination within Lagos and in their second month they are charging 200 naira. 

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Let me make it clear. 

Their competitors would charge around 1500 – 2000 to go to the island from the mainland but OPAY charges 100 and 200 naira. 

Imagine that!

The middle class Nigerians has droplets of price sensitivity in them, they are ready to cash on any available deals. 

So this proved a formidable strategy for OPAY. 

People are too busy with their daily routine, getting them to download your app is usually a big problem. 

I was in the office when I over heard that OPAY, a new type of Gokada was charging just 200 naira to any destination within Lagos. 

In less than five minutes I downloaded the app and topped up my wallet for the trip. 

I wouldn’t have even tried it out if the price difference was not so drastic. 

Getting people to download the app was a success, but the aim was getting people to talk about it and it worked massively. 

Word of mouth marketing is still the most effective means of marketing. 

As an entrepreneur, are there ways you can reduce the cost of your products and services in other for more potential customers to have an experience with your products and services?

Employee Empowerment and Brand Alculturization (Training) 

Opay carried out an intensive health and safety training for their riders and they were trained by the best professionals in the field.

Upon completion they were given smart phones worth 70,000 each, and were also alculturated to brand culture of OPAY. 

As an Entrepreneur your employees are your brand ambassadors as well as your internal customers. You have to empower and train them properly to serve your customers well. 

Availability and Distribution 

Nigerians are not brand loyal, to them the available becomes the desirable. 

OPAY availability and distribution grid across the state was well articulated and apportioned. 

From my experience you won’t stand up to five minutes on a major road without seeing them and that is helping their Brand reinforcement, which imprints the brand in the mind of their potential customers as being reliable and available. 

As an entrepreneur,  make sure your products and services are available and evenly distributed. 

Availability and even distribution of your products and services solidifies your brand. 

Finally, the bike hail section of their services is not their goal, but it’s a means to an end. 

Opera wants to build a digital community with OPAY that meets  the needs of average Nigerians. 

From money transfers, to payment of utility bills, to ordering of food and their recent sensation of an ORide. 

Inclusion of ORide as a part of their services has given OPAY traction and visibility which will Jump-start functional and frequent use of the other services rendered on the app. 

So as an entrepreneur think deeply, what service or related product can I add to my service or product offerings that can Jump-start the visibility and traction of my brand. 

I believe you have learned from their strategy. 

If you have used OPAY what has been your experience so far? 

Lets hear your thoughts. 

by Justin Tochukwu, a brand strategist and CEO Jukem Consulting

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2 COMMENTS

  1. What an Interesting Case Study of Opay’s Disruptive Market entry strategy. True evidence that innovation in business can set you apart and at par with your biggest competitors. The ridiculously cheap transportation price would definitely earn the attention and interests of millions of cost-conscious Nigerians. At the same time, also earning free word of mouth marketing by customers and users. Brilliant!!!

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