Introduction


LULA, a prominent ride-sharing platform for office workers, has announced the acquisition of the South African subsidiary of the US-based staff bus-sharing startup, Zeelo. The specifics of the cash-only deal remain undisclosed as both companies chose not to reveal further details.

Zeelo's Strategic Exit


Launched in South Africa in 2019, Zeelo has been a significant player in the ride-sharing market, completing over 2 million rides annually. The company, which has raised $33 million in funding, decided to exit the South African market to concentrate on its core markets in the US, UK, and Ireland. This strategic move allows Zeelo to streamline its operations and focus on regions with higher growth potential.

Expanding LULA’s Reach


With Zeelo’s departure, LULA plans to capitalize on Zeelo’s existing footprint, which includes over 18,000 riders, to enhance its presence across South Africa. The acquisition is set to bolster LULA’s market share and expand its services, providing a more extensive and efficient ride-sharing solution for office workers.

Addressing Transportation Costs


Transportation remains the largest work-related expense for South Africans. According to Statistics South Africa, workers spend an average of R2,180 ($121) monthly when using their cars and R960 ($53) when using taxis. Platforms like Uber for Business, MoveInSync, and LULA have been instrumental in helping employers reduce these costs for their employees. The acquisition of Zeelo’s operations is expected to further strengthen LULA’s ability to offer cost-effective transportation solutions.

LULA’s Growth and Operations


Founded in 2018 by Velani Mboweni and Xabiso Nodada, LULA operates in five cities across South Africa. The company has successfully completed 700,000 rides for over 380 companies, with a network of more than 1,000 registered drivers and shuttle fleet operators. Unlike traditional ride-sharing platforms, LULA does not own the vehicles but partners with individual drivers and shuttle fleet operators, providing rides for a commission ranging from 20% to 40%.

Achieving Financial Stability


The revenues generated from Zeelo’s operations are expected to make LULA cashflow positive. This financial stability will allow the company to “scale smart, rather than scale fast,” according to co-founder Velani Mboweni. The strategic approach to scaling will enable LULA to sustainably expand its services while maintaining high standards of quality and reliability.

Transition and Support


Sam Ryan, founder and CEO of Zeelo, acknowledged the difficulty of exiting the South African market but expressed confidence in LULA’s ability to support Zeelo’s customers and suppliers during the transition. "The decision to exit the region was a challenging one [but] we are excited to support the transition of our customers and suppliers to the LULA platform," said Ryan.