LULA, a corporate commuter ride-hailing service, has successfully acquired the South African operations of Zeelo, a staff bus-sharing startup originally from the United States. The specifics of the cash-only acquisition have not been publicly disclosed by either company.
With this acquisition, LULA aims to capitalize on Zeelo’s substantial local market presence, which boasts a network of over 18,000 riders. Prior to the takeover, Zeelo had reported delivering more than two million rides annually in South Africa.
Zeelo first ventured into the South African market in 2019 and had accumulated total funding of $33.6 million by August 2023. The company has decided to withdraw from South Africa to concentrate its efforts on its operations in the United States, the United Kingdom, and Ireland.
Sam Ryan, the Founder and CEO of Zeelo, expressed that the decision to exit the South African market was a difficult one. He conveyed his enthusiasm for facilitating a smooth transition of Zeelo’s customers and suppliers to the LULA platform.
According to the Provincial reports from the National Household Travel Survey of 2022, published by Statistics South Africa, transportation costs represent the largest work-related expense for South Africans. This context underscores the significance of the acquisition, as LULA’s expansion could potentially offer more cost-effective commuting options for corporate employees in the region.
The latest National Household Travel Survey (NHTS) has highlighted the transportation expenses faced by South African workers, showing that those using personal cars spend on average R2,180 ($121), while taxi users incur costs of around R960 ($53).
In response to these high commuting costs, platforms like Uber for Business, MoveInSynch, and LULA have emerged, offering services that help employers reduce transportation expenses for their employees.
LULA, in particular, is poised to expand its footprint in the transportation sector following its recent acquisition of Zeelo’s South African operations. With a network of over 1,000 registered drivers and shuttle fleet operators, and a presence in five South African cities, LULA is aiming to capture a larger market share.
Founded in 2018 by Velani Mboweni (CEO) and Xabiso Nodada (Head of Product), LULA has reported providing up to 700,000 rides for more than 380 businesses to date.
Unlike traditional transportation companies that own their vehicle fleets, LULA operates on a partnership model similar to Bolt and Uber. The e-hailing platform collaborates with individual drivers and shuttle fleet operators, offering rides in exchange for a commission that ranges from 20% to 40%. This business model allows LULA to offer flexible and cost-effective commuting solutions without the overhead of maintaining a fleet of vehicles.
Velani Mboweni, the CEO of LULA, has stated that the revenue influx from the newly acquired Zeelo operations is expected to propel LULA towards achieving a cashflow positive status. This financial milestone is crucial for the company, as it will provide a solid foundation for LULA to pursue further expansion successfully.
