The Careem Business Model – How Careem Makes Money

Last Updated on December 17, 2024

Careem, often referred to as the “Uber of the Middle East,” has evolved into a comprehensive “super app” that goes beyond ride-hailing to offer a wide range of services such as food and grocery delivery, digital payments, and courier services. Launched in 2012 in Dubai, Careem quickly became a go-to solution in a region where public transport options were limited. Today, the app operates in over 100 cities across 13 countries, and has built a loyal user base of more than 50 million people.

For businesses looking to create an app like Careem, it’s essential to understand the business model that powers its success. In this post, we will break down how Careem works, how it generates revenue, and what makes it a standout in a competitive market.

Careem Overview

Careem’s journey began with a simple but vital problem: the lack of reliable, affordable transportation options in many Middle Eastern cities. Public transport in cities like Dubai and Riyadh can be scarce or unreliable, so Careem stepped in with a mobile platform to make commuting easier and more accessible. The success of this core service led to rapid expansion, turning Careem into a multi-service platform that goes far beyond ride-hailing.

Today, Careem is a “super app” that offers a range of services under one roof. For instance, a typical Careem user might begin their day by booking a ride to work, order lunch via Careem NOW, pay a bill through Careem Pay, and finish the day sending a package. This “all-in-one” approach has made Careem an essential part of its customers’ daily lives. Notably, safety plays a crucial role in its appeal—almost 37% of Careem’s female customers and 21% of its male users said they used the service because it felt safe, which further contributes to the app’s growing popularity.

For example, a user in Dubai might start their morning by booking a ride to work using Careem. Later, they might order groceries for home delivery via Careem NOW and finish their day by paying a friend back for coffee through Careem Pay. By integrating these services, Careem ensures customers stay within its ecosystem throughout the day.

How Does Careem Work?

Careem operates on a simple yet effective business model that connects riders, drivers (Captains), and service providers through its mobile app. Let’s break it down:

For Riders (Customers)

• Booking Rides: Customers use the app to enter their pickup and drop-off locations, select the type of ride they want (e.g., economy, luxury, or even bikes), and confirm the booking. The process is seamless and quick.
• Real-Time Tracking: Once a ride is confirmed, the app offers real-time tracking, so users can see their ride’s location and estimated arrival time.
• Flexible Payments: Users have the option to pay through cash, credit cards, or Careem Pay, which accommodates different customer preferences across the region.

For Drivers (Captains)

• Becoming a Captain: Drivers, known as “Captains,” must go through an onboarding process that includes background checks, vehicle inspections, and training. This ensures high-quality service for riders.
• Earnings: Captains earn a percentage of each fare based on the trip they complete. Careem typically takes a commission of 20-30%, which is its primary source of revenue from ride-hailing.

Beyond Ride-Hailing

Careem offers more than just rides. With its Careem NOW feature, users can:

• Order Food & Groceries: Whether it’s a meal from a local restaurant or groceries from a nearby store, Careem NOW ensures timely delivery.
• Package Delivery: Users can send and receive packages through the app, expanding Careem’s offerings beyond transportation.
• Digital Payments (Careem Pay): With Careem Pay, customers can make secure payments for services and even transfer money to friends, helping streamline daily financial transactions.

In real-life scenarios, a small business in Riyadh might use Careem for employee transport during business hours. Later, they could order snacks for the office via Careem NOW and settle payments through Careem Pay. This cross-service integration makes it easier for businesses to manage their daily operations.

Careem Business Model

Careem, a leader in the Middle East’s ride-hailing and super app industry, generates revenue through several diverse channels, each contributing to the company’s profitability. By offering a variety of services, Careem ensures that it capitalizes on different revenue streams, which helps sustain its growth and expansion. Here’s a detailed look at how Careem makes money:

Ride-Hailing Commissions

The core of Careem’s revenue comes from its ride-hailing business. Careem charges a commission on every ride completed by its Captains (drivers). Typically, the company takes a 20-30% cut from the total fare. For example, if a ride from Dubai Marina to Downtown costs AED 40, Careem may take around AED 10, leaving the Captain with AED 30. This commission model ensures that Careem generates consistent income from its primary service while maintaining a fair income for the drivers. This model has proven to be a sustainable revenue stream for Careem, especially given the volume of rides it handles in cities across the region.

The flexibility of the ride-hailing model allows Careem to scale its business rapidly. By serving diverse customer needs, such as ride-hailing, car rentals, or private drivers, Careem maximizes its potential to make money from a single platform, contributing significantly to its bottom line.

Subscription Plans (Careem Plus)

Careem has also ventured into subscription-based services to secure a steady stream of recurring revenue. The Careem Plus plan, for instance, is designed to retain loyal customers by offering benefits like discounted rides, priority customer support, and free delivery on orders placed via Careem NOW. Customers pay a fixed monthly fee for these perks, ensuring that Careem receives a reliable income stream while keeping customers engaged.

These subscription plans encourage users to remain within Careem’s ecosystem, as they receive value through discounts and exclusive services. For Careem, this is an excellent way to increase customer retention while simultaneously generating predictable revenue, which is vital for long-term business sustainability.

Delivery Services (Careem NOW)

With Careem NOW, Careem taps into the delivery service market, which has become an increasingly profitable industry. Careem charges users a delivery fee for food and grocery orders placed through the app. Additionally, it takes a commission from restaurants and stores on each order, typically ranging from 15% to 20%. For instance, if a customer orders a meal worth AED 50, Careem may charge AED 10 for delivery and receive a 15-20% cut from the restaurant’s total bill.

This dual-revenue stream model—charging both the consumer and the business—makes Careem NOW a highly profitable venture. The growing demand for food and grocery delivery services, particularly during the COVID-19 pandemic, has accelerated Careem’s success in this sector. The convenience of ordering food, groceries, or even essentials through a single platform, combined with Careem’s fast delivery times, positions Careem as a dominant player in the market.

Corporate Solutions

Careem has also developed a significant B2B (business-to-business) revenue stream by providing tailored transportation solutions for companies. Many businesses sign contracts with Careem to provide employee transportation services, often paying a fixed monthly fee for these services. For instance, a corporation in Cairo may sign up for a subscription plan where Careem handles the daily commute for its employees, charging a flat fee per employee or a lump sum for the entire workforce.

This business model gives Careem consistent, predictable revenue and opens up opportunities for expansion in corporate partnerships. By tapping into the corporate market, Careem diversifies its income sources, expanding beyond individual customers to larger, more stable contracts.

Careem Pay

Careem Pay is Careem’s digital wallet, which allows users to make peer-to-peer payments, pay for services within the app, and even use the wallet for online purchases. This platform generates revenue by charging small transaction fees on every payment made through the app. Careem Pay has the potential to expand into additional financial services, such as loans, credit cards, and investments, offering a significant opportunity to further monetize its digital platform.

Careem’s expansion into fintech (financial technology) with Careem Pay aligns with global trends where tech giants and super apps are increasingly offering integrated financial products. As the Middle East experiences higher mobile payment adoption, Careem stands poised to capture a larger share of this growing market.

Advertising

With a broad user base across various services, Careem has become a prime platform for advertisers looking to target commuters, food lovers, and other demographics. Careem generates revenue by selling ad placements within its app. For example, a fast-food chain might place an advertisement targeting Careem NOW users, offering special discounts or promotions. Careem earns money from brands by charging for these ad placements.

This advertising model taps into Careem’s ability to collect valuable user data and deliver targeted ads. As Careem’s app engagement grows, so does its capacity to sell more ad space, making it an attractive revenue source. Advertisers are drawn to Careem’s massive user base, as it includes people who are already in a buying mindset—whether they’re commuting, ordering food, or paying bills—giving them a prime opportunity to make purchases.

Also Read: Uber Business Model

The success of an app like Careem lies in its ability to localize its services and meet the unique demands of its markets.

1. Localization: Careem adapts to regional preferences, offering cash payment options where digital adoption is low and introducing female-only rides in culturally sensitive areas.
2. Diverse Offerings: By combining ride-hailing, delivery, and digital payments, Careem ensures users remain engaged within its ecosystem.
3. Strategic Partnerships: Collaborating with local businesses and governments has strengthened Careem’s foothold in its operating regions.

For example, in cities like Riyadh, where public transport is limited, Careem provides a reliable alternative. Its ability to address such specific gaps has made it indispensable for millions.

Lessons for Entrepreneurs

Careem’s business model offers several key takeaways for anyone looking to develop a similar platform:

• Focus on Regional Needs: Careem’s success is rooted in its understanding of local markets. A ride-hailing app like Careem must cater to the unique challenges and preferences of its target audience.
• Super App Potential: Diversifying services beyond transportation can boost user retention and revenue. Offering food delivery, grocery shopping, and digital payments ensures a broader appeal.
• Tech-Driven Efficiency: Leveraging AI for route optimization, user matching, and fraud detection can enhance user experience and operational efficiency.

Build an App Like Careem with Oyelabs

Oyelabs is here to help you build a high-performance, feature-rich ride-hailing app like Careem. With our proven expertise in app development, we focus on creating seamless, user-friendly experiences that cater to both drivers and passengers. From efficient ride-booking systems to secure payment gateways, we ensure that every aspect of your app is tailored for success in today’s competitive market.

Partner with Oyelabs to bring your ride-hailing app idea to life and make an impact in the transportation industry. Let’s create a platform that meets user needs and drives growth!

Conclusion

Careem’s business model demonstrates how diversifying service offerings can lead to massive success. The platform’s ability to connect riders, businesses, and consumers through an integrated app has made it a go-to solution for millions in the Middle East. Whether you’re interested in launching a ride-hailing app like Careem or building a broader super app, Careem’s strategies provide valuable lessons for creating a scalable, multi-service business that meets the everyday needs of customers.

If you’re looking to enter the mobile app market and want to create a ride-hailing app like Careem, learning from Careem’s journey could set you on the path to success.

Also Read: Build a Taxi App Like Uber