Digital Commuter

Digital in India is a buzz as well as a reality. With digital initiatives left, right and center across the length and breadth of the country. Demonetization Mahakumbh in 2016 brought a spurt in digital activities as well. Bourgeoning smart-phone usage and adoption of digital channels with cheaper data has provided impetus to growth; including ride (hailing/sharing) apps like Ola, Uber, Prydo, Shuttle, Meru Cabs and so on.

As a digitally enabled consumer I too utilize these app services.    Convenience to order a ride at my doorstep and being able to pay online without haggling on streets being some of the benefits.

After using the services of these apps in North and eastern part (briefly) of India, I felt the experience would be the same in South as well. However, in Hyderabad there is a resistance to digital payment modes available with ride-sharing apps to say the least.

Over a period of 6 months I engaged in seeking cheap rides (through autos as well as other modes including bikes) both through Ola and Uber primarily. What I have come across as findings being a consumer will not reflect greatly for either Bhavish Aggarwal or Dara Khosrowshahi’s firms respectively. Primary resistance has come from auto drivers (individual or union-based) with some rental drivers thrown in as well under various genuine or false guises.

The extended problem

There are 3 primary stakeholders to the problem with additional ones thrown behind the scenes. The ride-sharing company, the consumer and the auto-driver. In the current state of affairs, it has become a hassle for all three stakeholders.

·       Loss of Revenue for the ride-sharing company with auto drivers refusing say an OLA Money wallet or online payment on Uber. Cancelling the ride and subsequently seeking cash for the ride!

·       The harassed consumer like me, who in the peak office hours of morning or evening, haggles with auto drivers, who cancel rides or travel without accepting online payments!

·       And lastly the auto driver, who may or may not own the vehicle, needs to pay the owner or pay a loan installment daily along with gas in cash or kind. They have learnt the Indian way of gaming the system on an app like Ola with not entering an OTP for a confirmed ride, taking payment separately and letting the booking lapse on the Ola ride-sharing app!

The other plausible stakeholders could be the local authority, GHMC in Hyderabad who need to regulate the number or autos plying along with verification, the actual vehicle owners, money lenders whom the auto drivers need to repay etc.

Business Model Conundrum

The crux of the story lies in how the online payment system including Ola Postpaid, online wallet and business models are working in sync. The ride sharing apps working models seem to be based primarily on

·       -> peak time rates,

·      ->  availability of specific type of vehicles in a time-period

·       -> per km rate baseline and

·       -> other parameters like distance of the ride etc.

What is missing plausibly is the need to have a humane look based on the category of vehicle and ownership. For example, not extending Ola Postpaid scheme for rides on autos. Since that results in delayed payments and deductions to auto drivers.

As an entity the company should be looking to ride economies of scale and avoid looking to make out extended profits out of the bottom of the pyramid services. That will have a cascading effect in terms of the volume, satisfied stakeholders and a gain for both the topline and bottom-line.

Cash the culprit!

Behavioral change is hard. Honorable PM Shri Narendra Modiji learned the hard way driving that through demonetization for Indian masses as well.

Indian consumer markets are still cash driven and ride services are no different. However, refusing online payments due to false presumptions or assumptions must be managed by ride-sharing services. Cash drives corruption in various forms and means, every effort must be made to get people into online mode for keeping transparency.

As a digitally enabled and aware consumer who wishes to avoid using cash, ride sharing services need to consider that its business models work for all stakeholders. And work to limit cash transactions!