Jan, 2018     

Online Mobility Newsletter

Online Mobility Stories:

The industry sees a jump in consumer satisfaction from September-16


Although the cab industry has grown by about 40-45% year on year, the players have been able to improve the consumer NPS significantly. This can be attributed to the better-trained drivers, improved app experience and improved offerings from the cab aggregators.


Autorickshaw category has grown to become a crucial part of online commute booking market


While the online autorickshaw market has historically operated in stops and starts, the crippling driver strikes at the beginning of 2017 provided the right tipping point for this nascent category to evolve. Further enabled by lucrative offers (e.g. INR 29 fare for < 4km travel distance), this category has grown 3.5x in the last one year.


Online cab industry continues to promote car-pooling to increase ridership – but is it worth the effort?


The online car-pooling increased by 22% as compared to the previous quarter. This is mostly driven by the huge discounts offered by the online players. But given the discounted fares of car-pooling as compared to normal rides, is it worth the effort? Well yes, because car-pooling helps to improve ride efficiency for drivers with more rides per trip and also helps to reduce the need for more drivers on the platforms. Overall, it’s a win-win for all – customers get discounted fares and drivers & platform can handle more rides and hence earn better.


Unit economics continues to improve for online cab platforms, driven by a steep fall in driver incentives- but is it sustainable?


Rationalisation of driver incentives spending has enabled better unit economics for the industry. However, RedSeer research shows that this has come at the cost of falling driver satisfaction with the players- also leading to many of them leaving the platforms and potentially threatening the industry growth.


Online cab players are punching bags for all and sundry. But what do consumers feel about them?


Ever since they arrived on the big stage, online cabs players have come to signify all that is wrong with the sharing economy and have become the punching bag for drivers, journalists. But what about that other stakeholder- the consumer? Research by RedSeer indicates that even during the strike-ridden months of JFM’17, booking and ride experience satisfaction for Indian consumers remain broadly stable or only slightly declining- a clear indication of the high value attached by the consumers to these services.


Stuck in midst of a growth vs profitability battle?


Online cabs industry suffers a growth slowdown for the first time: After recording an unprecedented 250+% y-o-y growth in CY16, the industry came to a shuddering halt in the first quarter of CY17 and recorded a q-o-q fall in rides of ~5%

Supply crunch caused by striking drivers was the primary driver of the slowdown: As the incentives structure offered by the players became significantly less lucrative in JFM’17 (dropping to almost half vs CY16), frustrated drivers took to the streets. The resulting supply crunch turned out to be a major blow for the industry, clearly highlighting the growth vs profitability conundrum that the online cabs industry faces today.

The leasing program needs to succeed for the industry to find the delicate balance between growth and profitability: Players are focusing on expanding their cabs leasing program to reduce driver incentives cost burden while ensuring steady driver incomes. The success of the program will enable them to improve driver satisfaction and free up precious cash to deploy on customer acquisition and product innovation.

Facing existential threats?


Driver strikes had a limited effect on the app-based taxi market in Feb 2017: Inspite of persistent and extended strikes in multiple cities, total rides dropped only 4% m-o-m for the players, as customer demand remained high and the active drivers managed more than regular rides in absence of competition from other drivers.

However, Ola/Uber could now face a new era of regular driver strikes and competition from new players: With driver earnings dropping regularly in 2016 and new union-backed cab players entering the market to capitalise on driver dissatisfaction, the industry may be entering a new era of intense competition and supply challenges. The next few months will determine the seriousness of the threats to the future of the industry, from both the supply and competitive perspective.

Copyright © 2017 RedSeer Consulting.