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.