Tag: Startup

The Online Cab Industry – How it Stacks up!

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Ashkal Javed used to work in the sales and marketing department of a telecom company before he quit his job to become a driver for an online cab aggregator. The promise of earning one lakh rupees a month and upgrading his lifestyle seemed lucrative. However, things did not go as they were expected. “Incentives have reduced drastically and I can’t even pay my EMIs now,” shares Javed.

Javed is just one of those many online cab drivers who are struggling to make their ends meet. Low fare bookings, fall in driver incentives and preference towards bookings on company owned cars are some of the concerns that these cab drivers have raised in the ongoing strike.

A quick analysis of the daily commuter market in India shows that of the total 130-150 million trips, about 2 million are through online cab aggregators. Data by RedSeer Management Consulting shows that online daily trips are expected to increase more than 50% to 5.4 million by 2020.

Over the last couple of years, players like Ola and Uber have been working on cashing-in on this massive opportunity. Armed with an innovative business model, these aggregators built a strong network of driver partners to penetrate into this developing market. “The offer was too tempting. High incentives, zero commission and huge monthly earnings lured me into becoming a driver partner. I used to earn a minimum of Rs 70,000 a month in the early days,” says Rasul Sheikh, a cab driver, adding that his monthly income went down by 50%.

Data from RedSeer Management Consulting also draws a comparison of monthly take home between Online and Offline (black and yellow) players. In 2017, the average take home for an offline player stood at a flat 17,000 rupees. For online cab drivers, monthly payouts have fallen from 27,000 rupees in the January to March 2017 period to 19,000 in the July to September period.

With the focus on profitability and reduction in cash burn, aggregators have been trimming spending on driver incentives. In October to December 2016, 60 per cent of the gross booking value was spent by cab aggregators as driver incentives. This number has dipped to 16 per cent in just one year. However, consultants say that driver incentives are likely to stabilise at this level.

Commenting on the strike and driver protests, an Ola Spokesperson said, “Interest of our driver partners and customer convenience are of paramount importance to us. While, we have seen a slight improvement in our services in Mumbai, however for the situation to improve significantly it is imperative that intimidation of driver partners and vandalism of their cars by vested interests be stopped. New economy companies like us are counting on the police for normalcy to return. ”

An Uber spokesperson said, “We regret the disruption caused to our rider and driver community by a small group of individuals. We remain committed to serving the city, ensuring driver partners can continue to access stable earning opportunities, while giving riders a convenient option to get around their city.

The Hon’ble Bombay High Court issued an injunction prohibiting unions, their leaders and anybody else from obstructing the activities of Uber driver partners. We welcome this, and hope that it will enable drivers to stay behind the wheel, something many have been telling us they wish to do.

We have been listening to our driver partners all along and are committed to ensuring that Uber remains an attractive entrepreneurial opportunity for them. While the authorities have taken steps to ensure minimal disruption to our rider and driver communities, we hope that they will continue to enforce the order passed by the High Court.”

In light of this scenario, the key challenges that these cab aggregators continue to face are managing growth versus profitability and balancing driver demands with customer satisfaction.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Amazon brings change in seller-fee structure, makes it cheaper to ship locally

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

E-Commerce major Amazon is looking to motivate its sellers to focus on local markers to deliver products cheaper and quicker to its customers, reports the Economic Times.

According to the report, the company is also looking into pushing certain categories.

To achieve the objective, the local unit of the firm brought several changes to its seller fee structure. The structure shows that the firm has made it cheaper for sellers to ship locally, so that there is faster delivery to locals. The firm has, in turn, increased costs for regional and national shipping.

The firm has reduced the fees for selling on the platform by up to 70% in categories such as daily essentials and apparel, but increased 50% for items like shoes, home improvement accessories, power banks and charges, stated the report.

In total, the fees will increase for 24 categories, fall for 32 and no change will be made in 48 categories. The 48 unchanged categories include mobiles, laptops, books and small appliances.

For a healthy grocery push, the seller fees in the category have been reduced to 3% from 7%, as the company takes on Alibaba-backed Big-Basket and Flipkart.

The online major is also evidently giving a push to its fashion category, where it lags behind Flipkart. The firm reduced its seller fees in apparel to 17% from 19.5%.

According to the report, the firm said that the new rates will apply to all sellers in the marketplace. However, they did not comment on Cloudtail and Appario, two sellers in which Amazon has a stake.

Sellers told the daily that both Flipkart and Amazon had been changing fee structures over the past few years to keep their rates on par. This was so that they do not lose merchants to the other.

Flipkart in November lowered commissions by 5% for items priced below Rs 300 in many categories, in a bid to encourage sellers to offer their products at lower prices.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow