Taxi aggregators and supply side uncertainties

Abstract

The aim of this study was to understand the supply side constraints in Indian taxi industry. All marketplaces are bound to have a choke point. In on-demand taxi industry cab drivers create a blockage. Thus it has been a very difficult task for taxi aggregators to manage the supply side of the industry. The study was done in three phases. In phase I consisted of a detailed analysis of on demand taxi industry in India. The analysis was done in order to understand the key success factors and challenges faced in this industry. Three major players namely Ola, Uber and Taxi4sure were chosen for analysis. The revenue and operational models for all the three players were keenly observed. After the analysis done in Phase I, we understood that pricing is a major challenge in this industry. Further research suggested that discounts and coupons are a predominant strategy used by the major players in this industry. The aim of majority of the companies now is to focus on growth and consumer acquisition. To build the consumer base, discounts come handy and have been very successful in the past. According to industry experts, discounting is essential to engage the consumers in this category. Pricing is thus a major problems faced by radio cabs. Fierce competition in the industry is driving the rates down as low as Rs.6/km. Apart from these, advance selling was a curious strategy used by few of players. Thus Phase II focused on understanding the concept of advance selling. Advance booking helps to capture uncertain demands of the customers. Instant booking captures the immediate demand where certainty is high but if a customer wants to book a cab for future, his need may or may not change at the time of consumption of the service. Though there is less possibility of getting the business in case of advance booking but it helps to add extra business as it does not affect instant booking business. Also, advance booking provides a surety to the customer in case customer is not sure of getting an instant booking at crucial time. For example people generally do advance booking for airport, just to avoid uncertainty and the last minute hustle. Study of advance selling concept introduced a problem of availability of cab drivers. Hence Phase III composed of study of supply side uncertainties in the taxi industry. This part of the study involved qualitative analysis. Cab drivers of all the three major players were interviewed and their problems were noted. Secondly company officials of Ola, TFS and UBER were interviewed for their view on the management of supply side. Thirdly the middle men i.e. the business development team officials were interviewed. The qualitative analysis gave a complete view of the supply side uncertainties. The interviews helped us in getting an insight about pay structure and pricing, incentives for taxi drivers’ strategies for peak periods and demand occasions. Also the measures taken to solve the supply side issues were also critiqued.