From strategic point of view , they have failed to implement “Strategies for two sided markets”.
Two sided markets in this case, means one side are the drivers & other side are the consumers . Cab Aggregators like Uber & Ola provide the platform
Why they are bound to fail? I doubt if Cab aggregators are working towards in answering the most important question within their company : “Which side they should subsidise & for how long ?”
How have I arrived to this conclusion? Per the research work done across targeted customer segments & the cab drivers .
Surveyed Cities : Bangalore , New Delhi & NCR , Mumbai , Chandigarh , Indore & Mysore
Sample Set : 550 Targeted consumers & 180 drivers who ride/drive both the cab aggregators
Question : One side is subsidised . Question is : which side should be the one ?
Takeaways from the research work :-
-> 45% cab drivers have shifted from Uber to Ola in past 6 months ( Providing services to OLA )
-> 30% of the consumers have shifted to Uber in past 6 months ( Taking rides on Uber )
Ola have clearly chosen to subsidise the driver side ( Quicker revenue reconciliation/quicker payments to cab drivers , leniencies in checks/penalties around driver SLAs like ride cancellations/adherence to pick-up time et al) & Uber have chosen the consumer side ( 90% time consumers have got the guaranteed ride , appeasement offers for end consumers in case of bad consumer experience & defined SLAs across processes ) .
What's happening at ground level :-
-> Output losses : Incentivising drivers doesn’t makes sense from unit economics point of view. This is what Ola is doing & the same is reflected in the news about their burn rate.
-> Same side network effect : Consumers are not getting Uber on majority of the areas.
In short , Ola & Uber are unable to balance either of the sides ( Ola have too many drivers than consumers & Uber have too many consumers than drivers )
Short Term Strategy :- Uber & Ola can really win this battle through “Winner - Take all dynamics” : It means that they need to balance the equation by managing relationships with both consumers and driver community.
In order to sustain: Cab aggregators should be subsidising/controlling both the sides with parameters that are most valued/viable .
Research work :-
1.90% of the cab drivers told that they want to have quick payment of their services when compared to their other needs.
- 80% of the consumers wants to have guaranteed & hassle free rides/seamless experience ( right from booking till drop ).
Business Metrics : Driver & Consumer Retention
Long Term Strategy: How to avoid the “Threat of envelopment” .
What is “Threat of Envelopment”? When platforms have overlapping user bases, it is not uncommon for a platform to be "enveloped" by an adjacent provider.
Usually, this occurs when a rival platform provides the same functionality as your platform as part of multi-platform bundles. If one of the side ( driver OR consumer ) perceives that one of the platform bundle delivers more value at a lower price, than the other platform is in danger. If one platform cannot reduce price on the money-side or enhance the value proposition, then other can try to change the business model or find a “bigger brother” to help ( Reference from Wikipedia ).
This is the major threat that Cab Aggregators have to resolve . Maybe : Uber OR Ola can be the one stop shop logistic needs for the end consumers ? ( Like Bundled logistic services & bundled pricing can be the USP )
Bundle Logistic services : e.g On demand transfer of goods within the city et al ( But towards the end , the services should align what the side perceives as the most important thing )
Short term strategy & Long term strategy needs to be implemented at the ground level before the party is OVER !
Please Note : Views are personal & is not liable to any outcome