Disclaimer: This article was first published here
In the wake of strong dissent expressed by Indian Taxi drivers, it is worth asking whether the aggregator model is one which can keep both the customer as well as the supplier (the taxi driver, in this case) happy? As we speak, numerous taxi unions are on an indefinite strike in major cities like Bangalore, Mumbai and Delhi with an overarching complaint- India’s two most popular on-demand cab companies are not helping drivers earn enough; in fact the daily earn for some cab drivers has plummeted by 80% over the last 6 months.
The Customer vs. Supplier Conundrum
With the intense competition in the on-demand taxi aggregation space, the two key actors in the eco-system viz. the driver as well as the customer are often left dissatisfied due to diverging demands – one party is simply not earning enough while the other party is asked to pay an exorbitant amount for a ride. Given that on-demand ride hailing has become a habit, customers are forced to accept the fares displayed on their screens under the guise of the ‘going-rate’ or the ‘price that you pay for comfort’. And there’s nothing wrong with that whatsoever- demand drives prices. Why would a company not want to charge a customer, a certain something, a premium, if there’s a demand for that service?
The problem becomes a little more complicated when it comes to the drivers. In the early days, aggregator companies invested significant capital into acquiring and retaining driver partners by incentivizing them with lucrative payouts, even if they were losing significant money on every ride. With the focus increasingly turning towards profitability, the companies are forced to cut costs. And the drivers are suffering in the process because of the sudden decline in their incomes.