Surival of the...

“Are you attached to Uber or Ola or both?", I asked to initiate small talk with the taxi driver.

We were heading to the airport on our holiday. Because of a recent poor experience using Taxi aggregators Uber/Ola (Indian equivalent) I had made alternate arrangements for the airport transport with a local travel company I was familiar with. Expensive but I was assured of better experience.

As promised, the experience has so far been very good. The driver reached our home 15-20 minutes before the scheduled pickup time. The car, though not new, was spotless and clearly very well maintained, had a mobile charging facility for both iPhone and Android, and clean sealed water bottles in each door. The driver was very polite and helpful.

I just could not recall when last I had this kind of experience! I It felt even better than services provided by corporate taxi operators. Hence, I was curious to know which of the aggregator services, he was associated with for future travel. Most drivers in Bengaluru are attached to almost all aggregators and sometimes few travel operators.

“None”, he replied.

“Oh! This taxi is owned by or tagged to the travel company who got me connected to you?” I asked.

“No, I am the owner of this vehicle. I am an independent operator not associated with any of the aggregators or Taxi services or travel company”, he said.

Judging by the condition of the vehicle and his overall appearance, it was clear that he was doing quite well.

The business consultant in me was now curious to know how he was generating demand.

“How do you get customers then?” I asked.

“Customers are mostly known to me” he said.

“Is that enough to keep you going” I asked.

“Enough? I am unable to meet the demand!” he said, with a content smile.

Now I am even more curious! A key value propositions of Taxi aggregators in India, where only commercial vehicles can be used, is demand generation. I was curious to know what he was doing that made his operation sustainable. Also is it scalable?

The pandemic dealt a near death blow to the Taxi business. The condition of the vehicles and the drivers of the taxis, I travelled in post pandemic were a clear testament. Struggling.?

It looked like he read my mind and decided to share the story. We had two hours to kill.

Almost from the time he moved to the city from northern part of Karnataka, he started driving call center vehicles with aggressive SLAs in crazy Bengaluru traffic. He saved enough, to buy a used Taxi tagged to one of the Taxi aggregators, having made some decent money during the hay days, when aggregators were very generous with incentives. It was during the initial days, to get more vehicles on the road and encourage customers, aggregators made some heavy investment. A driver had to make only certain number of trips in a day, however short a trip, made them eligible for very good cash incentives that significantly increased their profits. This encouraged many to buy additional cars as the incentives were more than sufficient to take care of loan payments.

Due to investor pressure and other reasons, the incentives were stopped abruptly. This was a huge financial blow, but what really took the wind out of the industry was, the pandemic.

He was forced to sell all his cars at a loss during the lockdown. Later, he had to sell his wife’s jewelry to sustain day to day needs. Most drivers moved back to their hometown/village. He moved his family back to his village and he moved in with a friend in the city to save on rent.

During the partial lifting of lockdowns, those who needed to travel, especially long distances, started to hire Taxi’s from travel companies and kept them during the entire visit. He drove for the Travel companies. They were quite lucrative with good tips and food paid for by the customers. The customers did not want the driver going anywhere looking for food and get infected.

He noticed that the demand for such trips were going up and there was a severe shortage of cars/drivers. He decided to have another go. He sold the last piece of his wife’s jewelry to buy a used car.

The demand for long distance Taxis just went up significantly as lock downs across the country was getting lifted. He drove nearly non-stop to corners of the country for months. Made good money and at the same time, built up a customer list. Those happy customers started to refer him to others, and the list got longer.

Eventually he was unable to meet the demand, it was time to get more drivers. He decided to use a simple tech, that all the drivers were very comfortable with – WhatsApp and Google maps. He created a WhatsApp group of drivers very well known to him. They were all handpicked owner drivers, highly customer focused, ethical/trustworthy. They all drove a well-maintained car, personal and vehicle hygiene was another key criterion.

Customer requirement that cannot be met is broadcasted to the group thru him. Whoever picks it up is responsible for making sure the trip request is fulfilled to customer satisfaction. The fare is calculated based on the distance – thanks to google maps and pre-agreed per km rate. They take mostly long-distance gigs like airport drop/pickup and out of town trips. No poaching of other’s customers. The driver referring the customer will get a pre-determined small cut. All payments such as commission must be made within 12 hours via UPI payment system. Any driver defaulting on these conditions is taken out of the group after two warnings.

He now has over 250 drivers in the group with access to a variety of cars. He suspects there are another 8-10 similar WhatsApp groups in the city.

His car is loan free and fully paid for and he is now looking to buy another car. He has moved his family back to the city and his daughter is back in school.

On our way back from holiday, I decided to use his services for our travel back home. When I called him directly, he was able recall that I was a referral customer, he politely requested that I call the Taxi company I originally called and said that the request will come to his group via that channel. Clearly, he was following his policy of “thou shall not poach”. We got another excellent Taxi/driver to drive us back home.

Taxi aggregators in India depend almost entirely on the commission. Longer the distance, more the fare leading to higher revenue for both driver and the aggregator. I believe profitable long distance Taxi business will increasingly be taken away by these groups operating on WhatsApp. Billion-dollar tech giants being micro disrupted by near zero cost tech. ?

The pandemic was such a (hopefully) once in a lifetime “black swan” event that triggered innovation for many, unfortunately just to survive. Simple usable tech such as WhatsApp and UPI payment systems enabled these innovations or micro disruptions in the Taxi business. I am sure there are many others. Please share if you have come across any such stories…