If you’re staying in Pune or Bengaluru, hiring an auto is
the last thing you would want to do. The endless discussions, bargains and over-above
the meter charges has led to customers adopt to a new service – radio cabs.
Charged at a nominal rate of Rs.20 for the first 5 kms and Rs.12 thereon, these
cabs are a boon for anyone travelling over 10Kms. The cab service is an asset
free model (where no cars belong to the company) and the current count of fleet
is 40000.
Main attraction for drivers – Each driver gets Rs.1800 for a
day. He needs to log in to the system for 14 hours and the company agrees to
pay him a total of Rs.1800 ie if he drives around and gets Rs.1400, the rest
400 would be credited to his bank account. If he manages to earn more than
1800(say 2500), out of the 700 that he earned, 10% has to be paid to the
company.
If the driver cancels a request of going to a particular
place, he has pay up Rs.250 to the company. Instead the company has the risk of
losing the customer and buys more time by appointing a new driver.
So what’s the flaw here: There is no minimum amount that one
needs to make on a particular day – Hence when the cab driver gets a very
remote location, he continues to stay there for the next 6-7 hours knowing that
there is very less probability of being called.
The cab driver has his profit maximum when he doesn’t drive the entire
day and still makes 1800 in the process.
Marketing Campaigns: Currently there are 3 marketing
campaigns
NOW20 – 20% off on the ride if you book it now. Customer’s
advantage – All the cabs that I need would take 30 minutes to reach my
destination, hence I would always book it half an hour prior and still use the
20% off even if I am not traveling technically now.
50/50 - 50% off if
you book it through OLA money. Company’s advantage – The Company is sincerely trying
to increase the number of users who would park their money in the OLA wallet
hence a capital which the company uses to earn interest on through a sweep
mechanism. Given the numerous customer complaints on this end, a solution is
required for those drivers who start and stop the ride even before they meet
the customer and hence the money being debited from OLA money.
100% cashback – This was a jackpot. Travel for x kms for
free and get a cashback. Technically the company would charge you for the
transaction and then credit the money back to your OLA wallet hence increasing
the use of their in-house OLA wallet. I
personally used this service on a Friday morning when the offer had been
introduced – charged Rs.240( actual cost Rs.300, discount 60 distance travelled
21Km) and 300 is credited back to my ola wallet. I use this money against the
50% offer and hence the actual discount I get is Rs.600(I initially pay Rs.300
and use the service 2 more times for equivalent ride) and end up making a
profit of Rs.300 on the entire transaction. VOLA!
The reason the company is doing so well is because of the
volume of transactions that happen on a daily basis – Close to 1,40,000 transactions
on a daily basis. A simple math will tell you that with a minimum of Rs.400 Lacs
is their inflow per day and their outflow to these cab drivers is Rs.720Lacs
(There are large number of expenses not taken into account). Its only when
these cabs become really efficient( read as: more volumes) , the company starts
to make more money. This is reason for such marketing campaigns by the company.
***This analysis was done purely by interviewing cab drivers
,company staff and secondary internet
sources in the Pune region .
