What does a theoretical construct of a potential merger between Ola and Uber mean for the consumers and the market? Especially, when both are dominant players in India's ride-hailing market.
India’s taxi industry landscape has seen its evolution from unorganised to organised street-hail, to call cab booking services to app-based rides. For-hire vehicles like taxis or auto-rickshaw began in 1959 as black & yellow taxis and auto rickshaws. It did see the option of bargaining of fares, rides being refused and to even lower livelihood visibility of those drivers. Then came formalised fleet management companies dispatching vehicles from central control rooms or call centres. This was followed by 'aggregators' connecting drivers to commuters via smartphones. But has driver behaviour changed over the decades?
The ride-hailing apps started shaping the commuting market by providing budget-friendly fares for local travel. This affordability and initial price promotions attracted customers who opted for online ride-hailing apps. Also, the experience of air-conditioned comfort, as opposed to public transportation, became acceptable as the Indian economy grew. For a society that wants privacy, India has changed a lot in accepting shared rides, travelling in cars with strangers (other co-passengers), as well as share-bike rides.
No, no, no
Already both these industry leaders suffer from ‘naysayers'.
No, not the consumers, yet.
But their own drivers, who signed up to offer to drive the consumers, are asking for cabs. They end up saying no to consumers most times, turning down the cab requests on the apps when it does not suit their route.
The pretext keeps evolving creatively. Like asking the consumer to cancel the ride, to save on any penalty that the cab-hailing platform would impose on the driver. Not picking up consumer calls until it frustrates the consumer to cancel the ride. So many more...
One is a domestic entity that shaped a business using technology and youthful entrepreneurship. It continues to have audacious diversification of its enterprises, across unrelated segments including automobile manufacturing, electric vehicle batteries, financial services, etc. It reportedly has been having leadership attrition issues for some time now. While to its credit, it has also been a poster boy of sorts for the Digital India movement, and entrepreneurship.
The other one is a global entity, with its own challenges. It needs to quickly stem its financial losses and be relevant in the markets it is present in.
Hopefully being data-driven technology platforms, and claiming to use cutting-edge technology, these entities should know about the existing consumer issues. It is pathetic that despite throwing millions of dollars and hyped-up billions of dollars of valuations (ideas brought in by private investors), these businesses have not solved the supply side issue of adequate availability of cabs on the road. Without the benefit of formal empirical data, let’s use our experiences - many times we observe that drivers we use in these cab-hailing services, seem to be signed up for both these entities and end up declining business. Is it laziness? Is it needed for higher margins? Or is it a lack of financial incentives from the platforms? Is it a lack of training towards consumer service? According to a cyber security firm - Surfshark's data sensitivity index, the ride-hailing apps, on average, collect 14 data points per use. So much for consumers giving up their data privacy, for shoddy ride services.
It is now a seemingly distant & largely Utopian concept of clean air-conditioned cabs with polite drivers, ready to take you to your destination. What we have instead, is consumers regularly frustrated by the cancellation of taxi bookings, expensive cab rides, and upsell from travel insurance to finance the ride, on top of cancellation fees for no fault of the customer. And no grievance redressal options.
Despite their claims of large private capital, and technological prowess including (intelligence and) artificial intelligence and machine learning, these entities have not been able to solve these basic consumer trouble points. Hence, any merger or consolidation of their services would only worsen the consumer experience. With a merger, consumers would have a lesser choice.
Consumers deserve better
The Indian market is large enough if the cab pricing is rightly priced - for multiple newer players across two, three and four-wheeler categories. Current players, apart from cab-hailing for passenger domestic transport, also offer services like package delivery to intercity travel. Many newer competing brands have emerged in the passenger sector. If the core offering of dependability and efficiency is offered, competition would benefit. Needless to say, any brand that cannot offer value to the consumers, not just about the economic outcome, but also product experience, won’t survive long. What are the winds of change? Having lesser choices is a market tyranny. It could provoke a further deterioration of current low service quality levels.
This is why wider competition, with the tougher consumer demand, and better service standards of these entities is a must for this sector. Only increased and better customer service standards can solve the worsening service woes.