Drivers land better incentives in a crowded ride-hailing space – ET Auto


Drivers land better incentives in a crowded ride-hailing space – ET Auto

Even for Ola and Uber, showing fares upfront to drivers before they accept rides is a way of increasing transparency into what they would earn from every ride, industry officials said.

Increasing competition in the ride-hailing space has resulted in better incentive structures for gig workers in the sector as platforms experiment with their business models or tweak the way they charge commissions from drivers.

Swiggy-backed bike-taxi platform Rapido has introduced a subscription fee model for its driver partners on cabs and autos, doing away with the old structure of commissions on rides, while California-headquartered inDrive is offering commission rates of 10-12% to its drivers in India, less than half of leading players Uber and Ola’s 25-30% commission.

Uber has also started tweaking its commission structure, decreasing its commission by 5-7 percentage points during peak hours to incentivise drivers to be on the roads, people aware of the matter said.

ONDC-backed Namma Yatri operates on a software-as-a-service (SaaS) model, offering their services to auto drivers for a fee.

For Rapido, the daily fee paid by driver partners ranges between INR 9 to INR 29, while Namma Yatri offers its services at INR 25 per day, or INR 3.5 per trip for up to ten rides, following which it is free.

“Drivers have been opposing traditional commission structures put in place by platforms, given that a portion of their earnings was taken by the ride-hailing companies,” a senior executive at one of the large ride-hailing firms said on condition of anonymity. “The way these commissions are structured…how much money drivers receive in hand and how much goes away to the platforms create a poor perception for drivers, who think that they lose money to the platforms that bring them business,” the executive said.

Drivers, who are essentially gig workers, have time and again been at loggerheads with larger players like Uber and Ola over the payouts. In 2018, Uber and Ola drivers protested across the country over reducing cash incentives that the platforms initially used to create supply.

Crowded market

Over the last few years, the ride-hailing sector – primarily a duopoly between Ola and Uber – has seen newer players emerge, competing for the same set of customers and drivers.

In an interview with ET in February, Uber CEO Dara Khosrowshahi acknowledged the growing competition in the space. “The Indian market is getting more competitive. It was a two-player market previously, now there are three-four players. There are many young upstarts. We have to make sure we’re on our toes,” he had said.

The emergence of Rapido, BluSmart and ONDC-backed players has pushed Uber to introduce measures to retain its supply.

In November, ET reported that the company has rolled out the Uber Pro programme to give its drivers benefits such as area preference, discounted vehicle maintenance and motor insurance, as well as enhanced micro-credit offerings. Drivers become eligible for these benefits upon reaching certain milestones. During the programme’s pilot, the company witnessed a reduction in churn of drivers with the platform.

Scaling up

For the platforms operating on a SaaS model, industry insiders questioned the scalability of the offering even while acknowledging an improvement in gig workers’ stickiness on the platform.

“The SaaS model works like a loyalty programme… Once the drivers buy in, they try to milk as much as possible out of that INR 25-30 they pay every day. It automatically increases their time spent on the platform,” a Bengaluru-based ride-hailing company executive said. “It’s an important top of the funnel to acquire these gig workers… Eventually the fee will see an increase in line with costs incurred to manage the software,” he said.

“Through the commission model and the ride-based incentive structures, drivers don’t really operate on a gig system… Many of them end up driving for over 15-17 hours a day. But once they pay for a daily fee to get access to customers, they have a better visibility into their earnings after paying the fee,” the executive added.

Even for Ola and Uber, showing fares upfront to drivers before they accept rides is a way of increasing transparency into what they would earn from every ride, industry officials said.

“One of the key asks of gig workers is more information into what they’re earning… Being able to see the fare upfront is one of the ways to make that work,” an industry official said.

  • Published On Mar 12, 2024 at 08:51 AM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETAuto App

  • Get Realtime updates
  • Save your favourite articles

Scan to download App

Bloomberg introduces new lithium and cobalt indices to be listed on the COMEX – Charged EVs

Bloomberg Index Services (BIS) has announced the introduction of new commodity market indices that will…

Google’s Alphabet Inc. doubles down on robotaxis, committing another  billion into Waymo

While some self-driving tech companies are dialing back their development or scrapping certain vehicles altogether,…

Tesla Robotaxi event rescheduled for Oct. 10

Tesla CEO Elon Musk said the automaker Robotaxi will now debut on Oct. 10 The…