Sprawling territories; Taxi companies’ new strategy for survival battle

What do successful businesses do to ensure that their top line & bottom line keeps growing? One strategy is to plan an entry into adjacent territory.

Take taxi-hailing
services – Uber & Ola. Both have surreptitiously entered into an adjacent
territory to ensure uninterrupted growth – aggregating auto rickshaws on their
platform. Both are pursuing a
‘loss leader’ strategy to lure auto rickshaw drivers on to their platform.
Merely for signing up, these service providers are offering them business
without charging fees for it. This is in contrast with what these platforms do
when it comes to taxi drivers who are charged a commission for providing them
with business.

This aggressive strategy
is hurting the existing small players present in the market.

Take Bangalore
based mGaddi who claims to have over 10,000 auto rickshaws on its platform. It
charges a flat fee of Rs. 5 for every ride it provides. Certainly, its business
is getting adversely impacted. So how is mGaddi responding to the threat posed
by these ‘whales’?

mGaddi has started
offering a service through which an auto rickshaw can be booked in advance; a
service which these ‘whales’ are still not providing.

Pune based
‘Autowale’ have built ‘stickiness’ into their business model itself. To ensure
that auto rickshaw drivers do not desert them for greener pasture, they made it
mandatory for every auto driver who wished to join the platform to pay a fee
upfront. This ensures that it will be just a bit more difficulty to lure them
away! One of the reasons the auto drivers are willing to pay an upfront fee is
because they are promised of a 150% rise in their income.

Only time will tell
who will survive the battle. But even as the auto rickshaw space witnesses a clash,
another adjacent territory is ripe for entry by these well-funded ‘whales’ –
bus service. BTW Ola is already eyeing this territory!