It is the Uber and Ola that have come to influence us getting a cab nowadays. Or a Grofers to put the nearby grocery store together and offer you delivery at some minimal discount. Or a Zomato or Foodpanda who have their collection of restaurants that you can order from. Or a Redbus to help us choose from various operators for travelling by bus. Even some e-tailers are just marketplaces!
Who are these folks? Do they have any assets at all? These are the new breed in business circle called “Aggregators”. Putting it simply, they put everything in one umbrella for the customer to search and order but they do not own any of the assets, be it the cab or the restaurant or the grocery store. In old times, not very long ago, we called them “Brokers” who operates on a commission or the Middleman to facilitates trade – unfortunately however you call them, they do operate on commissions and being in their nascent stages of business, they throw away the venture capitalist’s money in terms of discount to acquire more customers like you and me. And overall this is similar to the ‘bazaar’ concept where many traders are lined up to offer their goods to customers like us. At this point, they are not held responsible for the quality products being offered by them, be it a rude driver, or a bad bag of rice or food poisoning. So add ‘no responsibility’ as well. What a way to do business – no assets, not answerable for quality(in a way), no products of their own except an app, no engineering development in them except for some web developers (which they can outsource) and purely only a marketing organization.
This is all great for the customers now(personally, I am smiling) , but in the long run, once they get into some sort of monopolistic mode, they do have the power to increase price and take us for a ride (literally, yeah, with Ola and Uber). Possibly. But my own feeling is they cannot. Gone are those days that any company can last that long and not morph quickly through acquisitions or other growth areas, because the technology is growing so fast they either have to adapt or perish. Some other new guy with a newer business model would eat their lunch shortly… stay tuned.
Who is monitoring the driver if he had not got his required sleep of 8 hours – what happens if a tired driver is at fault? Who is monitoring the time it takes to deliver food for you or its quality? Who is tracking the part if the nearby grocer is getting rid of old stock (but not expired yet)? The Answer is No One. You can say “reviews”, but we all know how the reviews are done. If you happen to pay the ‘premium service’ to these aggregators, your reviews is always above 4 out of 5. If not, you are finished. It is somewhat like media – they chase after TRP and not deliver the news without bias.
They say an Ola cab driver makes about a grand a day in India. He would be making the same amount even if he had not opted for Ola but he has joined Ola which would keep him busier.
Why cannot the Uber and Ola have a stricter licensing law for the drivers – give them a stringent test both on the road and on road rules, and only if they exceed the standards, they are allowed to continue. Pay their insurance premiums for comprehensive and third party liability to ensure protection of the customers. And check the condition of the car every six months and ensure they go through proper maintenance process. These are some of the value adds these aggregators have to do to differentiate from others – they do not seem to want to do this. So, sustaining this business model is going to be hard especially if you are living on venture capitalist money and not making any profits for years together. And the differentiation between like companies is none – there is no USP that they can boast – if someone adds a new feature, immediately the next guy follows with something better. The same situation exists even for e-commerce players here. Certainly all these companies would not be Buffet’s babies! But keep these coming, as we are ready for the RIDE as long as it lasts, LITERALLY.
The Author is a business and strategy consultant and a corporate trainer based out of Bengaluru, India.