The trick that's helping Ola retain drivers

BENGALURU: Drivers on ride-hailing platform Ola have spiked 7-10% in seven metro cities, after the homegrown aggregator rolled out revised standardised commissions to keep drivers active during peak hours, two people directly in the know of the matter told ET.The new payout structure, with an average take rate of 20% for the company, gives drivers a more predictable and transparent view of earnings as well as charges on tolls, taxes, commissions and parking. ET first reported Ola’s revamped incentive structure on January 6. An Ola spokesperson confirmed the new commissions structure.Retaining drivers has been a tough task for both Ola and rival Uber as falling incentives have led to lower earnings. The revamped payout is Ola’s strongest push in two years to keep drivers on its side, they said. “It also strategically comes at a time when Uber has moved its focus towards profitable growth globally, giving Ola the leeway to strengthen its presence in its home market,” an investor in the company said. Uber has not visibly changed its incentives, drivers told ET. “Ola’s earnings structure for partners is designed to maximise revenue and encourage highest quality of service and availability on the platform, in a sustainable fashion...,” the Ola spokesperson said.Both Ola and Uber continue to fight for customer wallets but keeping the supply of drivers consistent has been their biggest issue. “At a time when car ownership is falling, consumers are willing to pay more for predictable supply during peak hours,” a person closely tracking the mobility space said. “The key to this business is keeping active driver supply with incentives under check,” he added.An Ola driver dashboard of a trip in Bengaluru that ET accessed showed that the company charged a commission of about 20% on the fare, 5% in taxes, as well as a consumer service fee of 5.5% for its in-app entertainment Ola Play. Rides to the airport have an additional parking charge which is deducted from earnings, while Ola reimburses toll charges. 73718827 “Over the last three months, a lot of bottoms-up research and demand-supply mapping work has been done to frame these structures in a way that, on average, Ola keeps its take rate at 20-22%. Drivers, too, see value in being active on the platform at the right time,” the second person quoted earlier who is familiar with the developments said.The revised structure is not expected to hurt its path towards profitability, he added. “Balancing growth with profitability is where the power of platform comes into play,” the Ola investor quoted earlier in the story said. Ola has other models to make money for riders, including its membership program Ola Select, in-ride entertainment Ola Play and financial services. It also has a strong presence in the corporate segment and high margin businesses like outstation and self-drive.Ola’s decision to rejig its incentives structure comes at a time when rival Uber has sold its loss-making food delivery unit in India to Zomato and is expected to ramp up focus on its core ride-hailing business.“We constantly ensure sustainable earnings opportunities for our driver-partners... These fares are dynamic, as is our business model,” an Uber spokesperson said.

from Economic Times https://ift.tt/2RW9VHY