Shared mobility service providers including Ola, Uber, Vogo, Bounce, Rapido, and Yulu are expanding their portfolio and restructuring their category mix to gear up for a post-Covid-19 market, as consumer appetite for on-demand mobility looks to weaken, at least for a year. This is as per a report in the Economic Times.
These companies expect low-cost mobility solutions like autorickshaws and self-drive scooters to eat into the share of public transport, along with longer-term vehicle subscriptions and rentals for the premium segment.
This comes at a time when shared mobility, especially for cabs and bikes, is likely to be impacted as consumers remain cautious about the spread of the Covid-19 outbreak. Cab rides will be further hurt as office travel, leisure trips, airport and railway pickups, which constituted the bulk of revenue, are expected to fall sharply.
Businesses that have captive fleets will also eye increased occupancy with business-to-business partnerships, corporate tie-ups and product delivery in the near term.
In the long term though, founders are optimistic about consumer demand, due to a perceived structural shift from public transport to alternatives considered safer. Automakers, however, said part of this demand will gravitate towards consumers buying entry-level scooters.
“User behaviour post-Covid-19 will change in the medium and long term. A large chunk of people will move away from public transport towards safer alternatives in similar price range…and others who can afford will also upgrade from one form of mobility form factor to another, or may even buy,” said an investor in the mobility space.
Ola, for instance, plans to prioritise and expand its self-drive business to consumer subscriptions and corporates, according to people familiar with the development.
Last week, it launched Ola Pro in Australia, a premium offering that stresses on hygiene in cars, and there is talk it may also be launched in India, the people said.
For its core mobility business, Ola has introduced new guidelines for consumers, including compulsory masks, switching off ACs to avoid re-circulation of air, and cashless payments. “There is also bullishness about bike taxi in the medium-term…the belief is that it is a big category especially for smaller towns,” said an executive at Ola requesting anonymity.
Rival Uber India has also started exploring new categories, such as dedicated rentals to corporates, and the employee transportation segment, as well as ecommerce deliveries and long-term consumer leasing, to increase fleet utilization.
The two largest ride-hailing apps are also doubling down on their auto-rickshaw segment, which is likely to get a leg-up as people move away from shared cabs.
Shift away from public transport
Riding on the premise that quite a few public transport users may look at other mobility options, scooter sharing platforms Vogo, Bounce and Yulu are scaling up long-term two-wheeler subscriptions.
The move has a two-fold advantage — locking in demand while at the same time reducing vehicle maintenance costs.
“Given norms around social distancing…the safest mode of transport for consumers looking to move out of public transport or any private mode of transport shared with other people will be self-drive two-wheelers,” said Anand Ayyadurai, cofounder and CEO of Vogo.
The company has launched ‘Vogo Keep’ for customers who want to use the scooter exclusively for up to 30 days.
Bike taxi app Rapido, too, is expanding services from transporting people to moving packages, as consumers and drivers continue to be wary of proximity to an unknown individual. It has begun piloting concierge services and ecommerce, plus food deliveries.
“Covid-19 (outbreak) has forced companies to diversify their business line…delivery will be a key revenue source. For the ride-sharing business, we may see a strong push to the B2B segment in the coming days. Companies may look for some long-term business contracts for both people and freight,” said Jaspal Singh, co-founder of transportation consulting firm Valoriser Consultants.
Platforms that enable carpooling like Quick Ride, Loca and Get To Work are also re-evaluating business opportunities in a market where gaining customer confidence is likely to take months.
Others like Zoomcar and Drivezy, which primarily rely on weekend leisure travellers, say that business has been effectively zero, but expect an uptick in long-term car leasing.
Unit economics remains a question mark
A month before the pandemic became widespread, Ola was close to break-even, Bounce had announced that it was profitable on every ride.
However, the contagion has pushed all mobility players into the red.
For Uber and Ola, questions are being raised whether they will recover to their pre-Covid-19 ride numbers this year, and if their B2B offerings will get the same kind of valuations.
“Today the basic premise of transportation is being questioned. People do not and preferably would not want to move. If they do get out, they want it to be safe and affordable. How can mobility platforms deliver that and leverage their assets to stay afloat is the biggest challenge,” said Siddharth Pahwa, an independent mobility consultant who previously led Meru Cabs.
Analysts also question whether consumers will pay a premium for safer services.
“Adding elements which induce safety is not coming cheap, the opex (operating expenditure) goes up by 4-5%.. Will India pay that premium?” the founder of a mobility firm said.
Bike leasing has also come under scrutiny.
“To get customers, you need to price the subscription lower than an EMI per month, which makes it hard to make money,” said Amit Gupta, cofounder and CEO of Yulu, which is offering a leasing option to customers, but plans to move back to on-demand mobility as cities gradually open up.
Driver exodus
A lingering problem for cab aggregators continues to be its driver pool. Most migrant drivers have moved back to their hometowns. “You will not see them back sooner as there will be some restriction on inter-city movement in the coming months,” said Singh.
Founders and analysts also fear that some of these drivers may be so hard-pressed to pay their loan and insurance expenses that it may force them to rethink if they continue to work as gig workers.