How Arrogance Led to the Rise of Aggregator Economy In India
If you’re in India, chances are you would’ve experienced the following at least once
- An autorickshaw driver asking “where do you want to go? Pay me the same amount as the app”
- A hotel manager requesting “Please cancel the booking on the app, ma’am. We’ll give you a discount instead”
- A plumber or an electrician saying “There’s a lot of work on top of what you had mentioned on the app. Pay the shown amount on the app and pay me the remaining. And, here’s my card. Contact me personally if you have any more requirements.”
But, the situation wasn’t the same five years back.
Autorickshaw drivers charged Rs. 500 for a 10 km ride. Hotels charged us exorbitant amounts for an AC room and plumbers and electricians dodged our calls and came at their own will.
Hospitality, private transport, and home services were huge, unorganized, and independent sectors. They understood the demand. So they made their own rules.
They became arrogant. They decided to get more money from every customer. They never thought about recurring customers or bothered about customer satisfaction. They always thought “Where else are they gonna go?”
Instead of robbing people in broad daylight and causing them frustration, they could’ve charged the customers a reasonable amount, catered to more customers, and made a lot of money.
The arrogance and mistreatment of customers by a few of these people led to the rise of the aggregator economy.
The Dawn of Aggregator Economy
As the arrogance of independent sectors rose to new heights, a few smart minds watched it all. They saw their parents and neighbors suffer. And, they leveraged the opportunity.
Coming from an engineering and technology background, they were tempted to find a solution. They thought “Why not build services that connect people with genuine service providers!” And they did. The first sector to see such disruption was ride-hailing services.
When Uber and Lyft were becoming trendsetters in the US during the early 2010s, a couple of folks started to replicate a similar model in India. Within a short span of time (2014-2015) there were several such services to choose from. There was Ola, Meru Cabs, Taxi for Sure, and a few other small players. It came at the right time because India was undergoing a massive technological shift back then. With the influx of affordable smartphones, most people having access to 2G or 3G data, and the interest among various institutional VC firms to invest in India.
The aggregator economy started flourishing in India.
Attracting Both Parties
When they started out, these apps offered attractive benefits to both the users and the service providers. This eventually created a landscape where it has become a habit for the users to use only a specific app as a preferred mode of getting services (be it hailing a cab or booking a plumber). On the other hand, service providers started relying on these services for their livelihood. For example, cab drivers stuck to working for ride-hailing services as they get consistent income. Also, cab drivers who operated independently heard what other drivers are making through ride-hailing apps and joined these services eventually. The companies that were closely monitoring this behavior decided to make profits. Result? Service providers had to give a significant portion of their income as commission to these aggregators and users had to pay a premium to use the service.
The service providers who once enjoyed seeing so much earnings slowly realized the reality of being part of an aggregator model. But, they couldn’t do much. The sectors that were once filled with arrogant service providers are now filled with anxious, helpless people who can’t set their prices or take 100% of their earnings home.
But, a small subset of these sectors tries to stay away from all this. They formed a union and tried to run things on their own. For example, places like Goa still don’t allow Ola, Uber, or any other app-based services in their state. They still operate taxi services and the prices are decided among the union. This way they charge fair prices, make enough profits, and take them all. Even places like Jammu and Kashmir do the same.
I’d want to write about this in the first place because the rise of the aggregator economy has taught us an important lesson. Never take your customers for granted. Whenever a sector goes rogue without any rules and treats its customers badly, they present a business problem and a market opportunity for new startups. Everything the sector disagreed to implement for decades will be achieved by an app within a couple of years.