Rapido vs Uber

Indian Cab Aggregator Market

In India, the cab aggregator market is getting really crowded with many apps such as BluSmart, InDrive, and Rapido entering, along with Ola and Uber, which have been around for quite a long time. For a long time, I thought that there was no specific value that one app provided over another and that there was far less scope for innovation. BluSmart introduced an all-electric fleet as a marketing strategy and probably their inherent value as well. InDrive differentiated itself by allowing customers to bid, and a cab driver may or may not accept the offer.

Ola and Uber

Ola and Uber are the largest cab aggregators in India, and I have been hearing from cab drivers how they don’t benefit as much as they should. There was an initial surge in benefits when Uber and Ola started back in 2015-2016. To create more demand, they had to create more supply by attracting cab drivers, and they were giving an insane amount of money to cab drivers on each ride, burning cash in the process, and rightly so. Uber had been a loss-making company until it went public. Once Uber had enough supply, customers started coming in, and Uber gradually reduced the benefits to the cab drivers. Recently, they have been charging a commission of 25-30% on each ride that they offer to cab drivers (as reported by the drivers). Since it is one of the largest cab aggregators in India, cab drivers don’t have much power, and other cab aggregators such as InDrive, Ola, and BluSmart seem the same from the cab drivers’ point of view.

Entry of Rapido

I’ve been a diligent customer of Uber for a long time now (about 8-9 years), and I haven’t faced any issues from a customer point of view, except for the fact that it is a little costlier but far better than the services provided by Ola. However, the drivers’ issues persisted. Recently, I have been hearing a lot about Rapido from cab drivers and how they are “not charging any commission” and are better for customers as well. I thought of giving it a try. I installed the app and compared Rapido’s price with Uber’s, and it was definitely cheaper. As it was my first time booking a cab from Rapido, I didn’t configure my payment option and booked it on cash.

While talking to the cab driver, I got to know how Rapido is giving the full amount to the cab driver that was actually paid for that trip, but there was a catch—the cab driver has to recharge the app to get the trips. The usual recharge is 500 INR to get rides worth up to 10,000 INR. Even though Rapido is charging about 5% as a commission, the general sentiment among cab drivers is that Rapido is not charging anything and is being very transparent. This is a major mindset change from the cab drivers’ point of view since they are not being charged a commission for each ride but are paying for the platform that can be used by cab drivers to earn money, and it is simply that charge.

Also, since they are not charging any commission per ride from the cab driver, they are actually nudging the customer to pay via cash or UPI directly to the cab driver. How many times have cab drivers declined our ride because the ride was not on cash? Uber nudges customers on each ride that they should not pay via cash because if customers pay via cash, it can become difficult for Uber to retrieve the cash from the cab driver. If customers pay via cash, then the money is disbursed, but since it hasn’t reached Uber, Uber wants you to pay digitally. Cab drivers want cash because they need it to put fuel in the cab. Rapido has solved this problem so beautifully and with first principles that you wonder why the problem wasn’t solved earlier.

Since drivers like Rapido, they have actually become evangelists of the Rapido app so much so that when you book Uber, they’ll nudge you to install Rapido, and Rapido is growing organically. If services remain good, I might not go back to Uber again.

Market Dynamics

I’m pretty sure that Uber is watching all these changes, and they might reduce commissions, leading to some equilibrium. However, just when you think that one industry has stagnated, there is always some disruption, and it becomes fertile ground again for people to try newer things.