The pursuit of ridesharing companies’ survival in the post-COVID-19 world
By Farhat Zishan
The gig-economy gained popularity at the height of the 2008-2009 financial crisis, and soon enough startups like Uber and Airbnb were introduced to the masses. Fast forward a few years, gig-economy startups have grown into technological goliaths; transforming the everyday lives of people in multiple aspects – from our everyday commute to our holiday abodes. Ridesharing companies have been the flag bearers of the gig economy; garnering massive investments and morphing into startup unicorns; with aspirations of reaching every corner of the globe. And then, the global coronavirus pandemic took place. In a time when calling the nearest available motorbike or car was something in our everyday routine, we have to ensure social distancing – thus annihilating even the slightest possibility of getting into mass transportation or worse, on someone else’s vehicle. Hence, ridesharing companies are looking into huge financial losses, not to mention layoffs, and also the need to rapidly adapt to this challenging scenario and explore new business diversification models.
What’s up with the Global Giants?
Ridesharing giants Uber and Lyft both have downsized in May 2020, cutting 14% and 17% of their workforce respectively. Amidst all the turmoil Uber’s CTO Thuan Pham has decided to step down, while the company CEO has reported that its bookings in its key markets have fallen by 70%. Analytics firm Second Measure disclosed an even severe number. Drawing data from aggregated debit and credit card purchases of one million customers in the U.S. the firm has stated that spending on Uber rides has dropped to 83%. Sure enough, this staggering drop is likely to be severe in other markets as well. Because this is the first year for Uber as a public listed company, such drastic decline will result in severe pressure from the company’s investors.
The immediate response chalked out by industry experts and analysts is to decrease marketing expenses and cut down the multiple incentives that have been offered to the drivers. While this is the scene in the Western part of the world, things are quite the opposite on the Asian end. Grab and Gojek, Southeast Asia’s biggest on-demand mobility startups, face competing for financial crosswinds as they navigate the coronavirus outbreak. The number of people ordering rides on Grab fell by 24% during the week ending March 26 compared with Feb. 22-28, as per data from Indonesia’s Statqo Analytics. Gojek’s ride counts fell 11% for the same period. But instead of cutting costs and employees, the two companies are assisting drivers. Grab is offering drivers in Singapore a 30% discount on vehicle rental fees through May 4. Throughout Southeast Asia, the company is providing cash stipends to drivers infected with Covid-19 or who are forced into quarantine. The startup has spent nearly $40 million on such financial support. Gojek in late March established a relief fund of 100 billion rupiahs, or $6.38 million, financed in part by executives donating one-quarter of their annual pay. The fund will subsidize drivers in areas such as medical care and supplies. Grab and Gojek is going to these lengths to support drivers because they form the backbone of the services offered by the two startups, which span ride-hailing to home deliveries and digital payments.
What’s Happening in the Homefront?
In Bangladesh, ridesharing companies, now with their ride-sharing businesses at the brink of collapse, are placing their bets on food delivery services. Despite UberEats closing down its operations in Bangladesh, alongside 7 other small markets, other players in the Bangladeshi industry have risen to the occasion. Foodpanda has launched a new social media video in Bangladesh emphasizing the safety precautions that their delivery personnel are now adopting; garnering rave reviews from the audience. Hence, food delivery services are one sure-fire option via which ridesharing companies are trying to sustain their revenue.
Speaking of diversification, ridesharing companies in Bangladesh have displayed their grit and determination in coping up with all the adversity and exploring other avenues. Pathao has recently added multiple other offerings in their app – starting from a content browsing feature made in partnership with Bongo, to re-introducing Pathao Tong – their on-demand essentials delivery service. Customers can now easily sit in their homes and shop from retail stores like Shwapno, Meena Click, and Unimart with the help of these features. The ride-sharing platform has also partnered with Digital Healthcare Solutions, Praava Health, and Maya to provide instant health-care service via the app. Named as Pathao App, the platform will connect users to Covid-19 trackers online and provide one on one medical services through phone and video consultation. The service is surely expected to benefit many of the six million users registered to the app.
Shohoz, one of the other local ridesharing companies in Bangladesh, has also adopted a similar strategy – launching a health service named Shohoz Health using which the users can get video consultations and prescriptions from more than 100 doctors as well as getting necessary medicines delivered to their doorstep. Besides, Shohoz is also the technology partner of Corona Tracer BD, a smartphone app made by Bangladesh Government’s ICT Division and the Directorate General of Health Services (DGHS) and a2i.
Another ride-hailing service in Bangladesh Obhai, has installed plexiglass barriers in its cars and auto-rickshaws to protect passengers and drivers from coronavirus infection. The walls are made up of transparent 3mm acrylic sheets, weighing no more than 5kgs and fitted firmly between the drivers and the passengers, Obhai said in a statement as Bangladesh lifted the shutdown of the public transport system. This comes in addition to Obhai’s hygiene standards of regular vehicle disinfection, providing hand sanitizers to drivers, facilitating contactless payments, and providing both drivers and passengers with masks. “With limitations of social distancing and health guidelines applicable to an already overwhelmed public transport system, Obhai will come as a relief to all essential commuters,” the statement said. The following steps surely go on to portray that ridesharing companies in Bangladesh have already started to tap into new frontiers, and integrate better offerings during this pandemic. Such additions shall not only assist them to weather through the current pandemic but shall also help them to gear up for the future.
At this point, no one knows for sure about the future of ridesharing services or the fate of the companies that offer them. But with relevant diversification models along with strategic collaborations, these platforms are not only trying to sustain their businesses but are also helping out their customers throughout this difficult period. Let us not forget that these businesses were formed to defy convention, and also to transform some of the most significant parts of our everyday lives. Chances are that the pandemic might make the visionaries behind these companies head back to their think tanks and they can forge even better versions of these ridesharing companies – ones that will be pandemic proof this time around.