Profile - Namma Yatri
Will solving compensation and welfare for the cab operator create a better experience that challenges Uber, Ola. Rapido and others in India?
India may have surpassed China to be the most populous country in the world this month: “India’s population by mid-year will reach 1.4286 billion, compared to China’s 1.4257 billion – 2.9 million fewer – according to the United Nations Population Fund’s (UNFPA) “State of World Population Report” for 2023”1.
To add to that rapid urbanization, growth of direct investments in the private sector, expansion of public infrastructure and more is impacting the way people travel in cities like Bengaluru.
Uber and Ola were expected to have an oligopoly on the ride hailing service market that would even challenge personal vehicle ownership. Bhavish Agarwal of Ola was once quoted in a piece by ET titled : “Why Olacabs boss doesn't own a car.”
“We are building towards the future where people need not own their own cars. In the west, 70 per cent of the population owns cars. In India, it's just four per cent.
Despite that, our streets are clogged. We will just leapfrog car ownership as a concept and get into transport as a service. That's bound to happen. There is no other way for our country. We want to be the pioneers in enabling that. I don't have a car and have decided never to own one.”
But almost 9 years later we have reached a place where the CEO is changing bets on building for the same market he was opposed to. Ola has so far raised USD3.95 billion over 26 rounds with their last funding round on Feb 22, 2022, for $20M to build electric 2 wheelers and even a future sports car2.
Meanwhile, Ola Cabs has seemed to take a backseat with troubled legal disputes with drivers, declining customer experience, alleged violation of competition laws through predatory pricing and more.
Uber doesn’t seem to have pivoted as much as Ola but has definitely not had an easy time either in handling the ride sharing market’s headwinds in India. Legal challenges regarding licenses for operation, questionable lobbying efforts that exploited drivers and financial results that have not turned green.
The state of ride sharing services was sad and turmoiled but all of it has led to this moment where new players have emerged and have applied twists on the traditional business model.
Namma Yatri is an experiment that’s trying to fix the flaws of a ride sharing business model by fixing the driver’s value chain first. Their slogan directly reflects this mission: “0% commission, 100% open”.
With the contention being fixing the driver’s earnings problem can fix the shortcomings faced by current users such as:
Surge Pricing (from online services) and unfair pricing practices (from offline cabs)
Customer experience issues linked to drivers trying to save on cost of trip (trip cancellations or non acceptance of trips considered “short”, turning off AC, stopping before an actual stop, etc.)
In order to strategically solve this issue to create significant impact over the competitors, Namma Yatri is using the following steps:
Working with Auto Rickshaws Drivers Union directly to campaign, acquire drivers and iterate the platform.
Utilizing ONDC and Beckn Protocol established by FIDE to build an open and decentralized marketplace model for mobility in India.
Tech team lead by Juspay, utilizing Open Source software and product roadmap that can be built with citizen developers.
The key difference between Namma Yatri and a traditional competitor lies in it’s trip matching process. Once the way points are entered a user can choose between 2 ways to allocate a driver:
Auto assign a driver: This would automatically allocate the first driver to accept the trip estimate.
Choose between multiple drivers: This option collects quotes from multiple drivers in an area and provides users with a list view of all offers.
Rates set on the platform follow a government prescribed rate card that’s fixed with the exception being drivers are allowed to request a markup of up to 10% of the trip estimate.
Namma Yatri’s open roadmap includes:
Multi modal transportation: Connecting Public Transit modes on the platform
Open Source Maps: To reduce operating expenses
Ride-pooling: Sharing cabs with other users
Smartphone as Cab Meter for better fare estimates
EV charging and swapping map
Financial wellbeing tools for drivers
Driver earnings gamification
App-less Bookings, Offline Bookings
Enhanced Rider Safety
Customer Service Training for drivers
In 2023, distribution and marketing is no longer a challenge. The best example is ChatGPT which managed to acquire 1 million users in 5 days from all the anticipation and value it returned. A similar situation lies with Namma Yatri in light of its competition and the environment it operates in. Uber and Ola’s eroding customer and driver trust, along with the need for affordable transit modes create a feasible environment for a marketing budget-free Product Led Growth campaign for the platform. —> 760K registered users and 55K drivers in 8 months.
So if distribution and marketing has become an easier obstacle, let’s look at the Key Challenges of the product and operations that Namma Yatri team will need to solve:
Monetization vs Tech and cloud costs: Namma Yatri is yet to monetize the platform since it’s running a 0% commission model for the auto drivers. And currently they claim that nearly 80% of the operating costs for the platform go towards map / location service APIs. Capabilities that would be fulfilled by services like Google Maps. Overcoming this through a cost that is to be borne by the driver or the passenger is something that is yet to be tested. (Traditionally, commission or “take rates” for players like Uber and Ola have been between 10% and 25%).
Cost Challenge: The rate card currently follows the prices set by the Karnataka Transport Department (with a cap of 10% on any markup):
Auto Rickshaw drivers on the platform are collectively part of a union which poses an artificial cost control by the drivers. (And the ability to control prices only works in forward direction where users can add increments to calculated estimate). The only feedback mechanism that allows customers to negotiate prices for trips is the ability to choose from a pool of drivers, which only works effectively if there are enough registered drivers on the platform. (The platforms open data suggests that there are only roughly 55K drivers in Bengaluru since it’s rollout.)
Addressing Cancellations or Quote Acceptance: Currently there are limited guardrails and incentives to prevent cancellations or the non-acceptance of trips on the platform. A few anecdotes from Twitter :-
Namma Yatri has to find unique ways to tie in driver performance with the ability to remain or be prioritized on the platform. For ex: Google’s search results algorithm is linked to SEO optimization done by the website owner; A similar mechanism has to prevail on Namma Yatri for drivers (based on trip acceptance rates, avg trip rating, etc.) and quote ranking for searches made by users.
Uber Ola Rapido oligopoly that has incredible market share that may be difficult to displace. For ex: Uber has incredible war chest of resources. They have hands in anything from big data, AI/ML, autonomous cabs, an early hand in multimodal transport, big marketing etc.
Attested by the fact that they led a campaign on user safety to challenge competitors and reassure their position in the 3 wheeler cab market just a few months back3.
Fleet Management falls under the scope for operators rather than the aggregator and the only player directly involved with this effort are players like Blusmart because they are an “Asset Heavy” model.
And this direct hand in fleet management adds value to the customer experience; vehicles are clean and well maintained, working capital allocation and fuel management for the fleet is efficient (or in Blusmart’s case, managing EV charging and the stations). Aggregators like Namma Yatri have to build solutions to address responsibility of vehicle maintenance, financing, and other aspects of operations that directly impact the life cycle the vehicle.
An example of a subset of tools used by a fleet manager are: Geotab / Mappls (Vehicle Telematics and OBD) + Fleetio (Fleet management and Maintenance) + AtoB (Fuel Cards and payments) + Zego (Smart Vehicle Telematics based insurance) + Digital Bookkeeping. Using these tools in combination can significantly streamline the financial implications of running a fleet. And creating a vertically integrated platform that leverages such functions while remaining accessible can impact independent commercial vehicle operators and personal vehicle owners in India. (Find more of these tools in our database)
Trust and Safety —> Building a successful mobility platform is a challenging task, as it requires a focus on both user safety and the quality of service provided. Ride-hailing platforms such as Uber and Ola have invested heavily in building robust training and redressal mechanisms to ensure the safety and security of their users. This includes measures such as background checks for drivers, in-app safety features for passengers, and a strict rating system for both parties.
However, safety is not the only concern for users. They also expect a high-quality service that is reliable, affordable, and convenient. Platforms must, therefore, prioritize both safety and quality of service to establish trust with users. Uber and Ola have set the standard for providing fast responses and resolutions by investing in customer support teams, driver training programs, and implementing measures to ensure reliability and consistency.
Extract Open Source Value : Namma Yatri has made its source code and roadmap open source, and its key performance indicators semi-open source (allowing users to view data but not export it). They have also launched an online hackathon to involve citizen developers in the platform's iteration effort. However, this effort needs to be amplified to involve more active trip users who may not necessarily be technically qualified to understand a GitHub repository and the roadmap that further lives in its readme file. Although India has a vast number of technically qualified users on GitHub (nearly 10 million!4), Namma Yatri's primary users, including drivers and passengers, may not possess the technical expertise required to contribute to the project on GitHub. Involvement of non-technical users can bring a fresh customer perspective and provide invaluable feedback to the project.
Bring the open source initiatives to the product / app where passengers and drivers will directly interact. Poll users on features to build, comment on proposed iterations, etc.
What other challenges / opportunities do you see to Namma Yatri’s growth story?
The implications of a novel idea like ONDC, open mobility and solving driver earnings from a “social impact first” intention are new territory for ride sharing businesses. Do you think it would work?
We have compiled more than 500 companies in the mobility space, others similar to Namma Yatri too. Find them on our website below.
Madhok, Eliza Mackintosh, M. S. (2023, April 19). India will surpass China as world’s most populous country by mid-year, UN says | CNN. CNN. https://www.cnn.com/2023/04/19/asia/india-china-population-intl/index.html
“Ola to go for IPO in 2024, investors to get healthy returns”: Bhavish Aggarwal | Autocar Professional. (n.d.). Autocar Professional. https://www.autocarpro.in/news/ola-to-go-for-ipo-in-2024-investors-to-get-healthy-returns-bhavish-aggarwal-114248
C. (2023, February 3). Uber moves beyond cars to ride with three-wheelers in latest India campaign | Advertising | Campaign Asia. Campaign Asia. https://www.campaignasia.com/video/uber-moves-beyond-cars-to-ride-with-three-wheelers-in-latest-india-campaign/484244
Goled, S. (2022, November 11). Where Does India Feature In GitHub’s Grand Scheme? Analytics India Magazine. https://analyticsindiamag.com/where-does-india-feature-in-githubs-grand-scheme/