With apologies to none at all
By Vikas Mehta
A few weeks back I had written on the decline in the services of aggregator apps and related my personal experiences with a few apps. You can find the article here.
Some of you readers wrote back and asked me for the reasons of this decline. As one put it, usually new offerings with new technology get ironed out over a period of time. So, why should the aggregator apps be an exception to this? Fair question and it set me thinking.
Before I continue, I would like to convey my thanks to Hamsini Shivkumar, Brand Consultant and Semiotician par excellence. It was she who nudged me into thinking deeper and we had a fair exchange of ideas. Much of what I write today is the result of her thoughts.
Let’s look at this decline in quality, first by looking at the Indian consumer.
Most of the aggregator apps like Ola, Uber, Swiggy, Oyo; when they came on to the scene, they offered a new service, promising higher standards of delivery at cheap rates. I am using the word cheap deliberately. The transport aggregators offered cabs at your doorsteps within minutes and their rates were lesser than a traditional ‘kaali-peeli cab’. They offered not only the convenience of quick service but also avoided the hassle of looking for a cab and the cabbie declining to take you to your destination.
Food service apps suddenly provided one with the comfort of home delivery from various restaurants at no extra cost.
Oyo provided cheap hotels with a minimum quality assurance.
Make My Trip offered everything one needed to travel including air schedules and bookings across airlines, railways and gradually also bus service. Hotels, cab pick-up and drop-offs and even guides for tourist places were gradually added on. And there was hardly any extra charge in the beginning.
And almost all of them started peddling discount coupons and more offers to make the deal even sweeter.
That’s why I used the word cheap. New services, new comforts and new conveniences were available cheaply.
All these were targeted at the Indian middle class. And the Indian middle class still confuses value with cheap. Typically, value could be defined as same for less. Or more for same. Or more for more. Or even less for less.
Same for less means cheaper, discounts. More for same means you add some more benefits. Buy one get one free or 200 gms extra in a pack of 500 gms at the same price of 500 gms. More for more would be pay only Rs 500 extra for buffet breakfast with a room. Less for less would be a star hotel giving you a room but not allowing you the facilities of a gym or a swimming pool.
The Indian middle class as a generalisation picks up more for same or same for less. Give them a room at a discounted price and they are happy. Free airport drop and pickup is accepted. But adding buffet breakfast at a marginal cost may not be appealing. No extra money shelling out. Period.
This is not to say that the middle class is not quality seeker. But they want best quality at low prices. They are not even looking at more for more. That’s why howls of protest arose throughout the country as transport aggregators started charging peak hour or rush hour or traffic surge surcharge. So much so, that public opinion forced some states to ban these surcharges by law! The typical middle class consumer has no problems accepting discounts but when charged extra due to high demand it demurs!
More for more works for the luxury good or premium service seekers. These may not be the typical middle class. So, a Vistara charges you higher fare as they give wider seats, more leg space and free food and it has its premium users. Or these are people who will not want an anonymous biryani but a biryani from Paradise or Shah Ghouse in Hyderabad. The premium- or luxury-seekers are fine with these.
And such people are few in numbers compared to the vast middle class who mostly is looking for more for same or same for less. The focus is solely on the price.
Therefore, when the aggregator apps were launched and everything was same for less or more for same, these were lapped up. Cabs available at your location without any extra fees and maybe even cheaper than metered kali-peeli cabs were a hit. Food delivered in fast time without any delivery charge was a success. Hotel rooms available at much cheaper price with a promise of cleanliness and sanitation were lapped up.
Now let’s see this picture from the viewpoint of the aggregator. Understanding the propensity of the middle class, they offered value but focussed on price. For the aggregator, it was hot food offered at the comfort of home at no extra cost but for the consumer it was about food at some discount too. It was not about cabs available quickly at your location without the fear of being declined by the cabbie but about great rates. It was not about an alternative available between 3-star and hole-in-the-wall shady hotels but about shady hotels available cheaper. To be honest, for both the cab aggregators and hotel aggregators, the story about cabs without declining and hotels with a standardised hygiene version were played up but these advantages were soon frittered away.
Their partner service providers had been acquired also on the lure of substantial earnings. Hotels and restaurants were promised big incremental revenues. The delivery riders were promised lucrative, per ride fees. Transport aggregators too were giving the drivers big monies. And as word spread about easy money, more partners accrued.
Discounts and price-cuts and subsidising of partners lasted for some time. And soon the aggregators were under pressure to improve margins. Move towards profitability. VCs wanted IPOs to cash out.
The partners became disenchanted when aggregators cut the big incentives, subsidising of vehicles and even helping spruce up the hotel property. Rider fees were slashed. And delivery charges crept in. Travel aggregators included convenience fees. The situation became piquant as the consumer suddenly realised that the free or discounted does not make sense as extra charges were levied. So, s/he demanded more accountability. The brunt of this was faced by the partners such as delivery riders, hotels, cab drivers, airlines etc. In turn, these partners resorted to all sorts of jugaad. This led to service standards declining.
And the jugaad mindset led to ingenuity of the partners. Cabbies, not wanting to travel short distances, would deliberately arrive late. Forcing the customer to call them. And on enquiring the destination, they would cancel the booking or say that they did not find the customer. Thus, not only causing major unhappiness but also destroying the advantage of ‘no declining’ as in traditional cabs. Restaurants realised that they could, in their own areas, do their own delivery. Hotels started asking regular visitors to book directly and gave them equal if not more discounts.
The aggregators tried to control the partners with technology. OTPs, rating points, incentives based on ratings were introduced. But service is an interesting concept. It can be aided with technology but it cannot replace the human touch. The aggregators, under cost and margin pressure did not accentuate the human touch. Nor did they expand technology to aid the human touch. In fact, the reverse happened. It used to be difficult to get through customer service numbers. Now the customer service numbers just disappeared. Bots supported by AI came in. Social media sites were flooded with complaints. This spooked the investors who put more pressure on the aggregators. Things just went downhill.
Another thing about service is that it becomes increasingly difficult to deliver consistent service online. In offline, service expectations differ according to customer segment and their location. Someone with a premium service mindset in Gurugram cannot be treated in the same way as a discount-oriented customer in Saharanpur. But in online, we have a single set of guidelines. We have one operating SOP. And this fails to deliver. No attempt has been made into moving into customisation of service.
And because most aggregator apps have not defined their target group but want to engage all possible users, they are dealing with different set of users. This results in trying to keep all segments happy without aiming at anyone in particular. To use a mathematical analogy, this results in service systems which cater to the lowest common denominator, LCD. And not HCF, the highest common factor.
Offline service standards are tweaked depending upon the location and your target customer. That’s why service companies do attain good standards, offline. But online, heavy investments are required to make it reach the customized HCF level. A luxury which the under-pressure aggregators cannot afford.
And that’s why, all these aggregator apps, while realising that they are in different business must also realise that by being an aggregator, their core is about service. Transportation, food delivery, rooms, travel is the second level of tangible benefit. The most important tangible benefit is service.
I think Amazon is the only aggregator which has focused on service. It openly declared that it isn’t in the business of ecommerce or entertainment. But it is in the service business. This has helped it achieve higher customer satisfaction and loyalty than other aggregators. And Flipkart which had the first-mover advantage in India, is today owned by Walmart, a discount store brand. Maybe therein lies a tale.
Communications firm MSL has bagged Ola’s communications mandate. Ola has engaged MSL for its end-to-end communications mandate starting November 1 2017. MSL India comes on-board post a multi-consultancy pitch that lasted over two months. Earlier, MSL has also held the communications mandate for Uber.
 By Pradyuman Maheshwari [updated]