Friday, August 1, 2008

Easy Cabs: Business Model
Recently I got a chance to come in one prepaid air conditioned taxi ( courtesy my new job ) from airport to my home. The drive was of about an hour.

The moment I entered it, the driver asked me, which newspaper I would like to read. I was surprised, and chose one business paper. Then he asked me, whether I would like to have mineral water, I was even more surprised, and accepted one bottle. Then he asked me, which music I would like to listen, I chose pop music. Then, he asked me if I smoke, and which brand, I courtly gave him my brand, and he offered me cigeratte. Then he told me that, if I need to charge my mobile phone, I told him, he wont be having its charger, to which he replied, that he has five type of chargers. I was simply amazed at this treatment.

( Some of this was cooked up to make the story spicy, but my astonishment was not )

By this time, I was intrigued by the five star treatment. So, I started inquiring him about the business model of the taxi system.

The major highlights :

The taxi was owned by the company, but will be transferred to the driver after 4 years.
There was a call center throughout the National Capital Region ( Delhi and around), with a single no.
The customer calls the call center
The call center, flashes the message to all the taxis in 10 km range of the customer location.
The driver who bids first, gets the order.
The taxi has to reach the customer in 15 mins.
All this is done via GPS (Global Positioning System) installed in each taxi.
The driver is a qualified driver, from a reputed driving institute.
The driver is supposed to pay the company, Rs 750 a day
Rest all the expenses including fuel is born by the driver
Apart from Rs. 750 a day, all the earnings go to the driver
But for this, drivers need to pay Rs 25000/- as deposit, and two guaranters.

What does the company gets?

Presently this company is having around 500-1000 taxis. Just imagine that the company is earning Rs 750x 750 ( average of 500- 1000 taxis)= Rs 562500 a day just for operating a call center. This amounts to be Rs 205312500 ( 205 millions) an year.

What does the driver gets?

Apart from getting the taxi after four years, each driver earns Rs 1500 a day after deducting expenses. In other words Rs 45000 per month. This is rare for even qualified professionals in India.

What does customer gets?

Five star service at reasonable rate.

Isn’t it the cool business model??


Anish Goyal, India said...

quite surprising.
just in March this year, they didn't have all these services and here in Hyd also they don't provide all that!!

seems like everything was cooked up for Mr P Agarwal :-)

chanakya arora MBE,India said...

i guess, while calculating cost for company, you forgot, to include cost of the cars.
if you go in detail of this business model, these cars would be purchased by company, and transferred after 4 years. All the cost of mainainence & upgrading of car (to maintain repute of Brand) is done by company itself.
Also, this being India, there were cases recently, when drivers themselves rammed their cabs, and poor company had to pay, for the insurance losses.& driver enjoyed a medical leave as per their contract.

Prabal Aggarwal said...

Hi Chanakya

Yeah you are right, I missed out the finance cost of the cars. But at the same time, repair and maintenance, insurance and medical leaves are all born by taxi drivers rather than the company. This is the unique model as compared to other prevalent models. Most of the other cab companies keep the drivers on the monthly salary basis, whereas easycabs use them as contractors.


murtaza said...

this is really amazing..
people can get better services for cheaper rates...

strato shear said...

I appreciate from this blog.thanks for share.
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