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Ola to standardise commissions to attract more drivers

Ola is standardising the commissions it charges its drivers while moving away from an incentive-driven model. The move would help drivers clearly ascertain their earnings and differentiate it from variable incentives, and also help bring more driver-partners on the platform.

6th January 2020 | 05:03 PM (IST)
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Homegrown ride-hailing major Ola has been taking measures to improve its unit economics ahead of its planned public listing by 2022. And it was very much reflected in its financial filings for the fiscal year 2019.

The biggest cost for the Bhavish Aggarwal-led firm has been driver-related expenses over the years. And the Bengaluru-headquartered firm, which brought down its expenses significantly this fiscal, is taking measures to balance its expenses without hampering its driver-partners’ earnings.

Ola is planning to standardise commissions it charges its drivers. The company plans to regain the supply of drivers that have taken a hit in the past couple of years.

“It will allow drivers to ascertain earning and differentiate it from variable incentives,” said an ET report quoting a person aware of the development.

Ola has been, for the past two months, charging drivers standardised commission at 25% in the country.

Moving away from fixed and incentives-driven payment model for its driver-partners, the company reserves about up to 5% of earnings to give back to drivers as incentives, added the report.

The development comes amidst the government’s plans to limit cab aggregator’s commission to 10%, which has also added to the pressure to cut costs.

In the past one and half years, the cab-hailing platform has witnessed several senior-level exits, layoffs and cost cut ahead of filing for a public listing.

At present, Ola has about 10K vehicles and 20 lakh active drivers on its platform.

Ola plans to add more drivers on its platform. In recent months, the company has also been focusing on new high-margin categories like corporate, self-drive and scooter rentals.

In early years, Ola drivers used to earn roughly Rs 500 per trip as the incentive structures were based on targets for drivers without any standardisation.

But soon after it realised that costs were taking a toll on the company, it cut them down.  And to an extent, it has helped the firm trim down the losses, which was visible in its financials.

In FY19, Ola recorded a spike of 37.7% in operating revenue by earning Rs 2,543.63 crore and trimmed losses by 9%. Ola earned 75% of its total income through commissions and convenience fee in 2019.

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6th January 2020 | 05:03 PM (IST)
18 views
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