Life has become easy: we can call a cab, order a meal, medicines, grocery, or send a courier, all from the comfort of the couch at home. This is all thanks to aggregators such as Uber, Zomato, Swiggy, Dunzo, Amazon and others that act as a link between businesses or services providers and customers. While the convenience of it all is great, it’s interesting to look at the aggregator model and what it means for its partners and end users.
An aggregator collects (or aggregates) data pertaining to goods and/or services offered by several vendors and displays it on its own website or application. It essentially builds its own brand and tries to attract customers that make purchases through it. While on paper this model looks great, over the past few years there have been numerous incidents that showcase a trust deficit between the aggregators and its partners. Even the end-users lack complete confidence in these platforms, often switching from one to the other or even choosing to avoid them after a bad experience. What exists now is a massive trust deficit.
In contrast, remember the dubbawalas and angadias, the first form of organised courier? It’s amazing the amount of trust that we had in them and how flawless their operations were. Dubbawalas perfected the process of collecting tiffins from home, carrying them from one station to another, delivering them to office and then bringing the empty tiffin home. The angadias, people who carry documents and valuables as a part of their ang or body, carried diamonds, cash and much more with full trust of the customers.
So, why are there recurring disputes with aggregators? One of the key factors is that the role of an aggregator is somewhat blur. Let’s take a deeper look.
What is the role of aggregators?
Are they a tech platform? An aggregator of services? Simply commission agents? Or are they themselves service providers, perhaps a mishmash of both? This confusion has caused an identity crisis leading to regulatory issues and trust deficit in minds of both customers and partners.
Let’s elaborate with some examples:
Commission Agents: Be it Uber and Ola drivers or restaurants and delivery boys, all have the same grievance – the aggregators charge a high commission rate, leaving very little for their pockets. We have seen Uber and Ola drivers repeatedly going on strikes against the aggregator commission rate and low base fare. To add to that there are few benefits for the drivers and most drive cars that are not self-owned, further reducing their earnings. Similarly, restaurants are moving away from apps like Zomato and Swiggy due commission rates that are at times as high as 25-30%. They see advantage in taking direct orders or selling through social media platforms like Instagram, where they can make more profits, control delivery and transfer some savings to the customers. Some restaurants have partnered with tech companies DotPe and Thrive that provide the technical support to build their own ordering links.
Tech Platform & Data sharing: Working with an aggregator, the partners expect insights into orders/demand and customer trends. However, the National Restaurants Association of India (NRAI) continues to raise concerns over lack of data sharing by Swiggy and Zomato and claims that this gives an unfair advantage to the aggregators. Data can help restaurants improve quality of service or help in building a profitable menu, but the online food apps argue that sharing this data would be breaching user privacy. NRAI now wants the Competition Commission of India to intervene. NRAI also alleges that food aggregators are rigging the system, prioritizing their own self-interest while ignoring the plight of restaurants. They argue that these aggregators compel restaurants to participate in massive discount schemes and indirectly hurt their prospects. A few years back a few hundred restaurants logged out of dining and membership driven platforms such as Zomato Gold.
Service providers or Competitors: Given the access to data and trends, aggregators such as Amazon, Zomato, Myntra etc. themselves become manufacturers and competition to the businesses that choose to feature on their apps/websites. Let’s look at Amazon. It became more than an aggregator when it began manufacturing products that are high in demand. It markets its own products as bestsellers or pushes them to the customer, thus becoming competition to the brands/vendors that sell through Amazon. Another example is that of Zomato. The online food aggregator has started its own cloud kitchens. They know what food is high in demand and the price range that the customer is happy to pay. As a result they have increased their own profit and added to the competition.
Relationship with Partners: Be it app-based cab companies, food delivery apps or courier apps, the problem is same across the spectrum: irresponsible behaviour towards partners. Zomato and Swiggy have had a complicated relationship with their food delivery partners. They have received flak over and over again for mistreating riders. A Zomato delivery boy was using a cycle to deliver packages when a customer crowd-funded a campaign so that he could buy a bike. Why are the aggregators not responsible towards their partners? Uber and Ola drivers also claim they are not getting right benefits or earning as promised. Their earnings have dropped over the past four years due to incentives and bonuses being cut, coupled with the rise in fuel prices and low per kilometre rates. A survey by Hyderabad-based Indian Federation of App-based Transport Workers and UK-based International Transport Workers’ Federation found that drivers of app-based transport companies work in a very toxic and isolated work environment, drive for over 15 hours, and still don’t earn enough.
Passing the Buck & Lack of Ownership: Aggregators are efficient in building their own brand but are quick to pass the buck when it comes to taking ownership, especially if something goes wrong. They simply blame the partners. Flipkart has been under fire in the past for delivering a brick instead of a phone and pack of tiles instead of a camera. But they never took ownership. Then there is Myntra, which offers the try and buy option. However, it is known to send the wrong size or different product and when the customer wants to exchange it they raise issues such as damaged product without even checking or sending a pick up, leaving a harassed customer at the other end. Similarly, if your food order is delayed, most often than not, food delivery apps blame the restaurant.
What all of these examples demonstrate is that there is no one consistent model that is being practiced by aggregators and the issues that were prevalent a few years ago continue to persist. They are just moulding and adapting as per their benefit and as a result, losing the trust of partners and customers alike. The corporate interest meddles with the partner interest, not adding enough value for the latter.
While this is an evolving model, aggregators need to create trust to gain success. Some questions that remain: What is the effort being made by these aggregators to enable the SMEs on their platforms? What is the value add for the partners? Are they willing to focus on creating loyalty, rather than competing and creating their own brand? There is definitely more than what meets the eye.
Given a chance, I would still trust a dubbawala even if an aggregator brings a similar service. The same dubbawala/angadia doing the same thing daily is more relatable. In fact, I still order my grocery from the local store via WhatsApp rather than app based platforms. It’s the human touch and reliability that makes all the difference, don’t you think?