The Covid-19 Effect: Shocking Ways It Will Change Ride Hailing Business Model

The Covid-19 Effect: Shocking Ways It Will Change Ride Hailing Business Model

There is a force that is so powerful that you must pay attention to. This force can be naturally induced or humanly induced. The effect is always the same regardless of the way it is induced.

The force is called change. The force of change can do two things; it can disrupt a system and it can innovate a system. That is why change is constant, this is the secret of human civilization and developments. Human societies and technologies have evolved over time.

While entrepreneurs are the major agents of change in the business world, nature is another agent of change. You see how Airbnb and Uber models disrupted the hospitality and the transport industries respectively. But today, Coronavirus is trying to disrupt these business models.

So, in this article, we shall learn how Coronavirus is disrupting ride hailing business models and what they should do to remain in business or what to do to pivot the models.

 The Coronavirus Effects on the Model.

 The ride-hailing business model which is also known as Uberisation is one of the epic business model innovations of the 21st century. We shall look at the components of a typical ride hailing business like Uber, Taxify (Bolt), Lyft etc and see how the pandemic has affected them. 

  • The Supply Side of the Model:

The supply side of the ride-hailing model is made up of the drivers and the cars. The drivers provide the cars and use the car to deliver service to the riders.

 But, in this period of social distancing how do you think the driver is safe from the infections. What if the drivers have come in contacts with people with the virus? The driver could be an agent for spreading the virus.

 There is panic on the supply side. The drivers will be afraid as life is better than death.

  • The Demand Side of the Model:

The demand side of the model consists of the riders or the passengers. They are the end users in the model. This period of viral spread of this virus, the riders or passengers may be a victim of this virus.

 The rider will suspect the passenger and the passenger will suspect the driver. Because, everyone is a suspect and a threat in times like this.

There is also panic on the demand side. What a great problem for Uber, Bolt and Lyft? 

  • The Digital Mobile Technology:

The business model runs on a digital technology of mobile application. It has an algorithm that is programmed to match the drivers and the passengers. So, the mobile application may be less useful during this period. Currently, in some cities there is total and partial lockdown and economic activities are reduced to the barest minimum.

 These effects mean decline in business of the industry. Decrease in passenger confidence on the services. This will translate to decrease in revenue of the businesses.

 Now that the problem is clear, what we need is how to solve these unique problems. Here are my proposed solutions; 

Solutions to the Coronavirus Effects to the Ride Hailing Model.

 When we change the way we look at things then the things we look at change. So, let’s look at the business model from solution angles.

  • Covid-19 Health Measure Compliant:

For the businesses in the ride hailing industry to continue in business, they should ensure that the drivers and the passenger comply with the safety measures in order to contain the diseases. This is the short term solution to this problem. Many businesses outside the ride-hailing model are using this general solution to remain in business at this time.

  • Owing Personal Car.

According to a discussion on Prof Nduibisi Ekekwe’s Linkedin page, he said it has made it very crucial to have a personal car. This is important because no Uber or Bolt driver will want to take a sick person to the hospital in this period. For instance, if your loved ones are sick this period, it will be hard to call Uber or lyft to rush them to the nearest medical facility but with your personal car you have an alternative and a reliable solution.

 So, having personal cars is an alternative solution and insurance against evil days.

  • Selfless Driving Solution:

Though the future of cars is selfless driving or autonomous driving but that future has become needed in the present.

With a self driving car solution there will not be contact between the drivers and the riders as there will not be drivers in the car. That means, the car would be sanitized to eliminate panics on the side of the riders or passengers. With this innovation in the ride hailing business model, the business will thrive in this kind of time.

So, when a change impacts a business model, the two things you do is you either pivot or you become obsolete and be out of business forever. With these solutions, you have alternative insurance and the ride hailing businesses will pivot to remain in business.

Share this post

Post Comment