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The development of mobile apps in smartphones and the latest affordable technologies have developed this market niche “Taxi Aggregators”. Entrepreneurs started investing venture capital in taxi aggregator business after keenly looking into the Taxi Aggregator Business Model.
It is undeniable, that huge capital is invested by the topmost taxi aggregators like Uber, Ola in this business due to opportunities in the market and the popularity of this new market niche.
To analyze this taxi aggregator business in this article, we will look into the Taxi aggregator business model.
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The taxi aggregators are a new market niche where the owners or the brand do not own their taxi and they depend on their associates to organize the taxi operators.
The intellectual property of the taxi aggregators is their capital invested for developing their App, IT support system and the network required for this business.
The most popular taxi aggregators are Uber, Ola in India. They always focus on developing or building their brand to expand its business worldwide by providing lower and affordable services to its massive customer base and thus maintains the relationships with their business partners or cab operators.
Opportunities that are driving Taxi Aggregators are as follows:
The threatening strategies of Taxi Aggregator Business model:
In the real business of taxi aggregators, the technology used to build the app or the brand comes secondary when compared to the partners of the taxi aggregator business. The partners are the main key to this taxi aggregator business.
To realize the benefits of the cab aggregator business model for the aggregators or to the potential customers, it is necessary that the partners need to be focussed on this business. Thus to maintain the relationship with the partners of the taxi aggregator business, the aggregators need to offer high incentive schemes for the driver-partners or the users.
Speaking the truth, it is difficult for the aggregators to make money in between offering high incentives for the partners. They should afford to lose a huge amount of money to grab the market share. This is the point where they fail to occupy the position in the industry and may fail in this taxi aggregator business.
To achieve a monopoly in the market, they should afford to lose billions during the initial stage of the business. Here in this taxi aggregator business, it is difficult for all the taxi aggregators to grab the market share. Many of the competitors of taxi aggregator businesses are moved out of this industry and it is always one market leader model business. The one which grabs all the market share will achieve the monopoly in this niche.
It is evident from the below information about the taxi aggregator competitors that the business model achieves monopoly:
The market share of the taxi aggregator is retained by possessing the potential customers and loyal driver-partners.
The short term incentives are focussed by the taxi aggregators and this strategy may fail in the long term
Let us discuss this with one example. Consider a scenario where one market leader has grabbed the maximum share and they start focussing on short term incentives to generate profit. The drivers may move out of the business or move to the competitors. This, in turn, increases the service charges of the cab operation to compensate for the loss due to a lack of driver-partners.
Now the condition of the market leader is the same as when they started the business but the only difference is that they have the maximum market share and the popular brand which is difficult for other competitors to grab the market share as it involves billions of dollars.
In this way, the taxi aggregator business model is a monopoly and it can be sustained by gaining the brand and popularity
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Hope this article helps you to understand what is taxi aggregator business and the business model of taxi aggregators. You will also be able to find the information about the market leaders of the taxi aggregator business.
Uber was the first company that bought a revolution in the Taxi Industry by making use of the Taxi Aggregator business model. Here is a detailed write up on the Business Model of Uber.
Ola followed the path of Uber and build its own, Ola Business Model which also became highly successful in the Indian Taxi Service Industry.