Why did Didi and Uber raise their prices? Beware that C2C platforms are starting to harm each other

The travel market has been very busy recently. Uber was sued by users again, Yidao was banned by WeChat, and they started fighting over a disagreement. The most annoying one is Didi. Positive news is pushed intensively, and reading the comments, every article is criticized like a dog, and the negative news cannot be suppressed every day.

Didi Chuxing is labeling itself as "great, glorious and correct" while being slapped in the face. In fact, this is inevitable, not only Didi, but all C2C online car-hailing companies cannot avoid it. It is better for this day to come sooner rather than later, because the sharing economy has been ruined by you. Last month, I warned against sharing economy and pointed out that Uber and Didi were doing evil on the supply side. Today, I will share with you where their bad roots are.

The C2C model is a wrong path

C2C is actually a professional term for e-commerce, and Taobao is a typical example. As a business model, C2C has a very confusing feature for the public, which is "you only see the thief eating meat, but not the thief getting beaten." Those who make money are showing off without fear, while those who don't make money are always in turmoil.

In essence, the supply side of the C2C model is unstable. In order to satisfy the user experience on the demand side, the simplest way is to have a large amount of redundancy on the supply side, that is, to make supply exceed demand, and the supply must be much greater than demand. This is acceptable for e-commerce companies. Goods can be stored and displayed without physical objects. The user choice on the demand side can force the supply side to survive the fittest. As a platform, it can earn profits by helping to empower the supply side. In fact, this is Taobao's basic profit model, selling advertisements and traffic to sellers on the supply side to make money.

This is also the reason why Taobao cannot eradicate counterfeit goods. The dialectical proof of "cause is effect, effect is cause" is as difficult as climbing to the sky. This is a mutually harmful balance. Therefore, Taobao has become a microcosm of a mutually harmful society, from the surprise at its birth to the counterfeit butt that cannot be cleaned up now.

After Alibaba achieved a phased success on the wrong path, it was necessary to launch Tmall, a B2C model. Jack Ma was absolutely serious when he said he wanted to kill Taobao. A company that wants to be great can start on a wrong path, but it cannot go all the way. It is said that only 600,000 of the 8 million Taobao sellers make money. The reality is so cruel.

The moment Didi Dache transformed into Didi Chuxing, I believed that was the sign of its becoming a great company. However, the private car and express business segments based on the C2C model had to be gotten rid of. Otherwise, no matter how much money was raised or how high the valuation was, it would all be in vain.

Less than 8 hours after I published an article criticizing Didi on a self-media platform, Didi’s public relations contacted me and said, “Please be gentle!” Their attitude was very sincere. They did not deny the deterioration of the driver ecosystem and were working hard to improve it. In the end, the relatively tenable reason for me not to criticize was: “Didi has a high valuation and a lot of financing, but it is still a startup!” My response was very direct. I was criticizing Didi, but it was not Didi’s crisis, so there was no need for crisis public relations. Didi’s private car and express cars are doing evil, so they need to be criticized. Criticism itself is constructive, not black. As long as Didi does not change its black-hearted business modules, I will continue to criticize them.

I can't say I have much compassion for the private car drivers who are about to be sacrificed, but at least this era has given me the opportunity to think independently and speak out, and I can do my best to speak out for the vulnerable groups in this situation. Because every time I take a Didi or Uber private car, I can have a pleasant chat with these hard-working drivers, and I can personally experience their difficulties and their foreseeable very pessimistic situation.

Compared with commodities, the essence of the travel market is service output or labor output. Labor time is the biggest cost and cannot be stored. Especially for full-time drivers who take their cars online, they have to bear almost constant operating costs and risks from the moment they take to the road, whether there are orders or not.

Nowadays, both Didi and Uber dispatch orders, and there are more and more requirements. Drivers have almost lost any initiative to choose. They don’t know the destination before the user gets in the car, cannot arrange their working hours and areas independently, have no bargaining power, and do not even have the right to refuse in fact. This is contrary to the principle of fair trade.

They are not in an employment relationship with the platform but a collaborative relationship, but the platform takes advantage of information asymmetry and almost cuts off all their rights and respect for partners. Don’t say that both parties are willing and have signed a contract - that kind of contract is equivalent to an overlord clause. Taobao sellers can at least set their own prices and decide whether to trade, it can’t be so tragic, right? For Didi drivers, they only have the right to quit, but how can they recover the cost of buying a car if they quit? They have already fallen into the pit, and the power to climb out is actually meaningless.

Nowadays, Didi drivers need to be certified. The purpose is exclusivity. If the driver promises to only accept Didi orders, he can give you priority in getting orders. Uncertified drivers normally will not have orders, unless the order volume is so large that certified drivers cannot finish it, then they will have a chance to give you orders. Drivers don’t even have the power to vote with their feet.

Isn't Didi doing evil? This is only visible on the surface. Invisible evil is more serious. Why does Didi dare to make it more and more difficult for drivers step by step? Objectively, this is caused by the serious imbalance between supply and demand in the C2C model; subjectively, the platform wants to cut leeks and tear off the mask.

Why did Didi and Uber raise their prices?

Price increases are inevitable, and returning to the law of market value is understandable. No one can ask a company to always lose money to gain publicity.

I think this is an inevitable rebalancing of supply and demand in the C2C model, but the price increases of Didi and Uber are not based on any technology or even black technology, not because of a large user base, not because of the user habits that have been formed, nor because of pressure from investors on the company's profitability. Instead, the results of their big data mining may have been able to ensure that the supply-side service output capabilities are strong enough.

To put it bluntly, the number and attendance efficiency of the full-time drivers and social vehicles that have been locked in have reached expectations. The service output capacity of those part-time drivers and vehicles that are not available from time to time is uncontrollable. They can only add icing on the cake and cannot guarantee the stable operation of the system, especially during peak hours. I think this way of rebalancing supply and demand is worthy of vigilance!

First of all, this process will further aggravate traffic congestion.

My travel experience in the past month is that I almost never meet part-time drivers during peak hours. The drivers who come are all assigned orders, and they are generally getting farther and farther away from my location. Some drivers come from 5 kilometers away. This not only makes the waiting time very long, but more importantly, it means that users who call for a ride in a congested area will attract more vehicles to flow into the area, exacerbating congestion, and this is an obvious vicious cycle.

The core of online car-hailing service is the two-way optimization of supply and demand based on LBS and the absorption of idle capacity, which can play a positive role in solving congestion. It is definitely not something that can be solved by dispatching capacity based on the unilateral demand of a user's geographic coordinates.

Let me give you an example. If I call a private car parked near Sijiqing Bridge waiting for orders at the congested area of ​​Zhongguancun Haidian Bridge, it will aggravate the congestion. Of course, you can say that the price lever is used to encourage me to choose other means of transportation to leave the congested area, but will I have more choices at that time?

The platform wants to make money, and I want convenience. Especially when it is raining and windy, such orders are likely to occur. Drivers have almost no choice - they have to come. Is the probability of aggravating congestion very high? In fact, this has formed a mutually harmful relationship. Both users and drivers are tortured, and people nearby are harmed, and this kind of harm will be superimposed and serious.

The correct solution is not a private car, but a ride-sharing service. Users make an appointment with a part-time driver who is heading to the same destination, departs at a similar time, is located nearby, or has a car parked nearby and is available. In fact, the driver is the user's neighbor, and this neighborly relationship can naturally be transformed into a social attribute. This is the sharing economy. Mutual assistance among neighbors is social interaction, and if this relationship can be solidified and stabilized, it will be the foundation of a healthy ecosystem.

Therefore, the private cars of Didi and Uber are currently causing more traffic congestion, and the smart travel they advocate may be questioned. Uber's practice in the United States has proved that although the C2C model of online car-hailing has big data, it is not suitable for building an intelligent transportation system. Some states have tried it, but ended up giving up cooperation with Uber and looking for other service providers to build it.

In contrast, B2C online ride-hailing companies are of positive significance in solving congestion problems, because their strong operating model can organize transportation capacity to enter congested areas in a planned manner in advance based on dynamic data analysis results. Drivers can plan routes and times based on two-way LBS data and merge orders in real time to optimize transportation capacity.

Because the B2C model is a system that seeks to balance supply and demand and then optimizes the system; the direction of big data mining is to analyze the needs of user groups to determine the supply of transportation capacity and service methods. Only a balanced model can play a positive role in the intelligent transportation system. The C2C model is essentially not a model that seeks to balance supply and demand, and it cannot be balanced. Its supply side must be highly redundant. How can it be expected to solve congestion?

It would be even worse if Didi and Uber called on drivers to enter the congested area first. For the sake of good user experience, they would like to call three cars to enter for one expected order. In fact, do they still need to call? At present, some experienced private car drivers have already entered the congested area first to wait for orders, which has caused traffic congestion.

Haven't you seen that many taxis stop beside you but don't open the door to pick up passengers? "Take Didi" has become a reasonable reason for refusing to pick up passengers. Jinan has strictly prohibited taxis from using taxi apps during peak hours. Doesn't this illustrate the limitations of the C2C model of online car-hailing?

Therefore, Didi can release the traffic congestion report not because it is a technology company or has great technology, but because it is a slap in the face. You are adding fuel to the fire of traffic congestion and you still have the nerve to release the report to show off? Currently, more than half of Didi's GMV comes from the C2C model of private cars and express services. How can you still say that you want to build an intelligent transportation system? It's better for Uber to acquiesce. At least they have fewer routines and more sincerity.

Secondly, who is responsible for the future of the drivers who are already deeply trapped in this situation?

The drivers of Shenzhou Special Car can greet users with decent uniforms and polite smiles, and can travel on every road in the city without risk and take users to stations and airports. This is because they have been trained, implement unified service standards, have excellent driving skills, are familiar with road conditions, and provide thoughtful service. While getting paid, they can also gain the respect of the vast majority of users. Their relevant rights and interests as employees can be basically guaranteed. The cars they drive are professionally maintained, and the car condition can always be kept good, so they and the users are guaranteed safety.

Can drivers of Didi and Uber do this? As far as I know, Beijing’s private car drivers can have four days off a month because of the license plate restrictions. I asked many drivers and they all said that the ride-hailing platform did not provide them with relevant labor rights protection. This is inevitable. The legality of their operation has not been recognized so far, so how can they be protected? In essence, they are still illegal taxi drivers.

They earned high incomes during the years of subsidies, but now that subsidies are gone, the price increase has brought them very limited benefits. They have to rely on themselves to gain the respect of users and get high ratings, and even try to please users with a humble attitude.

In order to investigate the living conditions of private car drivers, I have recently frequently used Didi and Uber to travel, and took the initiative to have pleasant chats with drivers. Since I have professional experience in car repair and maintenance, through communication I can not only understand the living conditions of drivers, but also have a certain understanding of their car conditions. I increasingly find that the ecological deterioration of the supply side of C2C online car-hailing models is shocking.

Let me give you an extreme example. At around 11:30 that evening, I hailed a car in front of the New Oriental Learning Center in Zhongguancun. I was shocked when I got in the car. There was a pregnant female driver driving a new car that had not yet passed the running-in period. What I learned after the conversation was even more shocking. She lived in Yanjiao and it was her first day on the road. She was a "novice old driver" who had held her driver's license for many years but had just recently started driving. She had no idea about the surrounding road conditions because it was too far away from the Yanjiao she was familiar with.

Along the way, I reminded her many times not to keep looking at the navigation on her phone. I advised her to go home quickly and stop doing this business, it was too dangerous! She said she wanted to earn money for her child's milk powder and share her husband's burden. They had just started a family and needed to pay for a house and raise a child. The car was also bought with a new loan. It was really like jumping into the pit of real estate and not getting out, jumping into the pit of heavy asset employment, and now it seemed that she was about to jump into the pit of children's education.

Through this case and conversations with many drivers, I found that there are many suspicions that C2C ride-hailing platforms are actively doing evil.

1. The screening of new drivers is non-existent, which is irresponsible to both the supply and demand sides;

2. One-way dispatching makes many drivers feel that they are being "taken away". They take orders one after another and unknowingly move away from the starting point, which is the area where they are familiar with the road conditions. As a result, they unconsciously work overtime (Didi has a setting for going home, but the experience is not good);

3. Cars with out-of-town license plates are involved in the business. They cannot go on many roads, but they often have to go to the destination of the order and are often fined;

4. Many drivers honestly told me how to successfully fake a license plate and even shared strategies and experiences on how to fake orders;

5. During the days when there are subsidies, drivers feel that when there are only two or three orders left to get subsidies, they get fewer orders, or when they get an order that is too far to be completed within the specified time.

I know that my investigation method is not rigorous enough, and the number of people investigated is not large enough, so I cannot infer a strong result to prove that the platform is doing evil. I have presided over product development and I am also a product manager. I know how easy it is to design a malicious product logic when there is information asymmetry, knowledge inequality, and absolute initiative. For programmers, it is just a matter of a few lines of code, which is difficult for users to detect, and even if they detect it, it is difficult to obtain evidence.

But the data in the background will not lie, and it is not easy to prove one’s innocence. Because data speaks, every action will leave traces, and product logic is a trade secret. Users cannot ask you to open it, but do users have the right to ask you to open the dynamic data records generated by your platform? If every driver requires the platform to open their own completed order route trajectory, whether the platform has the ability to open it should not be a problem. Whether the platform dares to open it is a problem, and whether the open data is falsified is another problem. If possible, the driver’s mobile phone can also obtain action traces. If a comparison is made, I will not jump to conclusions. Didi and Uber, if what I said are individual cases and not a common phenomenon, then you can prove your innocence!

I don't ask the platform to prove whether it is intentional or not. I only suggest that the platform can prove through data analysis that for a driver to earn 5,000 yuan a week as claimed in your recruitment advertisement, this income should be deducted from all costs, at least after deducting fuel costs and basic maintenance and depreciation costs of a car, which can be roughly called the driver's labor cost. Let alone 5,000 yuan a week, even if it is 3,000 yuan, how long does the driver need to work every day?

Don't say that drivers and platforms have a collaborative relationship. It is meaningless to calculate this for flexible working hours. Even the most flexible work has a rigid labor cost basis. Don't you always label yourself as a technology company? Since you can publish traffic congestion reports, this number must be calculated.

I don't expect that without subsidies and starting to take a 20% commission, this number will eventually meet the requirements of the 8-hour work system. If it is 12 hours a day, I have to thank you on behalf of the drivers. Anyway, from what I know, if these full-time drivers want to achieve a monthly income of 10,000 yuan (not even the high standard of 5,000 yuan a week), they have to spend more than 12 hours on the road every day. Many drivers work from 7 am to 10 pm, about 15 hours. Because this job not only has the factor of time length, but also the factor of high and low segments, that is, the distribution time of orders is uneven.

Aren’t these drivers workers? Now that they don’t have a legal operating status, do they not need basic protection? At least they are all Chinese citizens. Who will be responsible for their rights? Can a Wu Xueyi stand up in the lawyer team and "spontaneously" report that the listing documents of Shenzhou Special Car are illegal for the rights of investors (but Shenzhou Special Car was still listed, which was a slap in the face). Why can't there be a lawyer with a real conscience who pays attention to the basic rights of these drivers who are deeply trapped in it? Is it because lawyers only care about money?

The process of rebalancing supply and demand on C2C online ride-hailing platforms is likely to usher in a new mode of mutual harm.

Another feature of the C2C model is that both the supply and demand sides are unstable. The expected result of price increases is a shrinking demand. Price-sensitive users will be lost in large numbers, and orders may drop drastically. Part-time drivers don’t care, of course, if there are no orders, they will quit; full-time drivers, that is, the group that has been deeply trapped, are in trouble. The order volume is not enough to feed them. How much should the price increase be to balance it? However, as a platform, profitability is not a problem. The operating costs of the platform are relatively fixed. As long as there are orders, there will be commissions. If subsidies are stopped, the cost savings will be profits.

This is the confidence behind Didi and Uber's price hikes. The profit base created by burning money lies on the supply side, which is the huge number of full-time drivers who operate cars. They have burned out the operating cost margin of the platform, so they are really not afraid of the shrinking user base.

When the transportation capacity on the supply side is far higher than the transportation capacity required by user orders, I estimate that the platform will restart the order-grabbing mode, allowing the drivers on the supply side to compete with each other. This is a life-and-death struggle, not the survival of the fittest. The most likely method for those eliminated drivers is to continue driving illegal taxis offline and work in more congested hot spots at lower prices.

This is the process of rebalancing supply and demand when the balance formed by the C2C model in the era of burning money and subsidies cannot be sustained. This process is likely to start the so-called mutual harm mode of the sharing economy. I think it is time for the relevant departments to do something. When there were subsidies, some employment opportunities were indeed created and car sales were boosted. But now that the subsidies are gone, dust will return to dust. Who will absorb those unemployed drivers and the many illegal vehicles in the city? It is impossible for the relevant departments to take over the burning money and subsidies to maintain the balance of supply and demand, right?

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.