When Harrow develops its ride-hailing business, it needs to decide which comes first, chicken or chicken?

Hallo Hitch has been online for nearly a month. The official statement is that from January 25 to February 4, Harrow Hitch owners registered more than 2 million, and the cumulative number of orders issued reached 7 million. This seems to be a pretty good number, but its business needs to continue to develop. Baiying Technology believes that it must solve the chicken or the egg problem, that is, the supply and demand problem between Harrow owners and passengers.

The development of Didi Hitchhiking cost huge subsidies

Didi launched an online taxi-hailing service in August 2014, and launched a ride-hailing service in June 2015. In the early days, in order to attract car owners to register, it provided a 50 yuan subsidy to newly registered car owners. Later, it also provided a 100 yuan subsidy for completing the first order. After the car owner officially started taking orders, there was also a reward for taking orders; it also gave passengers discounts on the passenger side. This development model is quite similar to express train services, that is, subsidies are provided to car owners and passengers at the same time to rapidly expand the number of car owners and passengers.

In order to attract car owners to join, Didi subsequently provided huge subsidies. During the Spring Festival of 2018 alone, it provided 30 million yuan as an incentive subsidy during the Spring Festival. If passengers are included, the subsidy amount will be even higher. Relying on the huge subsidy stimulus, the number of registered Didi ride-hailing owners reached 5.5 million by August 2015, just two months after Didi's launch, with peak daily orders reaching 2.23 million.

The rapid development of Didi's ride-hailing business is inseparable from the support provided by its dominant express service. For passengers, after placing an order with Didi Hitch, if no ride owner takes the order within a certain period of time, he can quickly switch to the express service. This convenience also helps passengers using the express service to try cheaper ride services.

It can be seen that the rapid development of Didi Hitch has a lot to do with its emphasis on stimulating owner registration and passenger use at the same time, that is, it has solved the chicken and egg problem very well. Due to the large number of passengers accumulated by the original express service and the huge stimulus, Didi Hitch owners have been able to grow rapidly, and because the good service has attracted the rapid growth of subsequent users, a virtuous cycle has been formed, and eventually it has quickly become the industry leader, while other ride service companies have gradually been marginalized.

Hello needs to solve the chicken or the egg problem

In order to attract users, Haro’s price for ride-hailing is too low, which has become a focus of complaints from car owners. According to the billing basis released by Haro, it is about 1.4 yuan/km, which is obviously lower than Didi’s pricing for ride-hailing. Before Didi Hitch was offline last year, the author used Didi Hitch to carry passengers, and the price was about 2 yuan/km, which was much higher than Harrow. Excessively low pricing is one of the reasons why car owners are less enthusiastic about joining Harrow Ride.

Before Haro launched its ride-hailing service in January, it had carried out a lot of publicity and promotion, attracting many car owners to register. However, judging from the data released by Haro, its registered car owners exceeded 2 million, which is obviously a bit dwarfed by the 5.5 million owners of Didi Hitch in just a few months.

This problem has actually appeared on Dida Hitch. After Dida Hitch went offline in August 2018, Dida Hitch's business volume surged, with registered car owners and passengers soaring. However, because Dida Hitch's price was too low, many car owners were reluctant to accept orders. Dida Hitch's user experience dropped significantly, and Dida Hitch's order volume fell back about a month later.

Obviously, the best way for Harrow to change this situation is to provide subsidies. However, Harrow proposed to stimulate the development of the ride-hailing business with a subsidy amount of 30 million yuan. Compared with Didi, its efforts are still small. After all, the subsidy provided by Didi to drivers during the Spring Festival alone is as high as 30 million yuan. Such a small subsidy amount seems to be a drop in the bucket, coupled with its already low unit price.

A recent Beijing News survey of ride-hailing users showed that after Didi ride-hailing was offline, the current ride-hailing service was most criticized by users for "not being able to get a ride", followed by "drivers canceling orders at will", which shows that the current ride-hailing service experience is not good. In contrast, Didi Hitchhiking has a higher unit price and is relatively easy to carpool, which helps drivers increase their income. It has a higher binding force on drivers, and the passenger experience is naturally much better.

Judging from the current situation, because there are fewer Harrow car owners, it is difficult for passengers to get a taxi, and the car owners dislike Harrow’s low unit price and are unwilling to accept orders. This is forming a knot that is difficult to open. It will not be easy for it to quickly open up in the ride-hailing market.