Digital Marketing & eCommerce Innovation Blog

Digital Marketing & eCommerce Innovation Blog

How Digital Has Disrupted the Taxi Industry

The private taxi sector in the United Kingdom is ripe for disturbance, with a staggering 450,000 taxi journeys taken every day in the capital alone. Averaging around £3 billion a year in London, the market of technology-supported taxi services has exploded, with the likes of Uber, Hailo and Gett all set for a slice of the multi-million-pound industry. Indeed, since the launch of Uber, there are 26% more cabs in London and 62,754 private hire vehicles, which is up from the figure of 49,854 in 2013.

Early Controversies

This digital spin on the traditional hailing of a cab from the side of the road has certainly caused global disruption – both positively and negatively. Looking back at early 2014, you may recall taxi drivers bringing traffic to a standstill between Paris’ Charles de Gaulle and Orly airports, lashing out at how rising smartphone-based taxi services were eating into their business. This friction between digital dispatch taxis and traditional private hire vehicles has been ongoing since around 2009, when the market for technology-supported taxi services increased tenfold. Uber, the American contender for smartphone-taxi domination, has been the subject of unwavering controversy, particularly around the relationship between business and driver, and its poorly timed ‘surge pricing’.

Though the taxi industry is just another sector that has cashed in on the undoubtable smartphone revolution (along with the likes of FMCG and Finance), aspects like the algorithm powered ‘surge pricing’ have exposed the clear divide between smartphone powered “techy taxis” and traditional Hackney cabs that require human-to-human communication to make a booking.

Focusing in on the surge pricing functionality – something that is native to market leader Uber – the negatives of operating a digital-based service come into light. The surge pricing effect is automatically rolled out across the app when demand for cars is greater than the number of cars available. This supply equals demand sum may seem reasonable on paper, but what the app does not account for is external social stimuli. Context is simply not readily available for taxi apps. The question of why demand is off the chart is not comprehended by the algorithm, which has been accused of profiteering from critical instances and emergencies.

Current Status

In the modern world, there is an even greater expectation for brands to react to the changing nature of corporate social responsibility, fuelled by the hyper-aware senses of the younger generation. One company’s criticism is another’s opportunity, however, and as the digital taxi world extends to companies other than multi-national giant Uber, competing apps such as the likes of Lyft aim to offer alternatives, where a positive, ethical culture starts at the very top of the business. The current state of the digital taxi industry makes it an incredibly fierce sector, with unparalleled benefits ripe for the picking for the right company.

The success of the digital taxi industry is of course owed to the increase of smartphones accessibility. Regardless of industry, a certain expectation is held by the modern-day consumer. If there isn’t an app for it, it’s unlikely it’ll ever get done. Despite this, the value of the industry is owed largely to the consumers themselves. Digital solutions help build loyalty and trust between business and consumer. Customer satisfaction is an imperative feature for running a successful business, particularly as modern consumers are connected in a web of social profiles, where a singular negative Tweet can tarnish a life-long reputation of a business.

A key feature that is readily available with digital taxi apps is the ability to rate and feedback on your experience. Operating a “rate your journey out of 5 stars” system allows users to, at the tap of a button, deliver criticism to a multi-million pound business. This function is somewhat lost in traditional Hackney carriage taxi services, where any complaints or praise must be served directly to the cabby’s face, or the head office which is a phone call away. It’s quick, easy, and forces the company to be (somewhat) honest.

Conclusion

Digital has disrupted the multi-million-pound taxi industry by providing to the needs of the modern day consumer: an app, ease of access, a simple rate card system for consumer feedback and the use of digital payment methods. A sure combination to attract any modern day customer, the fleet of digital dispatcher apps boasts a competitive edge over traditional taxi companies. The general consensus is that business success lies in the ease of accessibility, something which a taxi app can provide with the swipe of a finger.

Need to book a private hire vehicle? You can either swipe to book a taxi and visibly track its progress, see your driver’s ratings and monitor the cost, or call up a local office?

Whilst the controversy imposed on multinational cab providers may defer a small portion of business using its services, the fact it’s readily available at the swipe of a finger on smart devices makes it irresistible to the digital generation.

How would you say digital has most disrupted the taxi industry? Start a conversation by Tweeting us @mporiumgroup.

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