From an online ride-hailing platform to a mobility service company, how Didi manages 2 million drivers

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2024-06-27 19:05LatePost official account

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01Didi has transformed from an Internet matchmaking platform to a national transportation service company that manages 2 million drivers.

02In order to increase the income of drivers, Didi has launched more low-cost products, such as special express cars and special discounts, and introduced an aggregation model to ensure transportation capacity.

03In addition, Didi has launched new driver income protection and off-season income protection programs in more than 20 cities to ensure stable driver income.

04Didi invests more funds in driver empty driving compensation, holidays and insurance subsidies to maintain the stability of the platform's capacity.

05Although the shift has converged Didi's valuation imagination, it has also become Didi's strongest barrier, giving the company more time to digest efficiency issues.

Technical support is provided by Tencent Hybrid Model

Image source: Visual China

In 12 years, Didi has built a heavy operation system to manage a large group of drivers.

Text丨Shen Fangwei

Editor丨Guan Yiwen Huang Junjie

Internet platforms were once considered to be the ultimate brisk matchmaking business. Three people can go to a big city with a population of 10 million to complete the recruitment of drivers and start a taxi business; A set of algorithms to adjust the prize money can mobilize millions of riders.

When the era of large financing and large subsidies has passed, the platform has gradually become the infrastructure of social operation from a disruptor to a social operation, and it is clearly required to assume social responsibility. The millions of laborers who are attached to the platform have changed from participating in the "sharing economy" to making some money in their spare time to becoming "flexible workers", and management has become a serious problem.

According to the Ministry of Transport, there will be 1.482 million new ride-hailing drivers in China in 2023. According to Didi's financial report, more than 19 million people in China took orders on Didi in the year ended March 31, 2023, most of them ride-hailing. It is understood that 2 million of them are online every day, and about 800,000 drivers are online for an average of more than 8 hours a day, and they are already "full-time drivers".

Veterans of traditional industries have long foreseen this. Zuo Hui, the founder of Lianjia, told us six years ago that he had no idea how to manage franchise couriers, food delivery riders and ride-hailing drivers. "It's hard to manage people." Giving money alone is not enough, Zuo Hui said, "People need to become more valuable – how many points can today's work add to their value tomorrow?" ”

We've previously written about Meituan's changes in managing riders and distributing income, and ride-hailing drivers earn more than riders who have fixed stops, fixed service areas, and can see their colleagues every day, but they don't feel like they go to work. They travel hundreds of kilometers a day from around the city, in confined spaces with passengers who will most likely never see each other again.

Since 2018, Didi has gradually begun to build a huge system, trying to maintain the normal operation of this large platform with more transparent rules, a certain amount of room for growth, and a new driver sharing mechanism. Excluding the thousands of companies it works with, Didi China's ride-hailing team today directly employs more than 7,000 people to manage drivers, safety issues, and driver-passenger disputes.

Behind the increasing number of management rules, Didi is transforming from a lightweight internet matchmaking platform to a national transportation service company.

Accumulate word-of-mouth value, be a squad leader, upgrade to a special car driver, and Didi gives the driver's income to rise channel

In his fifth year as a Didi Express driver, Chen Lin has driven more than 400,000 kilometers in Beijing and received a total of 35,000 orders. He has developed his own habit of running orders.

Go out at 6 a.m. every day, pick up an airport or train station reservation that you have picked up in advance, and then wait for the morning peak order at 7-9 a.m. near a large residential area; During the day, cruise and receive orders in densely populated areas of office buildings such as Guomao and Dawang Road; 17-20 o'clock evening rush hour, avoid urban congestion, go to Tongzhou, Changping to take orders; After 20 o'clock, I returned to the areas where Internet companies such as Wangjing and Houchang Village gathered, and waited for the employees of large factories who worked overtime to get off work and send several batches; Around 23 o'clock, check the drop-in mode and go home from work.

Chen Lin is a "full-time driver" for Didi in Beijing. Every month, except for the days when the tail number is restricted, he will take orders online for 15-17 hours every day. His average daily turnover is stable at around 700 yuan, excluding the cost of car rental and refueling in Beijing, he can have an income of more than 10,000 yuan per month, which is already the best in the country, behind the relatively high starting price of first-tier cities and Chen Lin's more time investment.

Didi stipulates that drivers can serve no more than 10 hours a day, but drivers don't have orders all the time, so they can be online for longer hours every day. Chen Lin remembers that in the early years, he received the same income, and he was online for 13-14 hours a day. Part of the reason why he is so diligent is to achieve a higher reputation and receive better orders.

Word-of-mouth value is the visible hand of Didi's management drivers.

Didi's dispatch logic to drivers first follows the principle of proximity, and on this basis, the system will give priority to matching drivers with the highest reputation value. Drivers with a high reputation are more likely to receive more high-quality orders.

Chen Lin will leave the car at a fixed time every day, clean up the environment in the car in time, do not refuse every system dispatch, and accept the system scheduling during peak periods, so as to get a higher reputation score.

The two core components of word-of-mouth value are travel points and service scores, which correspond to the platform and passengers' evaluations of drivers, the former including the number of monthly departures and the online time of departures during peak periods, etc., while the latter is mainly the passengers' evaluation of drivers, whether there are violations or passenger complaints, etc.

"Full-time drivers" have a higher order response rate and order completion rate every day, which is an important guarantee for Didi's platform to provide stable services to consumers, so they are often more likely to obtain higher reputation values.

The accumulation of scores is a long process. If a passenger gives a positive review or complaint, the driver will be deducted 4 to 16 points depending on the severity of the situation.

For every extra point a driver earns, they are likely to have more than thousands of people in their city's list, and they have the opportunity to receive better orders. On the contrary, if you encounter a bad review or complaint deduction, you may drop tens of thousands of people in the ranking, and your orders will be affected for a period of time in the future.

In addition to longer travel times, there are two direct ways to further increase your income: become a driver captain, or provide more expensive services such as driving chauffeurs and luxury cars.

In 2023, there will be about 20,000 driver captains on the Didi platform, and Chen Lin is one of them. According to the comprehensive score, Didi will select one excellent driver from every 40-60 drivers to serve as the team leader to assist the platform in managing other drivers in the team, and their responsibilities include urging drivers to go out every day, helping novice drivers, timely communicating management policies and various activity reward mechanisms, etc. In return, the captain can receive an additional income ranging from 500 to 1,000 yuan per month from Didi.

Applying to become a chauffeur or luxury car driver can also significantly increase your income.

According to data released by Didi, there are only 40 chauffeurs and 3 luxury car drivers for every 10,000 drivers, adding up to less than 100,000 people in the country.

Didi provides private car services in more than 50 first- and second-tier cities across the country, and luxury car services in nearly 10 cities. Taking Beijing as an example, the starting price of Didi Express starts at 13.3 yuan, and the subsequent billing starts at 1.52 - 2.22 yuan / kilometer, the starting price of the special car starts at 18.7 yuan in the same period, and the subsequent billing starts at 1.85 - 3.7 yuan / kilometer, and the minimum guarantee fee for luxury cars starts at 110 yuan, and the minimum fee starts at 5.8 yuan per kilometer.

Under the same working hours, after deducting the maintenance and car costs of different models, the monthly income of a chauffeur is almost 1.2 - 1.5 times that of an express car driver, and the monthly income of a luxury car driver is more than 2 times that of an express car driver.

Private cars and luxury cars should offer more expensive vehicles and better service. Special cars need B-class cars with a price of more than 200,000 yuan, such as Volkswagen Passat, BYD Han, Nissan Teana and other models, and luxury cars need at least Audi A6 and Mercedes-Benz E-class.

However, a Didi ride-hailing executive said that most of the rejected applications for special cars and luxury cars are not because of the model, but because of the service.

Drivers of special cars and luxury cars are required to dress uniformly and have a standardized hairstyle, and passengers are required to complete standard service actions, speech skills, and a clean and tidy environment inside and outside the vehicle. After the application is successful, they basically start a full-time job, with more defined working hours and hours.

From April to June, Didi requires no less than 11 hours of online time per bi-week and no less than 8 orders, ≤ points will be deducted twice for nearly 500 orders, and the service score will be > more than 90 points, and there will be no complaints about safety issues.

Service providers that work with Didi have higher requirements for drivers' online time and service points. A Didi driver in Beijing told us that on the basis of Didi's requirements, the car rental company required them to ensure that they were online for more than 147 hours per month during the morning and evening peak hours (an average of more than 6.6 hours per day on weekdays) and that they had a monthly service score of at least 110 out of 130.

Build a pyramid system to manage capacity

The rapid expansion of online car-hailing in the global market is directly related to its early lightweight operation model. Uber's famous "three-person team" model, where one person is in charge of the market, one person is in charge of the driver, and one person is in charge of other things, and the three of them can quickly open the city.

In its early years, Didi also believed in this operating model, defining itself as a light-model technology Internet company. They believe that platforms can transform the mobility industry by addressing information asymmetry and regulating pricing and subsidies based on supply and demand. It wasn't until two rideshare safety accidents in 2018 that this light operation model had to come to an end.

Liu Qing, then Didi's president, once saw 2018 as a pivotal year to change Didi. She said that the entire organization was hit hard by the security incident, morale was extremely bad, and the team was on the verge of collapse. Since then, Didi has temporarily taken its lightly operated ride-hailing business offline for rectification, and its core ride-hailing business has become more reactive in the Chinese market.

After the ride-hailing incident, Didi spent 10 months re-examining the qualifications of 3.7 million drivers, cleaning up 306,000 at-risk drivers, and selecting outstanding drivers as team leaders, who assisted the platform in understanding the drivers' situation, imparting experience, and helping each other within the driver community.

Today, Didi China's ride-hailing team employs nearly 10,000 people, including about 3,000 people in the technology development and headquarters operations teams, and about 7,000 employees in charge of safety, driver management, and regional operations. Split further, the security team employs about 900 employees, and the professional judgment team of about 1,300 employees is responsible for handling driver and passenger disputes.

In the following two years, Didi reorganized its organization, learned from the management experience of Lianjia and Meituan Takeaway, and cooperated with both self-operated and external companies.

The self-operated team mainly includes nearly 1,000 service managers and channel managers hired by Didi, and the service managers are responsible for connecting with the driver captain, managing and serving the drivers, and dealing with the drivers' questions about the online platform. The channel manager is responsible for connecting and evaluating DCP and HDMP partners.

DCP (Driver Car Partner) is a partner company that rents cars to drivers and manages their daily trips; HDMP (Hybrid Driver Management Partner) is a partner company that manages drivers who bring their own cars, including full-time drivers who bring their own cars and part-time drivers who occasionally take orders online.

There are nearly 2,000 DCP and HDMP external partner companies serving Didi, and their functions include daily management and training of drivers, and handling related problems encountered by drivers offline, including initial training for new drivers, monthly/regular training, and recall training for problem drivers; Handle double licenses for drivers, answer questions, guide participants in activities, deal with customer complaints and accidents, etc.

A cooperative company usually manages 1,000-2,000 drivers, and they will be divided into dozens of teams of about 40-60 people, set up a driver team leader, and assign 3-5 managers, forming a three-tier management structure of drivers, driver captains, and drivers.

Didi's own service manager has to communicate with partners, managers, and driver captains, and help drivers solve various problems on the platform side.

DiDi will evaluate the driver's online time and safe operation managed by each partner to determine the commission ratio to the service provider, which is usually 0.5% to 2% of the driver's turnover, which is paid by DiDi to the service provider. In order to ensure the retention of drivers, service providers will also use a part of their income to train and motivate drivers, and DCP will sign an agreement with rental drivers to give certain rental fee reductions and bonus incentives if they are online for at least 240 hours per month.

Part of the management work was handed over to machines and technology.

Passengers often see the trip recorder "Orange Vision" installed in the car. After the authorization of the passenger app is enabled, the real-time audio and video recording in the car will be made during the trip and uploaded to the Didi server in real time. Since 2019, Didi has installed Orange Vision in more than 1 million vehicles.

If the driver is detected to be fatigued or dangerous driving, or the trajectory is abnormal, the system will remind the driver to correct the behavior in time, or send a notice or text message to the passenger to confirm the safety status, and transfer the abnormal order to the safety team for manual customer service.

In the three stages of the order journey, Didi will trigger the corresponding security policy according to the change of order status. From the call to the end of the service, the platform has thousands of large and small security policies running in real time.

Didi has invested more in private cars and luxury cars, spending tens of millions of yuan a year on "unannounced inspections" by mystery visitors. Employees of Didi or third-party inspection agencies hail taxis as passengers to check whether the driver's service actions are up to standard.

DCP and HDMP service providers will require retraining for luxury car drivers who have been demoted due to unsatisfactory assessments and express bus drivers who have had too many complaints. If there is no improvement after the training, the driver of the luxury car will be restricted from dispatching orders or demoted to the express driver, and the express driver will be eliminated by the system and will no longer dispatch orders.

With thousands of service managers, 2,000 external partners, and technology and operational strategies to improve efficiency and ensure safety, Didi has built a pyramid system to manage capacity.

This has directly increased Didi's operating costs, and after the 2018 security incident, Didi invested 5 billion yuan in two years to build the system, and the total cost of the system still costs billions of yuan every year. Ride-hailing has become a higher-cost business in the Chinese market, unlike platforms such as Uber.

Set up more tiers of products, experiment with minimum revenues, and move from platform to infrastructure

To achieve the ultimate platform business, it is necessary to attract as many participants as possible and create conditions for them to compete to the extreme, so as to provide income for the platform. Pinduoduo has achieved this to the extreme, and merchants either give extremely low prices to attract consumers to the platform, or place advertisements to contribute revenue to the platform.

Ride-hailing companies are not particularly efficient platforms by nature, and Didi can only choose one of the nearest drivers as soon as possible, and cannot compete with participants nationwide like e-commerce.

Transportation services are public in nature, urban roads are limited, regulators will limit the number of vehicles, and Didi cannot infinitely introduce drivers to compete for low prices. Since 2023, Didi has repeatedly suspended the acceptance of driver applications to join at the request of regulatory authorities in different cities. The platform commission is also subject to the 30% cap of the Ministry of Transport and other departments.

At present, the commission ratio of most orders of Didi Express remains between 18% and 30%, and Didi will reduce commissions in various scenarios such as holidays and special weather, and issue subsidies to encourage drivers to get out of the car. After adding a series of incentives, the platform will give an average commission of about 13% to drivers who serve more than 30 hours per month on average in 2023.

Didi also had to ensure a safe trip while focusing on both the driver and passenger experience. Company growth, driver income, passenger demand – it may seem like an impossible triangle, but Didi must maintain a balance between the three in the long term.

As the number of drivers pouring into the platform increases, Didi needs to provide more cost-effective products to increase consumption frequency, while avoiding low freight rates, otherwise it will reduce the driver's income and affect their enthusiasm.

The macro environment is uncontrollable, and price reduction is the most direct way for Didi to stimulate demand for ride-hailing. In the past few years, Didi has introduced more low-priced products, such as special express cars that offer 8-9% off the price of express cars, and special discounts that are cheaper than special deals.

In some cities, Didi's passenger terminal has been revamped, allowing users to call vehicles provided by other capacity service providers such as Cao Cao and Ruqi on Didi, and after superimposing subsidies, the actual price paid by passengers is usually 8-9% off Didi Express.

Didi has also segmented its products more so that it can adjust prices more flexibly based on consumer preferences and supply and demand. For example, in some cities, express trains are divided into four categories, Didi Express, Didi Express, Didi Special, and Discount; Special cars are subdivided into three categories, light special cars, special cars, and executive-level special cars.

Didi encourages drivers to accept orders at a lower level – that is, express drivers can accept special offers and ride-sharing orders; Some chauffeur drivers can accept orange express orders (discount cars) or express car orders to exchange price for volume and increase income.

Since 2021, more and more drivers have flocked to the platform. In order to ensure the stability of their income, Didi has launched the "New Driver Income Guarantee" and "Off-Season Income Protection Program" in more than 20 cities, where drivers meet the required online hours, and if the turnover amount falls below a certain level, Didi subsidizes the drivers to ensure that they receive a relatively stable "basic salary".

Didi is exerting a stronger platform control ability, and will comprehensively consider factors such as the quality of each order, the distance between drivers and passengers, etc., so that as many drivers as possible have guaranteed income.

In order to keep drivers and ensure a stable supply of platform capacity, Didi has invested more money, including issuing empty driving compensation, holiday and insurance subsidies for drivers, and paying passengers fares that are not paid in time, which will further increase the platform's operating costs.

All of these regulatory measures to stabilize the driver population have made Didi more like a transportation service company.

The changes are also reflected in the finances. Didi China's mobility business generated 175 billion yuan in revenue last year, more than 90% of which was used as operating costs, mainly for drivers and subsidies. The company has raised more than 150 billion yuan and made a profit of 500 million yuan last year.

In the past decade, ride-hailing companies represented by Didi have gradually improved the travel industry and improved the travel efficiency of the whole society, starting from the initial matching of travel needs. Didi's transition from platform to infrastructure is recognized by the market and regulators, and it is allowed to share a share of the revenue, so it needs to assume more social responsibility. In its 12 years since its founding, Didi has always had to strike a balance between drivers and passengers, and it still has many challenges.

The shift from a mobility platform to a transportation services company has converged Didi's valuation imagination and could also be Didi's strongest barrier, giving it plenty of time to digest the efficiency issues that have accumulated over the years. Whether it's a company or a person, as long as you don't have excessive debt, slowing down isn't necessarily a bad thing.

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