Chinese ridesharing giant Didi’s push into Melbourne

DIDI is the latest ridesharing service to launch in Melbourne and has tried to get a foothold with discounted trips and a driver recruiting blitz. But is Didi actually any cheaper or better than Uber or a taxi?

DiDi is trying to get a foothold in Melbourne with a driver recruiting blitz. Picture: Supplied

DIDI driver Tam Tran was frustrated when his second passenger on grand final night took him to the airport.

“There goes my bonus,” he thought. “There’s no way to get back in time for the footy crowd now.”

For three hours on grand final night, the ridesharing company DiDi promised its drivers a $25 minimum for every order they took. The company paid the gap if the fare fell short.

CHINESE RIDESHARE COMPANY TO TAKE ON UBER

UBERAIR’S FLYING CARS PLAN

Unfortunately for Tran, he didn’t get the chance to drive many footy fans, who travelled an average of ten kilometres that night.

But it shows how determined DiDi is to lure drivers from its competitors and get a foothold in the Melbourne market.

Chinese ridesharing giant Didi launched in Melbourne after a test period in Geelong. Picture: Mike Dugdale

The China-based ridesharing giant launched in Melbourne on June 25 after a trial run in Geelong.

Tran switched from other ridesharing services to sign up with DiDi.

“Uber takes more commission and DiDi is taking less. So it benefits me to switch,” said Tran.

He said the commission rate with DiDi is 20 per cent, 7.5 per cent lower than the rate he had to fork over to Uber.

DiDi Australia marketing manager Douglas Toy said the uptake from drivers in Melbourne and Geelong had been excellent.

When DiDi entered the Australian market, competitors such as Uber and Ola were struggling for survival.

DiDi’s arrival has only made competition more intense.

IS DIDI CHEAPER THAN UBER?

It’s unclear if Didi will be cheaper than its competitors.

The pricing structure of the DiDi Express service is almost identical to that of its

main competitor Uber.

Both services have a base fare of $2, a time fare of 35 cents per minute, a distance fare of $1.15 per kilometre and a minimum fare of $7.50.

Both companies charge a booking fee, with DiDi’s $1 booking fee actually 45 cents higher than Uber.

So in theory, riders pay 45 cents more per trip if they choose DiDi.

But what could potentially make DiDi more affordable is not its price structure, but the discounts it offers through promotional vouchers and other gift packs.

DiDi made a big push in Melbourne during grand final week. Picture: Supplied

Uber has a strong foothold in Melbourne.

DIDI PROMOTIONS AND VOUCHERS

It appears DiDi is using the same subsidy strategy in Australia which helped it become dominant in the Chinese ridesharing market.

In 2015, the “subsidy war” was still going on between DiDi and Uber China, an international rival backed by international capital.

Both companies offered riders discounts and paid drivers decent rates.

Taking market share was the top priority. Turning a profit? Not so much.

Chinese media reported that the combined loss from the two companies was over 20 billion RMB, around $4 billion.

The war ended with Didi buying out Uber China in 2016.

The company lost $420-560 million more in 2017 but is hoping to turn a profit this year.

For Victorian DiDi riders and drivers, this strategy means low ride fares and higher income.

But if DiDi’s victory in China taught us anything, it is that this strategy is not sustainable.

So DiDi customers probably shouldn’t get used to the subsidies, discounts and vouchers — they will stop at some point.

Mr Toy was noncommittal when asked how much DiDi plans to spend on subsidies or how long its promotions will last.

CATCHING A DIDI TO THE FOOTY

In a bid to get more recognition in Melbourne, DiDi partnered with the AFL for grand final week.

The company opened up two dedicated pick-up and drop-off zones near the MCG, expecting a large number of customers going to and from the ground.

DiDi distributed flyers in the CBD and encouraged people to download their app with a “DiDi AFL gift pack”.

During grand final week, there was a 30 per cent boost in the weekly downloads of the DiDi app.

IS DIDI SAFE?

The company made headlines when a 20-year-old woman was raped and killed by her DiDi Hitch driver in Zhejiang, a coastal province in Eastern China in August.

Another woman had made a complaint to DiDi about the same driver a day before the murder, saying the driver took her to a remote area and followed her when she fled the car.

DiDi didn’t react to her complaint.

When the police contacted DiDi for the driver’s information, the company failed to respond in time.

DiDi came under fire for its driver vetting process and its slow response to police requests, vowing to improve safety standards.

The company took a series of temporary measures, including suspending late-night services, only allowing drivers to pick up riders of the same sex in certain areas and times, and a trial of en route audio recording.

The Hitch service, which pairs commuters travelling on the same route, is still suspended indefinitely.

DiDi recently announced it has tripled its emergency customer support team and can now provide driver or passenger information to the police in less than 10 minutes. But it is not clear if these measures will be duplicated in Australia.

In Victoria, Commercial Passenger Vehicles Victoria (CPVV) oversees the ridesharing business. It checks the health, criminal and driving history of drivers.

DiDi says it requires some extra information from its drivers in addition to CPVV’s driver accreditation, but the thoroughness of these checks varies.

While drivers like Mr Tran submitted all required documents to get their accreditation, another driver who spoke to the Herald Sun on the condition of anonymity wasn’t even asked to submit documents on his health history.

Mr Toy said DiDi Australia’s Express service offers 24/7 phone customer service for both drivers and riders.

Currently, DiDi Australia is focusing on its Express service in Melbourne and Geelong.

There are no immediate plan for DiDi to introduce other services or expand to other Australian cities.

Originally published as Chinese ridesharing giant Didi’s push into Melbourne