Mistakes Zoomcar should avoid in Philippines & fix in India

Zoomcar spent 629 crores to earn 291 crores last year. [source] That is spending more than 2 rupees to earn one single rupee. Like many startups it is a common story burning investor money in the gamble of long term growth, market cap and dominance. 10 years into their business in India (Zoomcar started in 2012 and I was a happy customer in their early days), zoomcar is still struggling to reach profitability and maintain customer satisfaction. Social media is full of angry customers upset about their booking being cancelled or refund not getting processed or getting dirty cars in pathetic condition.

Out of this 629 crores, 112 crores is for rent- assume office, parking lots and other such expenses

153 crore is towards amortization, depreciation and depletion- probably cost of vehicles they had to scrap or sell off as they were getting too old

62 crore employee expenses- salary

42 crore advertising/promotional expenses

Don’t know about the balance 260 crores

Zoomcar is pumping 25 million dollars into Philippines expansion. That is about 190 crores or four month operating expense of India. If Zoomcar wishes to excel in the Philippines it should learn from its mistakes in India and ensure they don’t repeat it in the Philippines.

Here’re a set of mistakes Zoomcar should avoid in the Philippines and rectify in India too.

1. No clarity on inventory: Earlier Zoomcar used to own the cars and put it up for rental. This means they had full visibility on the inventory. If they had 10 cars at a location (Say Bengaluru Koramangala), they would stop accepting bookings after 10 bookings. But now there are lots of changes which are complicating things

ZAP Subscribe: Zoomcar is giving their cars to customers on monthly rental and these customers would list their cars for daily rental when they are not using it. Such listing is hard to predict weeks in advance, you will know only last minute if a ZAP subscribe customer has listed the can that can be assigned. On the otherhand Zoomcar website accepts booking in the hope that some cars will be available. They will know only 2 hours prior if a car is available, so lots of customers will know the fact that they are not going to get any cars only 2 hours prior to their trip start, too late to make any alternate plans

Amigo/Host is another illegal scheme they are running to list whiteboard cars on rental- again visibility is poor who all are going to list their cars for what dates. [Detailed analysis here]

Location uncertainty and no one to verify vehicle condition is adding to the list of reasons why one may not get their cars last minute.

Zoomcar is desperately trying multiple sources of revenue- monthly rental from Zap subscribers and daily rent from customers. But this process has added too many complexities- pick up location is some remote residential area, no one to support if there is any issue with the car while pickup or return, unpredictable when a subscriber would list their car or take it off listing etc. 

2. No money to maintain cars: Cars need periodic maintenance. Rental cars are abused much more compared to own vehicle as customers don't care about long term life of the car- replacing worn out clutches, worn out tires and other spare parts, fixing damages, changing oil, filters, regular cleaning etc. But with Zoomcar under severe loss, they are cutting costs wherever possible, including vehicle maintenance. As long as a car is moving, no one cares to fix it. But if I am taking a car for 2-3 days/200-400 km road trip, I need assurance that the car is in good condition and will hold throughout the trip. Customers find major issues after they start their trip-either forced to abandon the car mid way because of a breakdown or drive super slow in a car that can break down any time. On top of it Zoomcar has no mechanism to track its own faults and will charge the customer wrongly for damage that was pre-existing but discovered during the rental period or damages caused due to poor maintenance.

Have less cars in your fleet, accept less bookings but maintain those cars properly and serve those customers well. This is the only way you can regain confidence. Massive growth without a strong foundation is not sustainable. If cars are in good condition & customers are happy, you will be able to charge a premium also. If cars are in pathetic condition, too many last minute refusal due to shortage of vehicles, even deep discounting will not win you repeat business from customers who had bad experience earlier.

3. Vehicle allocation at the last minute. Location is communicated just 2 hours in advance- might need you to spend on taxi to reach there- often random residential locations without clear landmarks and high risk of non availability.

Zoomcar fleet managers should have visibility at least 1 week in advance what all bookings they will be able to honor and which are all looking risky- this way they can try to arrange vehicle from nearby cities or try to upgrade a customer to better vehicle or inform customer well in advance that their booking can’t be honored.

If customers can be told 5-6 days in advance that they won't get the car they can make alternate arrangement. Communication 2 hours in advance or worst, after reaching the pickup spot is the most hopeless situation Zoomcar is putting its customers into.

4 Too much automation is killing customer experience: Earlier Zoomcar would have a set of fixed locations where their cars used to be, manned by a few staff who would inspect and allocate the car.  Zoomcar listed listing cars from customers location, no human presence to ensure car is handed over properly, no one to complain in case of issues

Also automation assumes lots of things to be right- it doesn't have provision for various real life scenarios customer face- like "I am not happy with this car but still will take it because it is too late and I don't have any alternative" or "It is Ok for now but I feel clutch or tyre are at the end of their life, don

t blame me later if they fail" or " I am ready to return the car on time but your pick up guy hasn't shown up"

Both India & Philippines are labor intensive countries. It is not expensive to hire a few executives who can manually supervise delivery & collection and address typical issues on the spot (damages, fuel level etc). Too much automation works fine in Europe & US where hiring staff is expensive, customers are sensitive to follow set rules and automation usually works fine.

Zoomcar at least has a customer care to call. Amazon and many startups don’t provide any number or email to complain- only chatbots or some automated process.

Zoomcar has tried its best to use technology- app based unlocking, detailed checklists etc but they have limitations. For example, fleet executives are supposed to keep the car at 30% fuel but they keep less and insist on customers to mark as 30%. Often if I declare a damage as major there is no alternative vehicle- so either I have to accept the damage or cancel my trip, map location sent is often not accurate and when an issue is spotted/reported Zoomcar doesn’t have the process/manpower/money to rectify it and offer a compensation/replacement.

5. Unethical practices: Seems zoomcar executives are incentivised to collect as much money as possible from customers. Maybe they have some compulsion as the company is short of funds. Customers are charged for vehicle damage when the fault was existing from the beginning, refund is delayed or reduced and various other unethical means are adopted to extract as much money as possible from customers. You may manage to milk a customer once and extract a few thousand rupees, but you will never get business from that customer again and one frustrated customer will stop another 20-50 potential customers from booking Zoomcar, so it is not really in the interest of zoomcar to try cheat customers for a small amount.

6. Too many stakeholders trying to outsmart each other is killing the ecosystem

• Zoomcar as a company wants to make the max out of subscribers, vendors, customers, employees
• Zoomcar vendors (like those hired for pickup & delivery) want their dues paid on time. They have 50 cars to deliver on Friday evening but only 2-3 staff on duty, delays are bound to happen.
• ZAP subscribers don't want to spend their time cleaning, fueling cars and want all repairs to be handled by zoomcar, but Zoomcar is trying to use their subscribers as fleet executives and save on salary, rent and other expenses
• Amigo/Host owners get furious as end customers mistreat their cars and zoomcar won't help in compensating. Zoomcar trying to list whiteboard cars for commercial usage and won't help much in case of accidents/legal cases or other issues.
• Zoomcar fleet executives need excuses to charge extra to customers, can't do a good job keeping cars in good condition and documenting existing damages. Damage from previous customer they couldn't spot in time or damage they themselves might have caused- all are tagged to next customer
• Zoomcar customers want best cars in low prices and get furious on any extra charge levied on them. They want all their loses and inconvenience compensated while zoomcar thinks customers should be fortunate to get their booking amount back. Many first time customers abuse the car as much as they please and think they got good value for their money. Many damages are not visible from outside and vehicle owner/next customer/zap subscriber pays the price eventually.

Zoomcar should reduce having so many stakeholders, keep the process simple and straight forward.

There is a thread running in Team BHP where most members feel Zoomcar may not survive for long. However we see Zoomcar is on expansion spree while struggling to make profit. Let us see. Twitter is full of complaints from Zoomcar customers and zoomcar twitter bot giving standard template replies trying to pacify disgruntled customers.

Similar: Tips to avoid bad experience with Zoomcar * Zoomcar Amigo/Host program * Zoomcar refund crisis *