A segment that took a severe hit during the coronavirus but is now exploding in India - is the requirement for drivers. From the increase in ride-hailing apps to D2C eCommerce platforms to a quantum leap in the hyperlocal deliveries segment - qualified and safe drivers are now in extreme demand.
Here is a snapshot of the growth of different markets:
- In the ride-hailing segment, as of 2029, the number of users in the Ride-hailing market is predicted to be 380.60m, with the average revenue per user to touch US$28.09.
- With tiers 2 and 3 becoming invaluable assets in the eCommerce game, last-mile deliveries have taken center stage. Numbers by Shipsy show that the Indian last-mile delivery market is expected to reach a staggering USD 6-7 billion by 2024, with a projected CAGR of 15.62% from 2022 to 2027.
- According to a report by RedSeer Consulting, the hyperlocal deliveries market in India was valued at $1.2 billion in 2019 and is expected to reach $2.4 billion by 2024, growing at a CAGR of 15% and is a trillion-dollar market opportunity in India.
As eCommerce grows, these two segments are bound to grow too, and to sustain this growth, one factor must be on everyone’s radars. If the economy depends on drivers - how do we ensure that only genuine and able drivers are onboarded?
This is why more superior onboarding process is required to authenticate and verify drivers before they start their service.
There are tons of flip sides to inadequate driver verification. Bad actors that manage to enter the system may manipulate the system by employing multiple fraudulent measures . Let's dive in!
Types of Fraud in Driver-Based Industries
1. Hyperlocal Deliveries
- Order tampering: Drivers deliberately substitute or replace ordered items with inferior or cheaper products. For instance, they may replace branded products with generic ones or fresh produce with older items.
- False deliveries: Drivers marking deliveries as complete without actually delivering the order. This can involve forging customer signatures, taking photos of wrong locations, or simply lying about delivery attempts.
- Payment fraud: Drivers accepting counterfeit or fraudulent payment methods, such as forged credit cards or fake currency.
- Account takeover: Unauthorized use of another driver's account to access delivery orders and payments.
This is a post by a Reddit user who claims a reputed brand’s delivery personnel barged into his home and demanded the person pay him $60 to a specific QR code. Here is the full story!
2. Ride-Hailing
- Fake bookings: Creating fictitious rides to inflate earnings without providing actual transportation services.
- Fare manipulation: Charging customers higher fares than the metered rate through various tactics like detouring or increasing distance traveled.
- Unauthorized access: Using another driver's account or vehicle without permission to accept rides and earn income.
- Insurance fraud: Filing false claims for accidents or vehicle damage to obtain insurance payouts.
- Referral abuse: Misusing referral programs by creating fake accounts or sharing referral codes with non-eligible individuals to earn incentives.
Multiple ride-hailing drivers have been caught showing fake screenshots to users after a ride to get higher fares.
This is an example of a fake screenshot posted on Reddit by a user!
3. Last-Mile Deliveries
- Package theft: Stealing packages during delivery or from delivery vehicles.
- Delivery fraud: Marking deliveries as complete without actually delivering the packages.
- Route optimization fraud: Manipulating delivery routes for personal gain, such as making unnecessary stops or detours.
- Vehicle misuse: Using company-owned or leased vehicles for personal purposes, such as commuting or personal errands.
Recently, The Singapore police in the Indian city of Surat registered a case against six delivery personnel employed by courier service Instakart Services Pvt Ltd for allegedly stealing 63 high-value mobile phones worth $16K. The accused reportedly replaced the original mobile phones in the parcels with various objects before marking the parcels as returned.
Related read: Unravelling types of fraud as we move through the digital customer journey
Making the case for efficient driver onboarding
The rapid expansion of e-commerce, last-mile delivery, hyperlocal services, and ride-hailing has intensified the need for a robust and efficient driver onboarding process. Traditional manual verification methods, often involving paper-based documentation and time-consuming background checks, have proven inadequate in addressing the challenges posed by these fast-paced industries.
Our research has shown us 4 very distinct problems plaguing the current system today:
1. Onboarding Turnaround Time (TAT)
Drivers are experiencing an overall TAT of up to 2-7 days from signup to their first ride. Delays in onboarding can result in lost opportunities and decreased driver engagement.
2. Trust and Fraud Prevention
Rider-related frauds are on the rise, with issues such as account collusion, price manipulation, and criminal behavior posing major risks to platforms. Fraud undermines trust in the platform, deterring both drivers and customers.
3. User Experience (UX)
Drivers must manually fetch and provide details through document uploads, leading to a conversion rate of only 70%. The cumbersome process deters potential drivers, reducing the pool of available drivers. It's always tricky balancing UX vs Fraud prevention. Here is our guide.
4. Cost of Onboarding
Detailed background verifications (BGV) with no additional signals to assess risky drivers create major overhead costs for each onboarding. High costs strain the platform's resources and limit the scalability of the onboarding process.
How can driver onboarding successfully leverage AI?
a. Verify accurately and reduce false positives
- Comprehensive background checks: Conducting thorough criminal history, driving record, and employment verification checks.
- Identity verification: Using advanced technologies like biometric authentication (fingerprint, facial recognition) and document verification (e.g., driver's license, ID card) to confirm identity.
- Social media screening: Analyzing social media profiles for red flags or inconsistencies.
b. Reduce Onboarding Time
- Digital onboarding: Manual authentication of documents has always been a standard pain point with ride hailing and delivery companies. Streamlining the process through online applications, digital document submission, and electronic signatures.
- Automation: Automating routine tasks like data entry and document verification to accelerate the process.
- Parallel processing: Conducting background checks and other verifications simultaneously to expedite the process.
c. Reduce Onboarding Cost
- Efficient workflows: Optimizing the onboarding process to minimize manual intervention and reduce labor costs.
- Technology investments: Utilizing automation tools and digital platforms to lower operational expenses.
With this three-pronged approach, a good onboarding strategy ensures the company does not face monetary or reputational losses.
A Case Study: Bureau's success story with India’s first bike-taxi app!
