Street Battle Goes Online

The game-changing app-based taxi aggregator model has caused such market disruption and change in consumer behaviour that many people today actually prefer to hire a cab than buy a car. But, at the same time, the aggregator business has given rise to an intense and cut-throat competition between the two dominant players — Uber and Ola. Foreign app-based taxi hailing company Uber is fast catching up with desi rival Ola, but the latter has dominated the Indian roads at least till last year.

The self-projected market share numbers of these companies are often exaggerated and hardly seem accurate as they add up to more than 100 per cent. So, third party reports are the best option to go by. As per a June 2016 report by RedSeer Consulting, Ola was the clear market leader in 2015 with a market share of 50 per cent (61 per cent including TaxiForSure), followed by Uber at 26 per cent, and others at 13 per cent.

However, by Uber’s own estimates, they have captured more than 45 per cent market share as of March 2016 against 5 per cent in January last year growing at 40 per cent month-on-month. Uber claims to have 2,50,000 driver partners, whereas Ola claims to have 3,50,000 of them and 80,000 autos.

Recently, the rivalry between the two companies spilled beyond the streets to the online medium with accusations of who may be doing more nation building. Ola’s COO Pranay Jivrajka wrote in a blog post titled “The Law is the Law” that “It is a shame that our competition has to fan a debate of nationalism to hide their identity of being a multinational, with serial violations of law as a business strategy, not just in India, but globally. This debate in our view is not about foreign versus local but who is respectful of the local laws and who is disrespectful.”

Without naming its rival, Jivrajka alleged that Ola’s “competition” chose to run bike taxis in Gurgaon with white number plates illegally. “They continue to operate this service, even today as you read this, in spite of receiving multiple notices and seizures of hundreds of vehicles by the local authorities, also terming it as aiding and abetting an organised crime.”

Jivrajka’s post appeared to be in response to another blog post by rival Uber GM for South & West in India Bhavik Rathod, who wrote the post following a 15-page affidavit filed with the Karnataka High Court by Ola, “Uber has the deepest respect for the laws of India. What makes Uber ‘foreign’? The fact that we are established in San Francisco but have a hyperlocal team solving problems that are locally relevant? Or that, just like our competitors, we received most of our funding from ‘foreign’ investors?”

Founded by IIT-Bombay graduates Bhavish Aggarwal and Ankit Bhati, Ola had the first mover’s advantage in India as they were the first to start operations in December 2010. TaxiForSure (now acquired by Ola) was founded a few months later in June 2011. Uber entered much later in October 2013 and it gained momentum in India only after it started accepting cash payments in September 2015. According to RedSeer Consulting report, Uber’s cash transaction share has grown to 50 per cent by March 2016.

In terms of strategy, Ola believes in spreading out its wings to as far as tier-II, III cities, while Uber believes in focusing on the high-growth markets. Consequently, Ola is present in about 102 cities in India, while Uber is present only in 26 cities. “The idea is not to get into 100 cities and spread ourselves out too thin. We want to focus on growing deeper into the markets we are in. Out of the top 5 cities that see the highest volume of business, we are leading in 3. The idea is to grow our business stronger and stronger in these high volume markets,” Amit Jain, head of Uber India told BW Businessworld.

But Ola may have played a “masterstroke” with the launch of the Micro category in March this year, according to RedSeer Consulting. “The micro category has reached 30-40 per cent of the size of entire Uber by the end of March 2016,” the report stated. It also said that Ola’s horizontal expansion across transportation categories like rentals, luxury cars, and outstation could help the aggregator maintain its lead on Uber.

Ola has a natural advantage of being built from the ground up for the India market. For instance, the Ola app is more 2G friendly, opening up seamlessly on slow connections. “Our engineers have worked on the 2G optimisation technology, which automatically detects the network and accordingly optimises the user experience,” says Anand Subramanian, senior director, Marketing Communications, Ola. Uber needs at least a 3G or a WiFi connection for a seamless experience but both companies are working hard on their technologies. In March, Thuan Pham, CTO at Uber inaugurated their engineering centre in Bengaluru, which is first in Asia for the company.

The battle between the two companies has moved far and beyond the streets to the online platform. Ola will have to play to its strength of understanding the local market better and watch out for Uber’s global experience and deep pockets to maintain its market share lead.

ayushman@businessworld.in