It wasn’t too long ago that Uber Asia’s Head of Business Eric Alexander, claimed India to be their fastest-growing market. Uber has now announced that India is number two (after the US) in the number of rides taken.
According to an official statement, Uber is currently doing 5.5 Mn rides per week, with around 5 Mn monthly active riders and 2.5 Mn weekly active riders in India. This has led to $60 Mn gross revenues per month, at the same time clocking $30 Mn losses.
Despite that, Uber remains bullish on the Indian market and has already claimed that it will not be playing the game as an ‘underdog’. According to The Information.com, Uber India’s monthly operational budget is around $35 Mn and it plans to increase it to $50 Mn by December 2016.
Earlier, Uber India also invested $6.4 Mn(INR 43 Crore) in Mumbai-based car leasing firm Xchange Leasing India Pvt. Ltd. In March 2015, it entered into a strategic partnership with Times Internet with a deal size of $22.5 Mn (INR 150 Cr). Also, Uber raised $3.5 Bn investment from Saudi Arabia’s sovereign wealth fund, to make Uber India a potential bidder against its rivals in India.
India: Uber’s Next Preferred Choice
Uber has supposedly more money to burn than its rivals in India, especially after its withdrawal from China. Although in comparison to China, the current stats for the ride-hailing service in India are much lower than Uber’s China business at the start of the year. However, with that business being sold to rival Didi Chuxing in August 2016, prospects became much higher for the company to focus on India against other markets in Southeast Asia – namely, Singapore, Philippines, Thailand, Vietnam, Indonesia and Malaysia.
Uber’s operational challenges can be combatted with comparatively easier norms in India, than in other countries. India offers an even playground for all – the western companies as well as local incumbents. One can grow in the country on the basis of potential, without fear of getting sabotaged in favour of local rivals.
But the picture is not all that rosy. Lately, app-based cab aggregators have had to face the ire of the Central and State governments regarding surge-pricing, licensing issues. They have also had to deal with traditional taxi players encroaching on their business. Not only this, taxi unions in different cities have gone on strike against both Uber and Ola demanding a ban, and the Indian Road ministry has also introduced measures such as cap on fares, fares to be charged by meters and more.
Rules and regulations in India have always been state-centric giving them flexibility to manage the operations. Also, some traditional players are still growing their share of the pie, indicating an overall growth in the annual revenue of traditional Indian taxi market, which is currently pegged at $10 Bn to $15 Bn. This indirectly opens the doors of profit for the cab aggregators as well.
Uber-Ola Rivalry: What Lies Ahead
For long, Ola has been publicly claiming to be ahead of Uber, with more than 1 Mn rides on a per day basis. However, one of the Ola sources revealed to The Information that Ola believed it is leading by a factor of 2 to 1.
In comparison to Ola’s presence in nearly 100 cities, Uber has reached only 29 and still seems in no hurry to expand further, with the belief that the majority of the industry revenue is driven by the top 30 cities only. Ola, on the other hand has always touted to be profitable in areas where Uber has yet not expanded its reach.
The fleet of services too offered by Ola are much larger than Uber. This includes app-based cab booking service, Ola Shuttle, Ola Auto, e-rickshaw category, along with outstation and rental cab services. Also, it was much ahead of Uber in facilitating cash payments in India.
But, even with its large network, Ola has been constantly bugged by critics to improve its job of selecting low-quality drivers, for which Uber has already got some applause. For example, in the New Delhi area, Uber doesn’t allow drivers from nearby Uttar Pradesh on the platform, because the licensing requirements are much lower than in Delhi. Ola does not have this prohibition.
Also, it’s worth noting that Uber uses the same infrastructure to service every country where it does business. This means, for its 7,000+ total employees, Uber generates a lot more revenue per worker than Ola from 6,000 employees, handling India’s business alone.
From a tech perspective, Uber introduced UberPOOL which allows multiple riders travelling in the same direction to share the same care and pay a much lower fare much before Ola did. It recently launched the feature to book a cab on Uber without the app too.
In 2015 Uber launched UberASSIST for riders with special accessibility needs in India. Uber also joined hands with Zomato to allow its users to book cabs to visit restaurants of their choice using the Zomato app. In July 2016, Uber entered into a partnership with Snapdeal to enable car bookings directly from Snapdeal’s app. In September 2016, Uber launched a trip scheduling service, to book a cab in advance. However, it does not guarantee that the driver will accept the request.
To match its competition, Ola also launched “Ola Select,” in 2015 a benefit programme for its loyal customers, providing them services like free WiFi in cabs and loyalty points etc. In January 2016, Ola launched ‘Ola Corporate,’ to offer a complete mobility experience to corporate travelers across all major Indian metros. With this feature, customers can hail cabs when required and pay from their company’s centralised pre-paid account.
Also, recently in October, Ola also launched the feature of offline booking on the app. Prior to this, in June 2016, Ola added car rental service on an hourly basis. Earlier in March this year, it introduced Ola Micro, offering a ride for INR 6/km to take on Uber’s UberGo service that was priced at INR 7/Km.
With both companies evening out in terms of tech and suite of features offered, it is a matter of attrition and time that will decide the eventual winner of India’s cab-hailing wars.