Can Ride-Hailing Hotshot InDrive Smash The Ola-Uber Duopoly In India?

For the last decade, Uber and Ola have controlled over 70% of the Indian online ride-hailing market. But in the past two years, startups and platforms such as BluSmart, InDrive, Rapido, Namma Yatri, Red Taxi, and Snap E Cabs have tried to wrestle the duopoly and grab market share.

While we have written about how BluSmart has scaled up in the past, US-headquartered InDrive is looking to become the second large global player to make inroads in India after Uber. 

In fact, Uber is already looking to customise its offerings in sync with what InDrive offers. 

Founded in 2012 in Yakutsk, Russia, InDrive incorporated in the US in 2018, after divesting the Russia business completely. Today the app has a presence in over 749 cities across 46 countries. In 2022 and 2023, it was the second most downloaded ride-hailing app worldwide based on Google Play and App Store data. 

The high number of downloads can be attributed to the high demand among consumers for alternatives to the ‘Uber + Ola’ duopoly in ride-hailing. At least that is the case in India where a number of platforms have emerged post the pandemic.

Part of this wave, InDrive made its India entry in 2022 and has since expanded to 12 Indian cities including Delhi NCR, Bengaluru, Mumbai, Chennai, Kolkata, Chandigarh, Jaipur, Lucknow and Ludhiana.

What makes InDrive so compelling is its peer-to-peer, fair-price setting model, where passengers and drivers negotiate fares among themselves. It offers ride-hailing, intercity, freight, and delivery services in India, just like many of its competitors, but it is the pricing model which has become a key moat. 

Relief From Ride-Hailing Pains

There’s little doubt that Uber and Ola created the market for ride-hailing apps in India and solved several of the challenges around early adoption on both the driver and rider side. 

But we have written extensively about the problems that are yet to be solved, particularly with Ola and its many attempts in the past. 

In fact, most of the competitors to Uber India and Ola are banking on the fact that customers are frustrated with the existing options and complained about complacency due to the duopolistic nature of the market. 

In particular, arbitrary ride cancellations and surge pricing are the big targets for the new ride-hailing brigade. InDrive claims to solve both by offering price negotiation between driver and rider and zero surge fees.

Speaking to Inc42, InDrive country head Pratip Mazumder said, “We provide freedom of choice to both driver partners and riders. They can decide if they want to take a ride at a certain price or not. Both sides of the marketplace can decide for themselves. This model offers freedom and does not charge any kind of surge fee. Two people can agree on a price without the platform intervening.”

The price negotiation feature allows riders and drivers to come to a mutually agreed rate while the default payment mode remains cash to the drivers and hence the cancellation due to price or payment modes is very low, he claimed. “We see significantly low cancellations and these are mostly due to navigation errors or wrong pick-up addresses.” 

Driver-Centric Models Emerge 

Uber and Ola have also faced criticism from drivers, who have gone on strike multiple times over the years, demanding fair platform commissions and better earnings predictability. 

Both platforms charge 20%-25% commission from drivers, with an extra 5% for GST. When accounting for vehicle maintenance, fuel costs and other expenses, app-based drivers see much of their earnings erased. In some cases, car loan EMIs further reduce the net earnings. 

Further, the commission structure is ever-changing due to incentives and deductions by the platforms, leaving drivers at the mercy of whatever the companies decide. For years, drivers on Ola and Uber looked for alternatives that could disrupt this model, and it is only in the past two years that these have emerged, partly fuelled by VC funding. 

For instance, JusPay-backed Namma Yatri partnered with Bengaluru-based Autorickshaw Drivers Union (ARDU) to launch its service in 2022. JusPay has raised over $88 Mn in its lifetime for its fintech platform, but saw the opportunity to diversify into mobility. 

Namma Yatri has largely been incubated within JusPay though it is now run as a separate product. It started with zero commission and currently offers two payment options to auto-rickshaw drivers: INR 25 for unlimited trips per day or INR 3.50 per trip with no charges after 10 trips. 

However, auto-rickshaw union ARDU has reportedly ended its partnership with Namma Yatri in recent weeks, which calls into question the sustainability of new models. 

Similarly, ride-hailing platform Rapido faced extensive pushback on its earlier bike-hailing service in many cities, and eventually it expanded into autos and cabs as well. It also introduced a zero-commission model for drivers, and currently allows users to set a higher price per ride to get guaranteed rides. 

EV-centric mobility startup BluSmart is another example of a VC-funded platform that is looking to challenge the duopoly. Founded in 2019 the company claims to be on course to reach INR 800 Cr in revenue in FY25. And it looked to find a niche by employing drivers who are paid fixed salaries as well as performance-based incentives.

In comparison, InDrive takes 10% commission per ride which includes a 5% platform commission as well as the GST for the ride. Mazumder added that this is also one of the reasons why InDrive has been able to offer fair pricing in comparison to other platforms for drivers, which goes a long way towards solving ride cancellations. 

However, it must be noted that other companies are experimenting with similar models depending on the vehicle being used for the service, as we will see below. 

Can InDrive Dethrone Ola & Uber?

InDrive’s entry and rise to prominence in terms of the user base has forced Uber’s hand and led to similar changes in Rapido. For instance, the price negotiation feature has been so appealing that Uber has begun piloting Uber Flex in around 12 smaller cities in India before a potential launch in metros and Tier 1 cities.

Here’s where it gets interesting. Can InDrive survive against Uber Flex once it’s fully launched? It’s worth mentioning that the platform is already present in 125 cities across India. 

The largest player, Ola Cabs, is already present in over 150+ cities in India. Rapido, with its bike taxi service as its key offering, has now expanded its presence to over 100 cities. The old veteran, Meru Cabs, currently has a presence in 24 cities. Then, there are Quick Ride, BlaBlaCar, Jugnoo, and other apps operating in almost a dozen cities. Besides, there are a few fast-growing players such as BluSmart, which is currently operational in Delhi NCR and Bengaluru, and Red Taxi in six cities.

Backed by the Karnataka State Driver’s Council, Bengaluru witnessed the launch of a new ride-hailing service called Nagara Metered Auto Drive, which charges government-fixed fares of INR 30 for the first 2 km and INR 15 per additional km.

In such a scenario, it’s not going to be an easy ride for InDrive in India to survive and then compete with the top players. The platform was initially launched with zero commission and later revised to 5%, similar to how BluSmart changed its policy from no surge pricing to rush hour pricing as it strived for profitability.

InDrive’s Path To Profitability

Besides the operational challenges, profitability has been a significant pain point for both Uber and Ola. 

Even if Uber registered a staggering $1.9 Bn profit for 2023 globally, Uber India’s loss widened from INR 216 Cr in FY22 to INR 311 Cr in FY23. Uber India’s revenue also increased to INR 2,666 Cr in FY23 from INR 1,726 Cr in FY22, which is definitely encouraging for the company despite the losses. 

Ola Cabs’ parent entity, ANI Technologies, managed to cut its losses by nearly 50% to INR 772 Cr during FY23 against INR 1,522 Cr in FY22. ANI Technologies recorded a 42% growth in scale to INR 2,799 Cr for FY23 as compared to INR 1,970 Cr in FY22. Despite high commissions, both companies are still posting significant losses. 

Similarly, Rapido, which claims to offer a zero-commission model for drivers with a daily subscription fee, reported a 53.6% widened standalone loss of INR 674.5 Cr in FY23 against INR 439 Cr in FY22. Rapido’s bottom line was hurt despite its operating revenue rising more than threefold to INR 443 Cr during the year under review from INR 144.8 Cr in FY22.

In terms of scale, InDrive is the smallest player among these standout platforms in the ride-hailing market. However, according to the InDrive data shared with Inc42, its monthly active users in India are growing at 20% while the Y-o-Y rides have grown by 29%.

So what’s InDrive’s path to profitability? Mazumder said the challenge in the Indian market is that it is very complex with diverse states, cities, languages, and aspirations. He also claimed that InDrive’s vision of ensuring fairness and solving problems transparently is critical for people to accept and love the product, and once that happens, profitability will follow.

That may have been true for many startups in the past, but the reality is that competing against VC-funded players who have already scaled up to a large extent will not be easy or inexpensive. 

The company recently closed a $150 Mn round led by General Catalyst, taking its total lifetime funding to over $380 Mn. How much of that will be allocated for India? 

Instead of directly responding about the financial performance of the India business, Mazumder said, “If we can solve for India, we can solve for the world. Our CEO has a clear vision of reaching a billion-plus people. We aim to challenge injustice, provide access to better jobs, and improve quality of life. Profitability is an outcome of scale, product value, and market acceptance.” 

So what kind of product innovation is InDrive looking at? Interestingly, the company is going forward with a ‘super app’ vision, so it’s quite bullish on the depth of the Indian market. “So if you look at the app, we already offer normal cab rides, we have moto rides, and we have deliveries over 20 kg. This is how we are trying to create more use cases for the Indian market,” added Mazumder.

Like Ola, Uber, BluSmart and other players, InDrive also plans to go green soon in India. Mazumder believes that the company will enter the space once charging is not as big a problem as it is today. At the moment, InDrive is looking at ways to solve the charging infrastructure problem and plans to have a significant EV build-up in the near future. 

But for now, the big question is: does InDrive India have enough fuel in its tank to outpace BluSmart, Rapido and others in the race against Uber India and Ola? 

[Edited by Nikhil Subramaniam]