Cash Cab

Ola and Uber Compete to Rule India’s Roads

Ola_cars_lAbout 33 percent of India’s population now owns a smartphone, a figure that’s doubled from just two years ago. It’s a big number — a third of India’s population represents an addressable market of more than 400 million people. A critical mass has been reached for just about any imaginable app-based service, and they’re showing up quickly.

A significant on-demand economy has been developing in the region, enabled by the massive installed user base of smartphones. From ordering home-cooked meals to getting laundry done, a wide array of app-centric services are creating a tech-savvy workforce and audience.

Like in many other countries, app-based car services have surged in popularity in India. Two companies, Ola and Uber, currently compete to lead the on-demand taxi market. Ola is a local player based in Bangalore with backing from a series of major international investors; Uber is an international player making big investments in its Indian subsidiary.

Ola has been around since late 2010, and its popularity has surged in the past year. This is also true of its value: Ola is currently is estimated to be worth at about $4.5 billion based on recent investments from Accel Partners and Softbank. Ola has a presence in about 100 cities across India, with more than 200,000 registered but independent drivers who provide a total of about 750,000 rides per day. In 2015, Ola’s gross revenue amounted to $1 billion, of which drivers received about 75 percent.

Uber is currently available in only 20 Indian cities, and provides 200,000 rides per day in the country. That amounts to about a quarter of Ola’s volumes, but Uber has announced plans to invest $1 billion in India to ramp up the company’s presence and market share in the region.

Ola, like Uber, considers itself a facilitator of services rather than a provider, taking on the role of matchmaker between rider and driver. But Ola is more than a booking app — it’s been making a wide set of partnerships with banks and retailers to create an ecosystem for moving people and merchandise from place to place in the country.

Ola doesn’t own a fleet of cars, so has partnered with the State Bank of India for auto loans to attract drivers and grow its pool of fresh vehicles.

The company is becoming an e-commerce player in India, based on its e-wallet service called Ola Money. Users can establish accounts (that can be topped up using a credit card) and use these to pay for rides, but Ola is now utilizing this service to become facilitator of online sales. Customers can purchase sunglasses, book a hotel room or buy a bus ticket through their taxi app.

Like the parade of Uber-labeled cars now seen in places like New York and San Francisco, anyone visiting a major Indian city would be sure to notice the sudden surge of Ola. The brand is beginning to stick. Mobility and smart devices have enabled companies like Ola and Uber, and will continue to drive the creation of more app-based firms to alter consumer behaviour and economies — even those as large as India’s.

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