Ride-Hailing Company Looks for a Gateway to Europe
Last week, Ola, the Indian ride-hailing start-up, announced that it’s heading to the UK. In its second big international push, Ola received licences to operate in south Wales and Greater Manchester. It expects to launch in Wales in September 2018, and plans a nationwide expansion by the end of the year. The company will give passengers the option to book private hire vehicles and metered black cabs through its platform.
Founded in 2010, Ola offers services in more than 110 Indian cities and claims to be connected to over 1 million drivers of cabs, electric rickshaws and more. In January 2018, the ride-hailing firm began its global expansion by bringing its services to Australia, where it currently serves seven cities and has more than 40,000 drivers registered on its platform.
Ola and Uber are both backed by Japan’s SoftBank, and both already compete in India. Ola raised $2 billion from SoftBank and other investors in October 2017, and the Japanese firm took a 20 percent stake in Uber at the end of that year. Ola’s war chest is helping it fund its move into international markets (see India’s Ola Bolsters War Chest).
In the UK, Ola will go head-to-head with Uber. The US company has a long head start in many countries around the globe, offering services in 600 cities in 65 countries, with 3 million registered drivers. Uber launched in the UK in 2012, but doesn’t have nationwide coverage, and, like in many of its other markets, its presence has attracted controversy. The cab operator has come under intense scrutiny over passenger safety, which resulted in bans in a few UK cities. In late 2017, London’s transport authority declined to renew its licence, but after a legal battle in June 2018, Uber won the right to keep its cars on the roads under a 15-month licence. The incident served as wake-up call for the company, which has since rolled out initiatives to improve its approach to customer safety.
Ola’s latest move is part of a broader strategy to build an international presence. The Indian start-up is hoping that this will allow it to generate consistent revenue, as it works toward going public. For Ola, the UK holds a large opportunity given the areas of the market not yet served by Uber, the poor reputation of local players and the lack of investment in modern digital infrastructure by these local competitors. Indeed, until a couple of years ago, many of London’s iconic black cabs still lacked credit card facilities. Although the arrival of ride-hailing apps is forcing traditional taxi services to modernise, the pace of innovation has been slow.
But Ola’s launch in the country could be a risky move, if the troubles Uber has experienced in the UK since it entered six years ago are any indication. Tough competition and changing regulations create a rocky ground for the ride-sharing business.
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