Over the last several years, India’s taxi wars have been limited to two players, Uber and Ola, which together hold nearly 95% of the market. The firms have been at loggerheads since San Francisco-headquartered Uber entered India in 2013, two years after Ola was founded.
But developments over the last few months suggest that homegrown Ola might be pulling away in India, even as Uber struggles with internal issues and realigning its focus.
Racing ahead
While the two privately held companies are extremely secretive with data, the available numbers show Ola already having surpassed Uber on many fronts.
For one, the Indian firm operates in 110 cities, far more than Uber’s 31. This gap has persisted for several years now, which has led to Ola reaching far more Indian smartphones than its US competitor.
Given its spread, Ola has over a million drivers compared to Uber’s 450,000.
Ola caters to category of users through three different services: premium (prime, lux, rentals), low-cost (including autorickshaws), and car-pooling. “We see a lot of growth coming from these three buckets,” an Ola spokesperson told Quartz, adding, “Auto rickshaws are doing really good in tier-2 cities where distances are shorter.” Following the launch of its connected car platform Ola Play, the company has seen prime rides grow, too.
This wider network has also helped Ola increase its market share from 53% in July 2017 to 56.2% in December, according to market intelligence firm KalaGato. During the same period, Uber’s share slipped from 42% to 39.6%.
The other industry players trail the two toppers by a wide margin.
In terms of app installs, too, Ola is ahead by a big margin. Among 650,000 Indian smartphone users surveyed by KalaGato, a little over 40% had Ola’s app, compared to Uber’s 28.7%.
Uber also has a far higher uninstall rate in India compared to its rival.
Uber, however, remains bullish about its opportunities here. “India is one of the largest markets for Uber outside of the United States and our business is stronger than ever – we have continued to grow exponentially every week since we started (our) journey in India,” an Uber spokesperson said.
And there is one parameter on which Uber scores over Ola. It commands better reviews for its prices, service, and app experience. Uber’s net promoter score – the percentage of five-star reviews minus the one-star reviews on the Google Play Store – of 56% is higher than Ola’s 45%.
This popularity, though, will probably not be entirely leveraged given the increasing likelihood of Uber shifting its focus away from India at the behest of its latest and largest investor, Softbank.
The losing battle
Earlier this year, Softbank participated in a mega funding round where Uber raised around $7 billion from a clutch of investors. The Japanese investment giant also ploughed $1.25 billion into Uber separately, and Softbank now holds a 15% stake in Uber. The Masayoshi Son-led firm is already Ola’s largest investor and is widely perceived to be trying to avoid a battle between two firms in which it has invested.
The investor made its stand clear in January 2018 when Softbank board director Rajeev Mishra said the firm wanted Uber to focus on its core markets: the US, Europe, Latin America, and Australia.
While Uber is unlikely to pack up and leave India, “we can expect some kind of understanding or strategic deal between Ola and Uber in the latter half of 2018 or early 2019 to reduce the cash burn in competing with Ola and sharing the Indian market,” said Satish Meena, a Delhi-based analyst with Forrester Research.
Uber, however, call these “baseless speculations.” “We have barely scratched the surface here in India. Uber’s business fundamentals in India are stronger than ever, and we’re keeping our heads down to build the best and most innovative products out there to serve riders, drivers, and cities,” an Uber spokesperson said.
Yet, India may have dropped out of Uber’s priority list even before Softbank came into the picture. After its exit from China in August 2016, the company had said it would divert to India a “significant portion” of the $1 billion meant for China. This was seen as a major threat to Ola. But before this capital could make a dent in the Bengaluru-based company’s business, Uber itself ran into headwinds.
In February 2017, a former Uber engineer Susan Fowler wrote a blog post alleging sexual harassment by her manager. Soon after, the company showed the door to a senior executive, Amit Singhal, for failing to disclose a sexual harassment allegation during his time at Google. In the following month, co-founder and CEO Travis Kalanick was caught swearing at an Uber driver over the company’s treatment of drivers. Kalanick resigned in June 2017.
All this may have led to the India push taking a backseat. “The focus of Uber now is to move beyond the internal, legal, and regulatory issues and do an IPO in 2019,” Meena of Forrester said.
Deep pockets doesn’t imply that impetuous spending can be Uber’s solution. Besides, its deep pockets doesn’t imply that impetuous spending can be the US-based unicorn’s solution. “There’s a lot of cash in the bank both of them. Uber raises a lot more (globally) so it is burning a lot,” Ankur Nigam, a partner at management consulting firm KPMG, said. “Ola’s burn is probably around $300-$400 million dollars per annum, so it will probably last a lot longer.”
The homegrown startup
Often been labelled an Uber copycat, Ola has made several brave bets, stayed nimble, and experimented.
For instance, it has accepted cash payments right since inception, while it took Uber nearly two years to figure that out that cash remains king in the country. Since October 2016, Ola has allowed users to book cabs through text messages in case they can’t access the internet. This feature is key, given India’s poor data connectivity. Ola’s app also supports nine regional languages for cab and auto drivers – only 10% of Indians speak English.
“Even though the service itself is inspired by Uber, Ola hasn’t constantly been looking over Uber’s shoulders to build its playbook for India,” said Kartik Hosanagar, a professor of technology and digital business at University of Pennsylvania’s Wharton School. Instead, Ola has been bold in its decision making, he added.
In 2015, the company entered the digital payments space with its online wallet Ola Money, which is now accepted at pizza chains Domino’s and PizzaHut, Café Coffee Day, online ticketing portal BookMyShow, e-commerce website eBay, and hotel booking site OYO, among others.
Ola has also made several moves on the technology front. It launched an “electric mass transport project” with carmaker Mahindra & Mahindra, leveraged machine learning to generate supply and demand predictions in India’s unruly traffic conditions, and tailored location and mapping to the country’s poorly laid out roads.
Ola has also made several moves on the technology front. In December 2017, it diversified into India’s burgeoning food-tech space by acquiring delivery startup Foodpanda for $200 million. This was Ola’s second outing in the segment, after it had discontinued Ola Cafe, a food-delivery service similar to Uber EATS, a year ago.
“The features and tech innovations Ola is doing are very relevant to markets like India, Sri Lanka, Pakistan, and Bangladesh,” Nigam of KPMG said. “Uber is developing things that are relevant more for places like Japan, the US, Canada, and Germany.”
Ola is not stopping at just India. Earlier this month, the company announced its first international outpost in Australia. Among other things, it will rely on the vast network of Indian cabbies there. “Expanding into new geographies where people have a higher paying capacity will definitely help Ola generate better revenues,” Vaibhav Arora, associate general manager at consulting firm RedSeer, said.
With more income streams set up all around, Ola may well have more funds to pour into its innovations in India. And with Uber still looking to find the right gear, Ola seems to be on the fast track to success in India.
This article first appeared on Quartz.