India’s taxi wars took a sharp turn in 2013 when San Francisco-based Uber launched its services in the country. The world’s largest app-based ride-hailing firm—then valued at over $3.5 billion—was up against a handful of local startups founded by young, first-time entrepreneurs who were mostly inspired by Uber’s success.
Six years on, Uber is fighting a tough battle for growth in the country’s $10 billion ride-hailing market. Its fiercest competitor is Bengaluru-based Ola, which was founded in December 2010. Uber and Ola were pitted against each other from the word go. Today, they each have a market share of 35% and 45% respectively, and it’s still anybody’s game.
The war
Initially, Ola had the upper hand. It appeared to have a far better understanding of Indian consumers than Uber. For instance, Ola always accepted cash payments—essential in a country where bank accounts, digital payments, and credit cards were not very popular. It took Uber nearly two years after entering India to figure that out.
Ola solved problems that were unique to India way faster than Uber. In October 2016, Ola started allowing users to book cabs through text messages rather than its app, enabling it to add customers who did not have access to fast internet. Uber only released Uber Lite, a pared-down version of its app that works at low internet speeds, in mid-2018. And Ola’s app supports nine regional languages for drivers—only 10% of Indians speak English. Uber was reportedly working on a Hindi version of its app but the timeline is still elusive.
After its exit from China in August 2016, Uber was widely expected to divert a significant portion of the $1 billion it had earmarked for China to India, but instead, the company was hit by an avalanche of issues, including a sexual harassment scandal that snowballed into the eventual ouster of co-founder and CEO Travis Kalanick in June 2017. It tempered Uber’s near-term growth ambitions in India, but it’s still bullish on the country.
To assess the current standings in the Uber-Ola face off, Quartz India compared the two rivals on four parameters: Reach, fleet size, order values, and frequency of rides per passenger.
Reach
In absolute terms, Ola has a bigger reach than Uber in India. The Ola app is installed on more Indian smartphones, according to data collected from three million smartphones by market research firm Kalagato.
However, these data in isolation don’t necessarily indicate victory for Ola. It could merely be a signal of its bigger market presence, says Kalagato’s chief of business Aman Kumar. After all, Ola’s cabs operate in over 120 Indian cities versus Uber’s, which operate in just 40.
Moreover, the gap between Ola and Uber has been pretty much unchanged over the past year, suggesting that the American firm’s stronghold isn’t wavering—it’s just taken a practical call to be in fewer cities.
Fleet size
The Indian radio taxi market is estimated to have a total of around 500,000 cabs as of 2018 and it is expected to grow to more than one million by 2024, TechSci Research told Quartz. Uber and Ola “jointly constitute more than 90% of the total radio taxi fleet as of 2018,” researchers at the Noida-based firm noted. Ola leads the race here as well.
Order value
Ubder and Ola are neck and neck when measured by their average order value for rides paid by card, according to Kalagato. Kumar says that if cash transactions are included, the exact numbers may change but the trend would remain the same.
Frequency
Uber beats Ola by a long-shot when it comes to the frequency of rides per customer.
“Uber is in fewer locations but focused on metropolitan cities where there are more users for it,” said Kumar. “There is likely less frequent use of Ola’s services in smaller cities, bringing the average down.” 70% of India’s on-demand taxi market is concentrated in metro areas, calculates TechSci Research.
Even as the two companies battle it out, they have both been plagued by one common challenge: ensuring the safety of passengers.
Safety glitch
Over the years, Uber’s reputation has taken a hit due to a slew of sexual assault allegations. Ola, too, has battled its own set of complaints about driver misbehavior.
The litany of complaints are damaging. “Over the years, I’ve gotten Uber and Ola to minimize the impact of my forgetfulness. Mac missing. No problem. Get an Uber to bring it from home. Important documents left behind? Uber. Or Ola,” Vivek Durai, founder of business intelligence platform Paper.VC, wrote in his newsletter. “But the one thing I’ve been nervous about is sending our kids in one of these vehicles. Given the absolute lack of assurance by these providers on driver quality, general ambivalence on security and total lack of support to actual customers in their race to dominate every possible geography.”
Both firms have taken steps to remedy the issue. They now provide a photo of the driver, vehicle registration number and car model details on the app once the booking is confirmed, so the customer can cross-check before hopping into a vehicle. In January 2017, Ola also launched one-time password (OTP) authentication to start rides and, back in September 2015, it introduced number masking for privacy and security reasons. Both companies offer options to let friends and family track trips in real time and panic buttons on their apps for riders to reach authorities. (Implementation of this last feature however, is leaving much to be desired.)
In 2018, Ola launched its Guardian app, which monitors a passenger’s ride in real-time to identify unexpected and midway stops and route deviations and notifies the Ola’s Safety Response Team (SRT) in case of discrepancies. The company also plans to authenticate driver identities through selfies and conduct offline checks for impersonation at airport hubs, railway stations, and bus stands.
Currently, Indian consumers rank Uber and Ola equally on trustworthiness.
While both ride-hailing giants have their laundry list of issues to grapple with, they also have equally deep coffers to be able to throw money at solving them.
Now, the battle between the two archrivals is moving beyond India’s borders, as Ola embarks on an overseas expansion drive.
Foreign fight
Ola’s first foreign foray was to Perth, in western Australia, at the start of 2018.
Australia’s ride-hailing market was already fairly crowded with international and local players like Uber, GoCatch, and Taxify, but Ola has since managed to expand into seven cities in the country, signing up over 40,000 drivers. Australia’s existing population of Indian cabbies apparently helped build its driver network.
Next up was the UK and New Zealand.
“While its progress has been somewhat slow, limiting its operations to Australia, New Zealand, and the UK, the slow approach may be working well for the company. In fact, Ola recently overtook Uber as the top travel app on the Apple App Store in Australia and New Zealand,” Duckju Kang, CEO of analysis firm ValueChampion, said in a note on August 28.
ValueChampion analyzed the download rankings between August 1 and August 26 this year.
“Ola is still far behind Uber in the UK, but this could change especially given that the country is a popular destination for Indian immigrants, i.e. potentially high brand awareness in the market,” Kang told Quartz in an e-mail.
Globally, Ola now facilitates a billion rides each year, with more than a million driver-partners and 125 million customers in over 110 cities, the company says. Soon, it plans to enter myriad new markets such as Bangladesh and Sri Lanka. Meanwhile, Uber has over 100 million monthly active users spread across more than 80 countries worldwide.
Ola has been betting on hyper-discounts to fuel its overseas foray. Shortly after entering Australia, it charged drivers an introductory commission of just 7.5% versus Uber’s 27.5%. In New Zealand, it charged 9%. In the UK, it offered commissions of 10% to private vehicle drivers and a lower 5% to taxis. Whether or not this cash burn is sustainable is a very big question.
Then again, it’s not like Uber is close to stopping the bleeding either. Neither player has profitability on its radar for now.
Yet perhaps comparing Uber and Ola is no longer fair because Ola has expanded well beyond ride-hailing. While Uber has its eyes set on the ride-hailing prize, the Indian behemoth is looking more and more like a mobility company, following a concerted push into the electric vehicle space. It has also diversified into food-tech, and even financial services, and who knows what else next?