The homegrown ride-hailing app, Ola, has enjoyed a 61% increase in its total revenue, along with the feat of halving it’s consolidated loses to Rs 2,842.2 Crore. With over 10 lakh drivers operating a range of vehicles like autos and cars, and a strong presence in over 110 cities in India, Ola has now begun to foray onto international roads, with its first outpost in Australia.
Now, this begs the question – why is Ola gaining profits and customers by the carload, while Uber trails slowly behind?
Understanding the Indian market:
To begin with, Ola understood that cash transactions rule the roost in India. While Uber initially did not allow cash transactions (it caught on after 2 whole years) which was a long enough time span for the convenience of using Ola to sink into the minds of the consumers.
Furthermore, way back in 2016, Ola began expanding its customer base to non-active internet users too. With the ability to book cabs via SMS, this ride-sharing app confronted a very real problem – sporadic connectivity across cities!
Finally, the app captured the Indian market successfully by operating in 9 different regional languages, ensuring that all customers and drivers can use the app without language barriers.
Investment strategies:
Ola and Uber both scored the same investor, Softbank. Recognizing that both apps cannot thrive equally within the Indian market, Softbank’s strategies for Uber include a strong focus only on its core markets: Australia, the US, Latin America, and Europe. Perhaps this strategy is indicative of why Uber has not spent considerable efforts in marketing and gaining ground behind Ola.
If one is to believe the rumor mill, there are speculations that Softbank is angling for a merger between the two apps in India. Other rumors indicate that they want to diffuse any competition between Asian ride-sharing apps and Uber. However, rumors regarding Uber slowly reducing its presence in India do not seem to have any merit as the ride-sharing app is in trouble in other markets too.
Stiff competitions and run-ins with the laws:
While all this may imply that Uber has not been able to get a hang of the Indian market specifically, many occurrences indicate that the app is flailing globally too. In the USA, it faces heavy competition from Lyft, which received funding of 1 billion USD from Alphabet Inc right at the tail end of 2017. A month prior to this, Uber had lost its license to operate in London. Transport for London, the official transport authority in London, released an official statement on the same, saying “Uber’s approach and conduct demonstrate a lack of corporate responsibility”. This was said with regards to increasing criminal conduct associated with Uber, along with huge gaps in background checks for drivers – an issue that has been seen time and time again in India as well.
Furthermore, UberPop, a low-cost alternative to Uber, has been banned in France, Germany, and Italy too.
Apart from the ride-hailing services, Ola has also managed to make decent inroads into the digital currency sphere with Ola Money, which is accepted by a number of restaurants and brands like Dominos, Pizza Hut, BookMyShow, and OYO, amongst many others.
With these factors in mind, it’s not very surprising that Ola is winning the race against Uber
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