MUMBAI: Gone are the days when we had to book a cab by calling a local can agency, and that’s because cab aggregators in India have completely changed the way we book a cab.
Back in the day, while Mumbai had its distinguished kaali-peelis, Delhi had its metro whereas Bengaluru didn’t have a great public transport system. Cabs were never a mode of transport in India until a few years ago.
India’s first official cab service began in Mumbai in 2007 with Meru cabs, who were extremely high priced but came in handy during airport and long-distance travels. It was in 2011, when cab service provider TaxiForSure eased the booking process by starting an online portal, aggregating multiple cab agencies. They grew in popularity by including an Android-based GPS system, which helped customers track their ride.
Meanwhile, Ola, which started in 2010, was following a different model by associating directly with cab drivers, thereby eliminating the need for cab agencies. The company gained popularity only in 2013 as in the initial years, people couldn’t relate with the idea of talking to the driver directly on booking a cab and questioned the model’s authenticity. It was around the same time that global taxi market leader Uber entered the Indian market but failed to connect with the audience as it only allowed credit cards as a mode of payment.
Over the years, a lot has changed in the Indian cab aggregator sector, where some had to shut shop or were bought over due to bankruptcy and increasing losses. In March 2015, OlaCabs acquired TaxiForSure for approximately US $200 million and Geotagg, a trip-planning applications company, for an undisclosed sum. The company also acquired Foodpanda’s business in India in 2017.
The segment has gained a lot of attention due to huge funding, highly competitive pricing (Ola-Uber on-going price war), security issues of women passengers and tussle with the government for license and permits.
Today, Ola clocks an average of more than 150,000 bookings per day and commands 60 per cent of the market share in India, while Uber’s shares have slipped from 42 per cent in July 2017 to 40 per cent in December 2017. According to Japanese multinational conglomerate, SoftBank, the organised taxi sector in India may be worth $7 billion by 2020.
In 2016, Uber made a deal with its Chinese rival Didi Chuxing to exit the Chinese market, after the duo fought hard for the country’s huge customer base Uber also exited Russia and Eastern European markets last year after reaching a similar deal with Yandex, giving Uber 36.6 percent of the entity formed by the two companies.
SoftBank has made major investment in Ola and Uber who has also invested in Grab, which is Uber’s rival in South East Asian countries. Ever since Uber inked the deal with SoftBank, there have been speculations that Uber would pull out of those markets and it turned into a reality earlier this year where Uber sold its business in SEA to Grab.
Now, news is doing the rounds in market that a possible merger between Ola and Uber may be on its way in India. Since the Ola-TaxiForSure acquisition, the Indian market has essentially been a two-horse race and now, were the Uber-Ola deal to work out, we'd witness a monopoly situation like never before as Uber and Ola, together hold nearly 95 per cent of the market today.
If the merger does happen, we may see increase in advertising and marketing for the new merged entity as Ola and Uber are India’s two major cab aggregators with pockets filled. Ola has a robust advertising budget for television and print whereas Uber has an upper hand at digital and social media marketing. The combined entity would indicate 360-degree advertising including print, out of home, television and digital.
While Uber has always had an elite and urban vibe to it, Ola has a stronger presence across smaller towns and segments. The Indian firm operates in 110 cities, far more than Uber’s 31. The merged entity would ensure a better penetration in rural as well as urban markets as the customer base for both the apps would be aligned together.
This would also mean the prices would be kept in check as currently, Ola is assumed to be comparatively cheaper and affordable than Uber. But this could also go the other way, as a monopoly could lead to price tampering and exorbitant charges.
But the merger will also open the field for newer players to enter in the segment which will only help in competitive prices and all of them striving to serve better in order to acquire and retain customers.
All said and done, when and how the merger will unfold is a story for another day but if there’s one thing, it will definitely be an interesting tale to tell.
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