The War of the Taxi Aggregators

8/19/2019 The War of the Taxi Aggregators

1/26

The war of the taxi aggregators – Ola & Uber, in India, is in

high gear; every move one makes is met with an even

bigger move by the other. The battles contine on varios

fronts as they both try to win the !nal war. "ho is winning#

That is the million dollar $estion which is reverberating in

the ecosystem. %ark 'ata – a mobile a(( intelligence

com(any has come ( with some interesting data on the

same. It has released a chart that com(ares the weekly

active sers )"*U+ of Ola abs and Uber, as a (ercentage

of mobile device sers in India )(anel+ dring -/01-/2.*ccording to the chart, Ola is winning.

Some Interesting Findings From The Chart:

/. In 3ay -/0, both the (layers were neck1to1neck in

terms of their "*U )(ercentage of (anel+ – arond /.%1

/.45.

-. In 6ovember -/0, Ola started (icking ( (ace as its

"*U )(ercentage of (anel+ crossed the -5 mark, while

Uber7s lingered arond /.25.

8. In 'ecember -/0, Uber managed to catch ( to Ola

as they both registered arond 8.95 "*U )(ercentage of

(anel+.0. :owever, as -/2 began, Uber7s nmbers dro((ed

drastically and the ga( widened between the two.

http://inc42.com/tag/ola/http://inc42.com/tag/uber/http://www.7parkdata.com/http://inc42.com/tag/uber/http://www.7parkdata.com/http://inc42.com/tag/ola/


2/26

2. Ola toched the 5 mark in 3arch -/2 – its (eak

(ercentage as of October -/2, as Uber still hovered

arond the 8.95 mark.

9. *s of October -/2, Ola trned ot to be the winner

with 4.85 "*U )(ercentage of (anel+, whereas, Uber was

at 2.%25. Uber7s highest "*U )(ercentage of (anel+ was

registered in *gst -/2 – arond 9./5.

Here’s The Chart:

Also Read: Here Comes A Shocker For Ola And Uber's Bike Taxi

Services

http://inc42.com/flash-feed/here-comes-a-shocker-for-ola-and-ubers-bike-taxi-services/http://inc42.com/flash-feed/here-comes-a-shocker-for-ola-and-ubers-bike-taxi-services/http://inc42.com/flash-feed/here-comes-a-shocker-for-ola-and-ubers-bike-taxi-services/http://inc42.com/flash-feed/here-comes-a-shocker-for-ola-and-ubers-bike-taxi-services/http://inc42.com/flash-feed/here-comes-a-shocker-for-ola-and-ubers-bike-taxi-services/http://inc42.com/flash-feed/here-comes-a-shocker-for-ola-and-ubers-bike-taxi-services/


3/26

eries ? rond.

@aillie AiBord, ?alcon oft@ank

Aro(, '>T Alobal and 'idi Caidi (artici(ated in this rond

of fnding. *ccording to >oftbank7s )Ola7s investor+

$arterly earning annoncement, Ola (ossesses 45

market share.


4/26

not as many ,uality drivers. It is ,uite a task for aggregators to convince

drivers " used to a mom"and"pop model or radio ta2is " to work with them.

*nd those who are available like Singh may not remain loyal to one company.

Securing the supply side has become a slugfest among India/s top three on"

demand ta2i companies " *+I Technologies which runs Ola Uber and 1eru

" as they pour money to capture the market. 0la and $ber particularly

backed by global venture capitalists are threatening to make every other ta2i

company in India irrelevant. !ome"bred 0la has thus far raised more than

56(( million. $ber has mopped up 54 billion and has committed 53 billion for

India in the ne2t nine months. 7oth are using their war chest to offer

incentives to drivers and discounted fares to riders. Traditional radio cabs and

small"time operators are struggling to match up. The e2istential threat hasmade them cry out market monopolisation. Companies such as 1eru

Carzonrent and 1ega Cabs have thrown their collective might to regulate the

unregulated on"demand companies. 8egal tussles have greeted the

aggregators. 7ut more about that later.

1eanwhile big money is making this battle worth fighting for. *ccording to

the *ssociation of %adio Ta2i India the ta2i business in the country is growing

at &( to &' per cent a year. The organised ta2i sector accounts for 9ust four to

five per cent of the industry and totals 5:(( million. It is e2pected to grow to56 billion by &(&(.

Click here to Enlarge

RIDE SHARE

http://www.businesstoday.in/current/corporate/delhi-hc-dismisses-ola-cabs-plea-against-delhi-govtss-ban/story/222646.htmlhttp://www.businesstoday.in/current/corporate/uber-ban-by-high-court-revokes-in-new-delhi/story/221469.htmlhttp://www.businesstoday.in/http://www.businesstoday.in/current/corporate/delhi-hc-dismisses-ola-cabs-plea-against-delhi-govtss-ban/story/222646.htmlhttp://www.businesstoday.in/current/corporate/uber-ban-by-high-court-revokes-in-new-delhi/story/221469.htmlhttp://www.businesstoday.in/


5/26

0la has emerged as the clear leader in terms of market share. *ccording to a

presentation by Soft7ank Corp. an investor in 0la the company had a 4( per

cent share in +ovember &(3 based on data of registered vehicles.

Ta2i#orSure " a company 0la ac,uired in 1arch this year " had 3 per cent

share. 1eru had the second"largest share at 34 per cent while $ber which is

now the world/s most valued technology start"up at 5'( billion 9ust had five

per cent of the market. 0la appears to have e2panded its share if we were to go

by the disclosures Soft7ank made during its earnings presentation for its fiscal

year on 1ay 33. The combined market share of 0la and Ta2i#orSure is :( per

cent. 1eru/s share has dropped to 3& per cent while $ber is at four per cent.

*ll other ta2i companies together have the rest.

0la had a head start in the aggregation market having started in December&(3(. Ta2i#orSure was founded a few months later in


6/26

0la today claims &'(((( vehicles on its platform including autos and apresence in more than 3(( cities. It says it is adding 3'(( vehicles every day.1eru however says the market share mathematics should not be based onthe number of cars; it has to be on consumer revenue. If that is factored in1eru claims its share would be &) per cent. $ber which operates in 3: citiesdisputes the market share numbers. *n $ber spokesperson contends that thecompany is much closer to 0la in terms of overall market size. It/s not as one"sided as that report or subse,uent media reports have made it out to be he

says. ?e are the same size or larger in many big metro cities in India. ?hatever the size 0la does get the bragging rights for now. It publicly prides

itself for beating $ber in being more India"centric. 0n


7/26

made a significant e2ception in India. Customers can pay through the >aytm

wallet credit cards debit cards as also cash in a few cities. In India the

company offers uber=0 Ehatchback vehicles or small cars that are the

cheapestF uberG Emid"sized sedans that are costlierF and uber78*CH Elarger

vehicles at premium pricingF.

*lmost all countries have the uberG service but only India has a cheaper

version in uber=0. *nd there is a subtle difference in the operational model

between India and the $S. ?hile in India only a driver with a commercial

driver/s licence and commercial insurance can enlist in the $S anybody with

a personal vehicle can become an $ber driver provided he has a driver/s

licence and insurance.


8/26


9/26

That in fact is $ber/s global model and has heralded the rise of the on"demand economy or the /gig economy/ " fle2ible employment where the

worker is more a contractor than an employee. It has sparked debates onchanging labour market dynamics and spurred a new wave of microentrepreneurship not seen before. #reelancers like Chander Singh can

potentially make more money than his peers employed by a company to drivecars. $sing technology $ber has succeeded in matching sparse capacity withdemand. In its marketplace riders can get picked up in as little as five minutes

while drivers now spend less time sitting idle. The success reflects in numbers-$ber operates in )& cities across more than ' countries.

The gig economy model is highly scalable because it is cost efficient. The

burden of owning licensing insuring and maintaining a car rests with the

driver not $ber. The model loved by investors has led to a boom of on"

demand start"ups across the world. *nd in India too. Deep"pocketed venture

firms have allowed on"demand companies to chase market share and gain

scale even as they bleed heavily. 0la/s losses for instance are growing every

year. It had a net loss of %s ).&& crore in &(3)J3 according to disclosures

made with the %egistrar of Companies. In &(3&J3) it lost %s &&.:( crore.

%ecently 7loomberg +ews reported that $ber/s global operating losses total

56( million but it did not mention the time period. That number may be

outdated by now.


10/26

$ber"like services include 8yft in the $S that has made an imprint in the carpooling market. Sidecar will help you reach a destination and deliver apackage along the same route too. =rabTa2i matches ta2is with passengers inSoutheast *sia. In China there is Didi Huaidi and it aggregates shuttle busses


11/26

too. +eed a ,uick ride in 1umbai +o problem. !eyTa2i will connect you witha two wheeler.

0la was founded in 1umbai by IIT 7ombay graduates 7havish *ggarwal and

*nkit 7hati. They shifted head,uarters to 7angalore in &(3&. *ggarwal says

0la/s approach works better in India. ?e have built a very Indian service withan Indian business model. #or instance we accept cash Ein all citiesF unlike

$ber he says. Customers have the option to pay by wallet as well. !owever

today half of 0la/s payments are made through cash.

?hen 7usiness Today spoke to *ggarwal a few months ago he boasted of

running a call centre as a differentiator. Kou can also book an 0la through a

call centre. * lot of Indians are not comfortable booking through an app he

had said. 7ut from *ugust 3 0la discontinued the call centre for bookings "

the centres are only for support. That makes its model more $ber"like.

1eru is the only player amongst the three to have a hybrid model. *ccording

to CL0 Siddhartha >ahwa 6( per cent of its cars are today aggregated. The

rest are owned by 1eru and are given under a subscription model to drivers.

It creates a sense of ownership. The driver becomes owner of the car after

four years he e2plains.

The gap with 0la notwithstanding both $ber and 1eru say they have long"

term plans for India. They are picking their battles trying to outdo each other

in innovation and promotions.


12/26

0la introduced autos on its platform in 0ctober &(3; $ber announced it in *pril this year. In 1arch 0la introduced 0la Cafe a food delivery service "customers can order through the app and 0la cabs will deliver the order in,uick time. $ber doesn/t have a similar product in India but 0la Cafe is similarto $ber/s uber#%LS! service in the $S and uberL*TS in Spain. $ber has run

promotions around food delivery in India with uber=0$%1LT a gourmetmeal service curated by celebrity chefs. In *pril restaurant discovery company Momato said it has integrated an $ber button on its app that will help users

book cabs to the restaurant they wish to visit. *nd after a rape incident in an$ber car in Delhi in December last year both $ber and 0la introduced an in"app /S0S/ button.

+ow for the other significant rivalry. Cab aggregators have heralded an era of

ridiculously low prices " a cab ride in some cities can be as low as %s ' a

kilometre. To be in business all aggregators must discount the consumer on

one hand but also compensate the driver on the other. 7ecause securing

supply is pertinent that often means pampering drivers with all sorts of

incentives. That is a game traditional radio ta2i operators focused on

profitability cannot play. 7ecause they EaggregatorsF have raised money they

are selling EfaresF at half the price. Drivers are being lured by incentives and

benefits which have no relation to the cost of transaction says %a9iv Ni9 CL0

of Carzonrent which runs radio ta2i LasyCabs in four cities. !e has &'((

owned cabs and makes profits."O# HE #AR

During a 3("km 9ourney from Halka9i to Sunder +agar in +ew Delhi one

Thursday morning 1eru driver +adeem couldn/t stop talking about what a

good time it is to be a driver. !e didn/t own the car he was driving and pays a

daily rent of %s 3&(( to 1eru. *t times he chooses to work throughout the

day catching up on sleep between 33 p.m. and a.m. when demand for rides is

low. !e can make up to %s &((( a day after paying 1eru its daily share fuel

and maintenance e2penses. 7ut he has plans. I will go to $ber once I buy my

car he says. ?hy not any other aggregator I have heard $ber pays an

additional %s &'( as incentive for every completed trip. That is higher than

everybody else.

The ability to discount rides for customers and incentivise drivers is directly

proportional to the war chest each company has. Today $ber has the largest


13/26

globally " its commitment of 53 billion for nine

months in India translates into a monthly spend of

around 5333 million. That is nearly the combined

monthly cash burn rate of India/s three largest e"

tailers " #lipkart *mazon and Snapdeal.

?e can e2pand and improve our operations e2pand

into newer cities develop new products as well as

payment solutions and establish a great support

network says *mit resident of

$ber India. The company which primarily operates

through regional general managers and city general

managers made a significant departure from itsglobal policy by appointing a country head for the

first time in 1ay. The former %ent.com e2ecutive

has now relocated to =urgaon in India from the $S.

?ith this investment and the strong rate of growth

we are seeing we e2pect to hit over one million trips

per day in the ne2t si2 to nine months


14/26

+eera9 Singhal !ead of L2pansion for India at $ber

says the company offers various incentives to drivers

from time to time but didn/t disclose any details. The

incentives differ in each city. In Delhi for instance

$ber did not charge commissions from drivers

between


15/26

effectively to undercut competition. It killed most of its domestic competition

including Ta2i#orSure.

0la launched a new service 0la 1ini Esmall carsF at auto fares in #ebruary

&(3 in some cities. In *ugust &(3 0la dropped its 1ini rates from %s 3) to

%s 3( a km and Sedan rates from %s 34 to %s 3) a km. That started a price war

with Ta2i#orSure which in +ovember &(3 was forced to drop prices to %s

for four"kilometre in all cities it operates in down from %s &(( for 3( km.

Ta2i#orSure couldn/t sustain these prices. +obody was using ta2is for short

distances. They used autos. ?e wanted to make it cheaper for the customer

says %aghunandan =. co"founder of Ta2i#orSure. Cab drivers however

didn/t agree to such low prices. So we said whatever is the deficit we will pay.

?e started paying them %s 3'( to begin with. +ow it has dropped to %s 6' to%s :( as the number of trips they do has increased and they earn more he

adds.

%aghunandan = co"founder Ta2i#orSure says- /+obody was using ta2is for

short distances. They used autos. ?e wanted to make it cheaper for the

customer./

%aghunandan recently e2ited the company after it was ac,uired by 0la in1arch this year for 5&(( million. Ta2i#orSure couldn/t raise the funding it

would have re,uired to discount customers and compensate drivers after the$ber rape incident resulted in regulatory uncertainty and spooked investors.

0la continues to play the same game today. 7etween 1ay &6 and


16/26

kilometre in Delhi +C% from %s 3(. Then Sedan prices were slashed from %s

34 a kilometre to %s 33. In


17/26

is roughly 3 to 3' km. The competition is able to charge about %s 3& to %s 3 a

kilometre from the consumer and has a trip size of seven to 3( kilometre he

says.

The race though has 9ust begun. Since *ugust last year 1eru has run a

happy"hour scheme )( per cent cash back offers from time to time and a &'

per cent discount booking offer. * radio promotion in Delhi is currently urging

people to download its app. The company may be burning far less cash right

now but will have to do more if it were to remain relevant.

REGU!AOR) S*IR&ISHES

The rapid rise of $ber globally and other app"based cab aggregators has

come with its own set of headwinds " none more threatening than a tsunami of

regulatory battles the companies have to ward off. >rotests and lawsuitsagainst $ber have surfaced from >aris to San #rancisco. The fate of $ber and

0la has a common thread here. Scales may tilt in favour of whoever handles

the regulators better.City governments are worried about the safety of commuters. In Delhi afterthe rape incident in December &(3 sporadic complaints of indecent

behaviour have been made. In SKC!0TIC man with a severe chemical imbalance for a driver isnothing but serious she later wrote in a #acebook post that went viral. *similar complaint surfaced from an $ber"user in Holkata.


18/26

=overnments are also concerned about a

host of other issues from whether the

app"based service providers are meeting

local transport regulations to if they

should classify drivers working on their

platforms as employees. The

/contractors/ versus /employees/ debate

is particularly hot in the $S in the run

up to the presidential elections. *nd that

is something that ,uestions the very

basis of the gig economy model. In


19/26

kaali"peeli ta2is Eblack"and"yellow coloured local ta2isF because of capacity

utilisation he says. If you make them EdriversF employees the on"demand

model doesn/t work. $ber is a labour market app that allows higher capacity

utilisation of self employed people. Self"employment is a different contract

and a different decision.

In India Delhi has been the hotbed of legal tussles ever since the $ber rape

incident of December &(3. *fter the incident the Delhi government banned

the services of app"based aggregators who were non"compliant with the

1odified %adio Ta2i Scheme of Delhi/s Transport Department. 0la says it does

not re,uire such a licence since its cabs have *ll"India Tourist >ermits

E*IT>sF. !owever the *IT> cabs run on diesel and that violates a Supreme

Court order mandating commercial vehicles in the city to run only on the lesspolluting compressed natural gas EC+=F. 7oth 0la and $ber have continued to

operate in Delhi without a %adio Ta2i licence since the state government

found it difficult to implement the ban. The Delhi government in the

meantime refused these companies/ applications for radio ta2i licences.

0la had approached the Delhi !igh Court seeking ,uashing of the ban but thecourt on


20/26

The main problem is not rape. It is the switch from diesel to C+=. It will cost

drivers %s '(((( says Ni9ay >an9wani a Supreme Court lawyer who appears

for the Central >ollution Control 7oard. Lvery kaali"peeli ta2i has made the

switch in Delhi; so have all autos. It will apply to everybody in the +ational

Capital %egion he adds.

Cab aggregators off the record say it will cost drivers more " in the range of

%s 4(((( to %s ((((. They would be unwilling to make that investment

and may well ask the app companies to fund part of it. That would imply

significant e2pense.

It remains to be seen how app"based aggregators would respond and handle

the court/s observation. In the $S where $ber is facing resistance from some

cities it has adopted an aggressive approach. Take the case of +ew Kork City.The city council planned to limit $ber/s addition of drivers since it was

studying the impact of for"hire vehicle services on congestion. $ber launched

a high"decibel campaign " ads targeting 1ayor 7ill de 7lasio said many

potential 9obs are at stake. The company added a de 7lasio feature in its app

" a click of the button showed +o CarsB The city in


21/26

in fact moves in three wheelers. *nd auto aggregation is

picking up pace. $ber announced autos in *pril &(3' and says

the service has picked up fantastically well.

It/s been a game changer for many auto drivers who are now

not restricted to business based on line of sight. #or many

becoming a partner driver with $ber was transformational and

a fi rst introduction to smart technologies =>S navigation and

electronic banking says an $ber spokesperson.

0la introduced autos before $ber did " in 0ctober &(3. The

company claims more than '(((( autos registered on itsplatform the ma2imum being in 7angalore and Chennai.

Taking autos in both these cities was a headache for

commuters- autos rampantly overcharged or refused rides.

*lso these cities are more reliant on three wheelers. 1umbai

has a ta2i culture whereas Delhi has a metro.

The auto app for the driver is different from what a cab guy

gets. It has seven regional languages says an 0laspokesperson. %e,uests for autos are broadcast within a 3 km

distance and the fi rst auto to accept gets the business. In the

case of cabs 0la directs the re,uest to the nearest cab.

The three wheeler market is getting disrupted too.

#irst on +ov. 3: 0laOIndiaPs homegrown app"based ta2i aggregation

companyOsaid it had raised =2 million E%s))(4 croreF from a

http://qz.com/553041/ubers-ride-in-india-could-get-bumpier-as-chinas-didi-kuaidi-jumps-on-board-ola/http://qz.com/553041/ubers-ride-in-india-could-get-bumpier-as-chinas-didi-kuaidi-jumps-on-board-ola/


22/26

clutch of investors including ChinaPs leading ta2i"hailing company

Didi Huaidi. The announcement was seen as a big win for the

7engaluru"based startup as Didi Huaidi has far greater scale than 0la

and is valued three times higher.Then on Dec. ) 0la entered into a ride1sharing agreement with

Didi Huaidi along with the two other ta2i"aggregation services- 8yft

which is based in the $S and =rabTa2i which operates across

1alaysia Singapore Indonesia >hilippines Nietnam and Thailand.

$nder the partnership the four companies will allow users to book

cabs through any of the firmsP apps in all the regions where they

operate from earlier &(34.


23/26

most companies in the sector. The situation was so grim that

Ta2i#orSureOonce seen as a strong contender in the businessO

wasforced to sell ot to competitor 0la because investors turned off

by the regulatory issues wouldnPt give the company the money itneeded to stay afloat.

Uncertainties around the government policies regarding the industry

may persist but theyPre not deterring the industry anymoreOe2isting

players are continuing their race for market share and new investors

are 9oining in. >erhaps IndiaPs huge population 4'U of which is )' or

younger is too big an opportunity for anybody to miss out on.

1any companies with several different business models have

emerged in India over the recent years to get a piece of what7s

estimated to be an 5: billion E%s:((( croreF ta2i market that

remains incredibly diffuse. Currently large services account for only

'U or so of the industry.

?ithin that slice of the market four organised playersO0la $ber

1eru Cabs and Carz0n%ent Ethe operator of Lasy CabsFOhave

collectively captured around three",uarters of the business the

market research and consulting firm TechSci %esearch tells Vuartz.

7etween those four $ber and 0laOwith their deep"pocketed investors

Ohave zoomed past the others by e2panding to many more cities and

broadening the scope of their platforms.

$ber which currently operates in more than )'( cities in 4

countriesbent its bsiness model for India and for the first timeallowed cash payments which is a preferred method of payment in the

country. It also launched Ebt later ss(endedF an auto"rickshaw

aggregation business in India called ber*UTO in recognition that

http://www.livemint.com/Companies/t7TozTlZCAmvtSxog3OQ7L/Behind-TaxiForSures-sellout.htmlhttp://yourstory.com/2015/10/new-state-policies-for-taxi-aggregators/http://trak.in/tags/business/2015/03/03/ola-cabs-taxiforsure-acquisition-cab-aggregation-market/http://trak.in/tags/business/2015/03/03/ola-cabs-taxiforsure-acquisition-cab-aggregation-market/http://qz.com/493239/uber-bends-its-business-model-to-offer-cash-payments-across-all-of-india/http://qz.com/567184/uber-has-quietly-withdrawn-its-auto-rickshaw-hailing-service-in-india/http://techcrunch.com/2015/04/09/uber-autorickshaw-india/#.jdq179:7bqHhttp://www.livemint.com/Companies/t7TozTlZCAmvtSxog3OQ7L/Behind-TaxiForSures-sellout.htmlhttp://yourstory.com/2015/10/new-state-policies-for-taxi-aggregators/http://trak.in/tags/business/2015/03/03/ola-cabs-taxiforsure-acquisition-cab-aggregation-market/http://trak.in/tags/business/2015/03/03/ola-cabs-taxiforsure-acquisition-cab-aggregation-market/http://qz.com/493239/uber-bends-its-business-model-to-offer-cash-payments-across-all-of-india/http://qz.com/567184/uber-has-quietly-withdrawn-its-auto-rickshaw-hailing-service-in-india/http://techcrunch.com/2015/04/09/uber-autorickshaw-india/#.jdq179:7bqH


24/26

the three"wheeled open"air carts are a popular wallet"friendly mode

of transportation in several Indian cities.

0la meanwhile has added new offerings to its app like food ordering

and delivery service Olaafe Esimilar to Uber


25/26

7ut by that measure 0la is the clear leader in India. ItPs in more than

3(( cities to $berPs two dozen or so. 0f course launching in a new city

could entail little more than having 9ust a handful of ta2is there sign

up for the app. *rguably what really matters in this business in scale.$ber has more than &'(((( registered drivers in India and says it is

targeting a goal of supplying 3 million rides a day by 1arch. 0la

meanwhile has over )&'((( vehicles registered on its platform and

tells Vuartz it is aiming to clock ) million booking re,uests daily up

from about 3 million a day currently.

?hen it comes to market share each company has its own math. $ber

India tells Vuartz that Qin 9ust two years since our launch wePve gained

over (U market share of the on demand ride"hailing industry in

India.R

This would represent remarkable growth from the 1arch )3 figures

reported in a (resentation EpdfF from Softbank which in 1ay said

that 0la and Ta2i#orSure together held :(U of the Indian market

followed by 3&U for 1eru Cabs and 9ust U for $ber.


26/26

networking services. 0la is ahead of $ber in India when it comes to

?*$ but $ber has closed the gap some since the first ,uarter.

In terms of sessions per active user $ber is ahead of 0la but even

there the two seem to be heading toward a tight competition.Correction: *n earlier version of this post incorrectly stated that

Tiger =lobal is a hedge fund. The firm has clarified that it invests in

startups like $ber and 0la through its private e,uity group.

Documents

The War of the Taxi Aggregators