 "Ola, Uber fight the price war")
It is difficult, if not impossible, to miss the raging battle for cab riders on Indian streets. Uber and Ola are everywhere - be it on Bengaluru's tech corridor or the crowded highways of the metros, the brands loom large over the traffic racing past their hoardings. Uber has released front page ads in leading print publications as has Ola and both are splurging on digital and television too. Among the top advertisers among e-commerce companies, with a combined total of about Rs 300 crore between them, the two have committed close to Rs 13,000 crore worth of investments for the lion's share of the Indian market.
The ads, besides emphasis reliability and comfort are also promising cheaper rides. In March, for instance, Ola introduced a new category dubbed 'Micro' which it says is the most affordable service yet, with base fares of just Rs 6 per kilometre. "India scores a six with Micro," said Raghuvesh Sarup, chief marketing officer and head of categories at Ola. Ola's move was a response to rival Uber dropping fares to Rs 6 per kilometer in Chennai and Kolkata a month earlier. To put the fares in perspective, the base fare for an auto rickshaw in these cities is almost double that what Uber and Ola offer.
While the exact size of the market is not known, San Francisco based Uber's confidence runs so high that it has said it will overtake Ola in the number of daily rides by April, a claim that Ola contests very strongly. "In three weeks we've put up a category that is nearly 50 per cent of Uber's bookings per day. We will be larger than their entire brand within a month, and that's just Micro," added Sarup. Uber refused to comment for this story.
In the current ad blitzkrieg, which many would call the phase two of customer acquisition, each is looking to snatch the advantage away from the other. And for that they are using pricing, commuting experience and add-on features to lure in new customers and keep them loyal.
Ola is positioning the Micro service as an onboarding ramp for new users. Specifically, the company says it is looking at customers who might have chosen an auto rickshaw because they found hailing a cab too expensive. "Micro is targeted at people who're looking to travel short distances to get out of the heat, or the rain, and they'll prefer a car more than an auto or a bus. Mini on the other hand is for a more accustomed cab rider," said Sarup.
While Ola and Uber have disrupted the taxi hailing market in several ways, the fact is that a majority of the people in the country still can't afford their most affordable services. To tap into this, both companies have considered introducing affordable bike taxis. While they've hit a speedbump with the Karnataka authorities, but it's only a wait till they get the green light.
Ola has also introduced its shuttle bus service in three cities, but hasn't revealed too much about what sort of success it has seen. It maintains that Shuttle is a pilot project. At the opposite end of the spectrum, is Prime, its premium sedan service. The rider is greeted with a bottle of water, which Sarup says is in keeping with Indian traditions. Apart from the large and roomy cars, Prime offers in-car Wi-Fi, a tactic once employed by Uber too, but given up pretty soon.
The company believes that commuters do not really classify themselves as a Micro rider or a Prime rider. "You could use Mini on your way to work and Prime when you're going out with your family. There are people who are more discerning and there are also moments when they are also more discerning, and Prime caters to both of them," said Sarup.
The battle for commuters requires deep pockets. Uber is flush with cash thanks to its $62 billion valuation, but Ola is no slouch either. With a value of $5 billion, Ola is backed by Japanese giant SoftBank and Uber's Chinese nemesis Didi Kuaidi. While customers may rejoice at the prospect of the continuing price wars, experts caution about a time when the high-growth, high-burn period comes to an end. The ride could get bumpy, if the companies are not careful.
The ads, besides emphasis reliability and comfort are also promising cheaper rides. In March, for instance, Ola introduced a new category dubbed 'Micro' which it says is the most affordable service yet, with base fares of just Rs 6 per kilometre. "India scores a six with Micro," said Raghuvesh Sarup, chief marketing officer and head of categories at Ola. Ola's move was a response to rival Uber dropping fares to Rs 6 per kilometer in Chennai and Kolkata a month earlier. To put the fares in perspective, the base fare for an auto rickshaw in these cities is almost double that what Uber and Ola offer.
While the exact size of the market is not known, San Francisco based Uber's confidence runs so high that it has said it will overtake Ola in the number of daily rides by April, a claim that Ola contests very strongly. "In three weeks we've put up a category that is nearly 50 per cent of Uber's bookings per day. We will be larger than their entire brand within a month, and that's just Micro," added Sarup. Uber refused to comment for this story.
In the current ad blitzkrieg, which many would call the phase two of customer acquisition, each is looking to snatch the advantage away from the other. And for that they are using pricing, commuting experience and add-on features to lure in new customers and keep them loyal.
Ola is positioning the Micro service as an onboarding ramp for new users. Specifically, the company says it is looking at customers who might have chosen an auto rickshaw because they found hailing a cab too expensive. "Micro is targeted at people who're looking to travel short distances to get out of the heat, or the rain, and they'll prefer a car more than an auto or a bus. Mini on the other hand is for a more accustomed cab rider," said Sarup.
While Ola and Uber have disrupted the taxi hailing market in several ways, the fact is that a majority of the people in the country still can't afford their most affordable services. To tap into this, both companies have considered introducing affordable bike taxis. While they've hit a speedbump with the Karnataka authorities, but it's only a wait till they get the green light.
Ola has also introduced its shuttle bus service in three cities, but hasn't revealed too much about what sort of success it has seen. It maintains that Shuttle is a pilot project. At the opposite end of the spectrum, is Prime, its premium sedan service. The rider is greeted with a bottle of water, which Sarup says is in keeping with Indian traditions. Apart from the large and roomy cars, Prime offers in-car Wi-Fi, a tactic once employed by Uber too, but given up pretty soon.
The company believes that commuters do not really classify themselves as a Micro rider or a Prime rider. "You could use Mini on your way to work and Prime when you're going out with your family. There are people who are more discerning and there are also moments when they are also more discerning, and Prime caters to both of them," said Sarup.
The battle for commuters requires deep pockets. Uber is flush with cash thanks to its $62 billion valuation, but Ola is no slouch either. With a value of $5 billion, Ola is backed by Japanese giant SoftBank and Uber's Chinese nemesis Didi Kuaidi. While customers may rejoice at the prospect of the continuing price wars, experts caution about a time when the high-growth, high-burn period comes to an end. The ride could get bumpy, if the companies are not careful.