 "Pranay Jivrajka")
India’s largest ride-hailing service Ola has come under attack from global rival Uber, but it is fighting back by introducing newer categories and fulfilling more use cases as it looks to replace customers it loses to Uber with new ones. Ola’s chief operating officer PRANAY JIVRAJKA, in an interview with Alnoor Peermohamed, says that the taxi-hailing business is already sustainable in India, but a cannibalisation spree between the two companies is keeping the tap for subsidies wide open. Edited excerpts:
Ola is rolling out a lot of new categories and offerings such as rentals, outstation and cabs for corporates. Are these experiments driven by slowing growth in the point-to-point cab market?
We’re experimenting a lot but not with the intent of “how to grow” or “how to take things forward” but more with the intent of how do we create more use cases for the customer and improve the customer experience. Rentals as an example has one of the best use cases for someone travelling to a new city for a bunch of meetings in a single day and you can’t rely on point-to-point. This is a very specific use case, and we’d started it with a different intention, but very soon realised it was solving for use cases that was not possible to solve with point-to-point.
About eight-10 months back we started Ola corporate and that’s where we got to learn and understand the massive demand that this particular segment has. A lot of people in corporates, especially at a senior level or mid-senior level, have back-to-back meetings. Similarly for outstation, we rolled it back around three years ago, but there was a clear need and a very big market in itself so we brought it back with much higher technology integration than what it was before.
Ola shut Ola Cafe and Ola Store, two other so-called experiments from the company. Is it the same with these new categories or are they here to stay?
These things are here to stay. So everything starts as an experiment, but with Ola Store and Cafe we wanted to see if we could use the same stack to address business-to-business types of solutions. We thought it was something we could use, but maybe this is not the right time for us to focus on that. It’s not that it might never happen again, you might see us coming up with something similar in a few quarters. The biggest realisation we got out of the Ola Cafe experiment is that it doesn’t matter what you’re eating, as long as you get it in eight minutes.
How big are corporate users for Ola?
Before we formalised Ola Corporate, we did have corporate users but they were claiming bills and getting reimbursed. With Ola Corporate, the biggest pain point that we’ve addressed is paying for rides from your own pocket and getting it reimbursed and for the admin’s office to track who’s doing what. It’s a self-serve portal where you can hop on and come as a corporate and add users. We’ve seen that more than 80 per cent of these employees already had the Ola app installed on their phones, but we’ve given the user the independence of being able to put corporate and personal rides separately.
That’s how it started and it’s growing phenomenally. We have certain large corporates who we go to and make a sale but there’s also a long tail of SMBs (small and medium-sized business) who come all by themselves. On the user side we’ve seen that the frequency with which they use Ola Corporate has increased significantly. It’s also kind of a pseudo lock-in for the user as well because he uses the same app for getting personal rides as well. Ideally, the way to look at it is that the travel desk at every corporate should not exist when it comes to booking cabs.
You’ve rolled out multiple models of ride hailing, some that go completely against the idea of point-to-point mobility which you introduced first. Is India a country where several models are needed?
India is very heterogeneous and it’s historical with the number of languages, religions, etc. and our transportation needs also change as we move from city to city. I’d say they change every 100 km. You can see this at various price points that we offer within our app today. We think you have to cover the entire pyramid and across several use cases for users who might be similar. For example, there are users who can afford between Rs 5/km and Rs 12/km and we have three products for them. As we grow, over the next five years, everything that moves on the road should be enabled through us, that’s how we see it.
What will happen when Ola stops subsidising rides for customers and incentivising drivers? Will the value proposition remain?
Yes it will. There are two parts to this. One is, give discounts to the user, and the other is, subsidise it for the driver. From the past few months or a quarter, I would say we’ve stopped subsidising rides for users. Whereas for the driver, in terms of gross earnings (what the driver makes directly from customers) what he gets will be double on Ola compared to any competitor’s platform. This happens because we’re charging slightly higher fares on certain categories and the utilisation that we have on our platform is way higher than what the competition can offer. There’s obviously some equilibrium that is getting pulled towards us, but in order to match that there's a lot of subsidy that goes on both platforms. However, the extent of subsidy that we do and what the competition does is at extremes. The end outcome is that we have to match driver earnings so that he doesn’t move to the other platform and that’s pretty much how we have to game and maintain our market share at this point of time.
We believe that even when subsidies are finally reduced and then removed, it will be sustainable both for the driver and it’s already sustainable for users. We have seen this in most of our tier-II and tier-III cities, where we don't subsidise any rides but they’re still growing pretty fast. Even today if you see the earnings that a driver would have expected when he purchased his car is something he gets just from the consumers. It’s just that this cannibalisation of market approach that both (Ola and Uber) of us have taken, fortunately or unfortunately, is making us subsidise rides. But today if I reduce my subsidies to zero, it’s still a sustainable business for both drivers as well as us.
From where is Ola’s growth and volume of rides increasing?
In terms of growth of rides, it’s obviously more in tier-II and tier-III cities because there’s enough room and the base is very small. In terms of volumes, obviously tier-I cities dominate but the game in tier-I is now about how to solve specific problems of consumers. If you looked at the Ola app a year ago, we had just two categories — mini and sedan. Today we have a slider on which you have eight or nine categories. Making it a more inclusive platform has helped us grow even faster. We now have autos in more than 75 cities, which if you look at it were a pain since most didn’t run on meters.
There’s been a lot of friction between cab aggregators and the government, but are things changing for the better?
We are already in touch with the government, both at the Centre as well as in states. In terms of understanding value, everyone agrees that there’s value in what we’re doing and the way we’re contributing to the country. In terms of future development, urban planning, we’ve started conversations and have given some thought around it but it will take time. The first step is coming up with governance and regulation which is something that they’re doing at an accelerated pace. Once that happens, we’ll have a more cordial relationship with them and we’re already working with governments in smaller tier-II towns.
