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Publis hed by: South Asia n Acade mic Research Jour nals
ACADEMICIA:
A n I n t e r n a t i o n a l
M u l t i d i s c i p l i n a r y
R e s e a r c h J o u r n a l
(A D ou bl e Bl in d Re fer ee d & Re viewe d In te rna ti on al J ou rna l)
CHANGING PARADIGMS IN THE TAXI INDUSTRY IN INDIA
Dr B Karunakar*
* Professor,
Strategic Management, Founder Director,
Narsee Monjee Institute of Management Studies,
Hyderabad,India.
_____________________________________________________________________________
ABSTRACT
With focus on the taxicab aggregator model adopted by players like Ola Cabs and Uber
operating in India, the article begins with the evolution and growth of the taxi industry in India
followed by the entry of the radio-taxi operators. With the development of the ecosystem of
internet penetration and rising mobile users, the taxicab aggregator business has received a
robust fillip because in their business model the firm’s mobile app allows customers with smart
phones to submit a trip request which is then routed to their drivers who help complete the trip.
The growth of taxicab/radio-share cab aggregators led the radio-taxi operators to relook at their
operations prompting players like Meru Cabs to adopt a hybrid model. In the article, the
business model of Ola Cabs and Uber India is explained in detail. Further the intense rivalry
between them in the taxicab aggregator business is covered in depth. While the taxicab industry
is poised towards bright future, it is acknowledged that the regulatory environment needs to keep
evolving over time and keep pace with ever changing needs of the market.
KEYWORDS: Taxi, Radio-taxi operator, Radio-share cab aggregator, Taxicab aggregator,
Taxicab industry analysis
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INTRODUCTION
India is witnessing a revolutionary change in urban road passenger conveyance – from traditional
horse carriages of only a few decades earlier to modern-day fleet cabs, radio taxis and rental cars.
The industry, very new and growing fast, is already valued at $6-$9 billion.
―Why own a car, when you have a taxi at your doorstep?‖ has emerged as a trending concept in
India.The taxicab industry is reinventing the way we look at commuting over a short period of
time. Easy availability, quick access and competitive rates provide freedom of choice and
comfort for end-user while creating business for automobile/ financing/ taxicab companies and
employment opportunities. The taxicab aggregator model by players like Uber, Ola etc are
scaling fast(cf. Amit Jain, Partner, December 2015)
1.Evolution of Taxi Industry in India
Around a century back with the development of automobile industry, Taxicabs arrived in India to
complement horse wagons. Post independence with a faster growth of the economy, the black
and yellow Fiat taxis in Mumbai, Indiabecame an integral part of the city's heritage. These taxis
were equipped with a meter, earlier mechanical and now electronic, that decided the fare based
on the distance travelled
From the late 1990s, besides the Fiat taxis, the cars used for taxis included Maruti
Esteem, Maruti Omni, Maruti Wagon R, Maruti Versa,Tata Indica, Tata Indigo, Renault Logan,
Mahindra Logan, Hyundai Santro and Toyota Innova(cf. Taxis in India, website,
https://en.wikipedia.org/wiki/Taxis_in_India).
Taxicabs are required to have a fare-meter installed as per the Government of India regulations.
However, many taxicabs operate either without fare-meter or defunct ones, as the enforcement
by the authorities is not strict. In such instances, the taxi fare is decided by bargaining between
the driver and the customer. Taxicabs face stiff competition from auto rickshaws. But in the main
city district of some cities like Mumbai, where the auto-rickshaws are banned, the taxicabs have
a dominant presence. Taxis and all other commercial vehicles have a yellow number plate. So
charging taxes and toll in highways is easier for the officials. (cf. Taxi Cabs around world,
website, https: //torontotaxiprices.blogspot.in/2014/04)
The livery of the taxicabs in India varies from state to state. In Delhi and Maharashtra, most
taxicabs have yellow-black livery while in West Bengal, taxis have yellow livery. Private taxicab
operators are not required to have a specific livery. However, they are required by law to be
registered as commercial vehicles.
Taxis can either be hailed or hired from taxi-stands, depending on the city/state. In cities like
Mumbai and Kolkata, taxis can be hailed on the street. Whereas in cities like Bangalore, the taxis
need to be hired from taxi stands. Besides the taxi-fare, additional surcharges for late-night rides,
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luggage and toll taxes are to be paid by the passenger(cf. Taxis in India, website,
https://en.wikipedia.org/wiki/Taxis_in_India).
2.Entry of Radio Taxi
In India, there are about 1.8 million registered commercial passenger cars (cf. All India and state-
wise number of taxed and tax-exempted motor vehicles registered in India, website,
www.data.gov.in) and are licensed to run as cabs. The Indian Taxi market is worth $ 6 billion of
which only about 5% is the organized market that comprises of private car rental operators, radio
taxis and radioshare aggregators. The cab industry in India has the following segments primarily
(a) point to point city taxis (b) car rentals including self drive cars (c) airport and railway station
cabs and (d) outstation and long-distance cabs(cf. Ola raises $ 500 million in series F funding,
website, http://forbesindia.com/article/special)
The advent of Radio Taxis in India started as early as the year 2000. Easy Cabs, Fast Track,
Mega Cabs were the early players who adopted this business model and later Meru Cabs joined
this particular market.
Under the Motor Vehicles Act, operators were required to own a minimum number of 500 cabs
in order to obtain a radio taxi license. It also required driver verification and stipulated that each
driver hold a badge to drive a commercial passenger vehicle(cf. Terms and Conditions for radio
Taxi Scheme 2006, website, http://www.delhi.gov.in).Hence radio taxis were not allowed to use
any cabs that did not have a commercial permit.
Though in India the concept of online booking of taxi and cabs is quite new and successful, it has
been generally observed that online booking of car and taxi operations are on a macro-level with
national scale(cf. India car rental industry, website, http://www.ibef.org).
A comparative snapshot of the companies as of date is shown below
(Source:Companies websites and Das, Goutam August 2015)
Company
Founded
Cabs/Drivers
signed up
Bookings/Day
% of
bookings
through
mobile
Active
in
Cities
Easy Cabs
2000,
Delhi
6500
15000
10%
4
Fast Track
2001,
Chennai
6000 estimate
(4500 in
Chennai)
35000
NA
40
Mega cabs
2002,
Delhi
3500
15000
0
6
Meru Cabs
(Hybrid
Model)
2007,
Mumbai
6000
28000
40%
23
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Easy Cabs: It was founded under the name ‗carzonrent‘ in Delhi in the year 2000 by its CEO
Rajiv Vij. It is an important player and has about 6500 cabs, of which it owned about 500. It has
radio taxi services (Easy Cabs) and a fleet of self-driver services (Myle). The company has a
technology development team actively involved in developing and maintaining IT based
technology platforms to expand aggregation and apps based on its business model(website,
http://www.easy cabs.com).
Fast Track: It was founded by Redsun C Ambigapathy, the present MD and started operations
in Chennai in 2001 on a call taxi basis. It has an estimated 6000 cabs with a strong presence in
Chennai and parts of Tamil Nadu. It operates through a franchisee model in 40 cities with a
substantial number of them in Tamil Nadu (website, http://www.fasttrackcalltaxi.in).
Mega Cabs: It follows an exclusive ownership model with a fleet of 3500 cars. It operates in the
radio taxi services as well as car rental on an offline model (website, http://www.megacabs.com).
Meru Cabs: It was founded as a radio taxi company based in Mumbai, Indiain April 2007 by
Neeraj Gupta. It was one of the pioneers in radio taxi operations in India with the objective
of providing vehicles for hire through aggregation of taxis. It raised funds against an equity
stake in the company from India Value Fund (IVF), which is a private equity fund with a corpus
of over US$ 1.4 Billion. It provided cab booking facilities through calls or websitewith the
payment through cash or card.
It has more than 6000 cabs operating across 23 cities in India and is one of the largest cab
companies in India. It handles more than 28000trips a day. Meru was the preferred taxi service in
Mumbai, Bangalore, Delhi and Hyderabad airports according to the claims made in the company
website. It may be noted that the airport contracts were key revenue-earning options for Indian
cab operators. It had GPS/GPRS based security systems and digital meters in its cabs for
connecting the cab with the back office call centers.
The company has adopted an ownership model in which the drivers were selected, trained and
provided a company-owned cab for which they had to pay a fixed amount (about Rs 1000) to the
company every month. As owning and maintaining a depreciating car was detrimental to
profitability, the company of late had reduced losses by shifting to a hybrid model. It transferred
ownership to the drivers for a good portion of its fleet and the new breed of ‗driver turned
owners‘ took the onus of paying up vehicle loans as EMI. The drivers became owners of the car
after 4 years. At Meru today, 70% of its cars aggregated while the remaining 30% are company
owned and provided under a subscription model to the drivers(cf. Das. Goutam, August 2015).
Besides the sedan service ‗Meru Select‘, the company also runs a hatchback service called ‗Meru
Genie‘ to cater to segment that preferred lower fares.
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With the success of Ride Share start ups like Ola cabs, Taxi for sure in the Rideshare services,
Meru Cabs also started providing services through their mobile application and payment
through cash, card or wallet christened Cab Wallet. It currently operates in 23 cities in India as of
date (website, http://www.merucabs.com).
3.Radioshare/Taxicab aggregators Business Model
Over the last two decades, rising internet and mobile phone penetration in India has changed the
way communication and business is done.
In 2014, the number of mobile internet users in India was 159 million and estimated 213 million
(2015) in a report by Internet and Mobile Association of India (IAMAI) and consultancy firm
KPMG. The number of mobile Internet users in India is projected to double and cross the 300
million mark by 2017 (cf. Mobile-Internet-users-in-India-to-double-by-2017-says-study, website,
www.livemint.com).
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Currently in India there are around 243 million internet users with a19.19% penetration of the
population(cf. www.internetlivestats.com).The ecosystem of internet penetration and rising
mobile users is providing a robust fillip to the taxicab aggregators business.
How the On Demand Cabs Business Model works
Uber was founded as "UberCab" in 2009 by Travis Kalanick and Garrett Camp. The Uber app
software required a smart phone. Uber was trying to build a presence in this segment in addition
to its existing business model.Since Uber's launch, several other companies have copied its
business model, a trend that has come to be referred to as "Uberification" (cf. Huffington Post,
January 2015). Other startups were Ola Cabs, Lyft, Sidecar, Haxi, Lets Ride, Pool Circle, Tripda
etc
Though limited to a niche presence, the ride sharing start ups have the potential to disrupt and
bring structural changes to the industry. This model could cut costs further and serve to an
entirely different target market.
By end of December 2015, the Uber service was available in 68 countries and 372 cities
worldwide (cf. website, http://www.Uber.com).
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How does the on demand cabs business model works? The customers can hire drivers using the
company‘s app available on both iPhone, Android and Windows. Once riders make a request,
they receive an ETA (expected time of arrival) from the driver. When a driver receives a request,
it appears on his iPhone, along with GPS coordinates of the rider. From here on, riders can call
the driver if they need to make any special requests. Customers are required to enter their
payment information through the Company‘s app prior to requesting a car. Riders can rate their
drivers with a rating of 1 to 5, so if someone reports a negative experience, the company can
discipline (or dismiss) delinquent drivers.
Cab booking
1. Customer loads the mobile wallet with cash or stores credit/debit card details
2. Customer opens app and sets pick-up location (some apps can pick up location on their
own)
3. Selects payment method
4. Selects cab type and then places the order
Cab delivery
5. Cab picks up the customer and the trip is tracked by GPS
Payment
6. At the end of the trip, the fare is charged directly to the mobile wallet. In the case of
cards, a customer enters CVV and verification password on the app. Payment can also be in
cash.
7. The aggregator transfers money to the driver‘s linked bank account in 24-48 hours
Uber pioneered the business model which is now replicated by other taxicab aggregators with
customization to the local countries
In the business model, the Company is a Network Orchestrator that connects passengers with
drivers i.e., it manages a network of drivers and passengers through a phone application. It also
provides options and varieties in the transportation service
This means that there is no ownership of fleet or cars, coordinating passengers with drivers via
technology and sharing of the ride cost.
The On Demand Cabs Business Model in a Capsule:
Driver: Anyone with a driving license and a car can apply to become a driver in any of the
covered cities. After screening, the driver is enlisted in the system and given a smart phone. This
provides a steady income to anyone with a car without additional investment.
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Passenger: Registered users download the app to their phones and if they need a taxi, they call a
taxi via the app. They can also track the taxi on their phone as it approaches. This service is
convenient for the passengers, provides them relatively low cost comfortable service.
Fare and Payment: Company sets the taxi fares with Premium fare during peak hours and flat
rate for off peak hours. Passengers pay through their credit cards, cash or mobile wallets. The
fare is based on car type, distance and peak hour.
For more understanding on the pricing mechanism, please read Exhibit I
Dividing the Fare: Company divides the fare, usually 80% to the driver and 20% to itself. Even
after a 20% pay cut, the taxi drivers earn more than the traditional taxi services.
Future Growth – Company doesn‘t own any taxi. Because of that it can show a higher amount
of its earnings as profits. The company needs to invest in research and development for future
growth. The initial reinvestment will be a modest amount. In addition, there will be legal and
regulatory issues costs.
Driver entrepreneurs:
In the study by Goutam Das (August 2015), Uber‘s global model has heralded the rise of the on-
demand economy. In this model, the driver is more an entrepreneur than an employee. He
contracts his services and is on flexible employment triggering a change in labor market
dynamics.
This model is highly scalable because it is cost efficient. The responsibility rests with the driver
in owning, licensing, insuring and maintaining a car and not with the ridesharing company. The
model has found ready acceptance by the investors and has facilitated the rise of on-demand
start-ups across the world and in India. The deep pocketed investors subscribed to the approach
of the on-demand companies to garner market share and gain scale even as they made losses.The
comparative table of the ridesharing companies in the next section reflects the losses that they
are making.
4. Emerging Radioshare/Taxicab Start Ups
In December 2010, OlaCabs, popularly known as Ola, was founded in Mumbai by Bhavish
Aggarwal and Ankit Bhati, alumnus of Indian Institute of Technology, Mumbai. It has started as
an online cab aggregator and emerged as pre-eminent mobile app for personal transportation in
India. The cabs are reserved through Ola‘s web browser or a mobile app. The company develops,
markets and operates the Ola mobile app, which allows customers with smart phones to submit a
trip request which is then routed to Ola drivers who use their own cars. Calling a taxi cab with
the Smartphone is easy and the app is continuously upgraded. This cab service supports both
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cash and cashless payment options with Ola money. Through the introduction and facility of
cash payments, Ola created a very Indian service with an Indian business model.
In June 2011, the second taxicab aggregator TaxiForSure (TFS) was started in Bangalore by two
graduates from NIT Suratkal and IIM Ahmedabad, Aprameya Radhakrishna and Raghunandan G
(cf. TaxiForSure.com, website, http://www.helionvc.com). In 2013, the company expanded its
services to Chennai and Delhi. In 2014, the company expanded its operations to Ahmedabad,
Hyderabad, Baroda, Surat, Pune, Mysore, Udaipur and Rajkot. In all it operated in 36 cities.
Ola acquired TFS for $200 million in a cash and equity deal on 2 March 2015.TFS continues to
operate as a separate entity with the CEO Arvind Singhal heading the company(cf. Ghosh,
Debojyoti, March 2015)
Seeing the success of Radioshare start-ups like Ola Cabs/TaxiForSure, Radiotaxi operator Meru
Cabs also started providing cab aggregator services in June 2013 through their mobile
application and payment through cash, card or wallet christened Cab Wallet (cf. Meru
Wallet). Meru Cabs had embraced a hybrid model by augmenting its traditional radio taxi
services with the radioshare aggregator services. It currently operates in 23 cities in India.
In October 2013, Uber started operations in India by offering ride services with UberX (mid-
sized sedans that are costlier), UberBLACK (larger vehicles at premium pricing) and now
UberGO (hatchback vehicles or small cars that are the cheapest). Uber introduced UberGo in
India in November 2014 to compete at lower price levels from lower-cost real-time ridesharing
competitors like Ola. Globally, Uber accepts credit cards, debit cards, wallets and no cash
payments. However it has made an exception in India by keeping the local norms in mind and
from May 2015 started testing cash payments. The pilot project was started in the Indian city
Hyderabad(cf. Rao, Leena, website, http://www.TechCrunch.com).
Type
100% aggregated
Hybrid model
70% aggregated
Name
Ola Cabs
TaxiForSure
Uber India
Meru Cabs
Entry with
mobile app
2011
June 2013
October 2013
June 2013
Founded
December 2010 in
Mumbai
2011 in
Bangalore
Acquired by Ola
in March 2015
for $ 200
Million
June 2009 in San
Francisco
April 2007 in Mumbai
Company
ANI Technologies
Serendipity
Infolabs
Neeraj Gupta teamed
up with India Value
Fund
Cab booking
Only through app
Only through
Only through app
Call centers, website
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In competition, Ola provides different types of cab service ranging from economic to luxury
travel(cf. Ola aims to counter Uber with its Biz class service, website, http://www.timesofindia-
economictimes.com). Ola claims to clock an average of more than 150,000 bookings per day and
commands 60 percent of the market share in India(cf. Ola now has $250 – 300 M run rate,
website, http://www.vccircle.com).
For more details on the companies, please read Exhibit II
To complete the perspective on the taxi industry in India, it may be noted that besides the
radioshare aggregator business model, other new models of business operation are getting
visible.
Cab sharing business model
In January 2015, the cab sharing model was introduced in India by Bla Bla, acting as a facilitator
between the two parties travelling on the same route. This platform allows private vehicle
owners and other travelers inform each other about their travel plans. The company fixes a
ceiling on the cost of travel depending on the route to avoid unnecessary hassles later. This is a
relatively new model and how it pans out would be a function of its popularity and the regulatory
regime that is likely to evolve over time.
Self-drive business model
Zoom is working towards popularizing the self-drive model that is quite similar to the ones
followed by companies like Hertz and Avis in several developed economies. The company
provides a car on a rental basis to customers charging on an hourly/daily basis. The payment has
to be made in advance. In this model, the customer gets price advantage as the model eliminates
the cost of driver. Also there is the benefit on flexibility of time (cf. Amit Jain, Partner,
December 2015).
5.Radio Taxis versus Emerging Radioshare aggregators
As observed, the origin of the radio taxi industry was firmly rooted in the ownership model
wherein companies owned fleet of cars. The drivers were selected, trained and provided a
company-owned cab for which they had to pay a fixed amount (about Rs 1000 to Rs 1400 per
day) to the company every month. The fixed amount was estimated at about 20 to 30 per cent of
day‘s earning in fares (cf. G Seetharaman, March 2014).
app
and Apps
Payment
Cash payments
accepted
everywhere/wallet
option
Cash payments
accepted
everywhere/
wallet option
Cash payments
accepted in 6
cities
Paytm wallet,
Credit & Debit
cards
Cash payments
accepted
everywhere/wallet
option/Credit & debit
cards
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Under the Motor Vehicles Act, the radio taxi operators are not allowed to use any cabs that did
not have a commercial permit (cf. Terms and conditions for Radio Taxi Scheme, 2006, Transport
Department)
The cost to obtain a taxi permit was around Rs 200,000 in Mumbai (and at least Rs 150,000 in
many other cities) and the process was fraught with delays by the rigid bureaucratic working by
the Regional Transport Office (RTO). Further the fare meters of the radio taxi cabs had to be
calibrated every year by the RTO and as a result the ‗per kilometer‘ charges could not be altered
at will.
Whereas the new radioshare cab aggregators did not face any entry barriers and claimed that they
were not bound by the RTO regulations as they were technology platform providers and not
―typical cab operators‖. Moreover, it was easy for these aggregators to apply dynamic pricing by
updating meter charges using electronic billing systems that led to price wars.
Radioshare cab aggregators, a new phenomenon, connected drivers with a large number of
customers by giving the drivers better chances for effectively utilizing a depreciating asset.
Using web and mobile based technology, aggregators enhanced the driver‘s chances of getting
more trips per day and expanding their choice of trips. From the customer‘s viewpoint, they were
assured of competitive rates, accurate billing and higher safety as the cabs were tracked in real
time with known driver identity.
The growth of Radioshare cab aggregators prompted the Association of Radio Taxis in India
(ARTI) to demand government interference to regulate them(cf. Singh, Rajiv, October 2014).The
main point of contention was that aggregators could freely change taxi fares and had low
operations cost as they did not own their fleets. Many drivers employed by the traditional cab
companies and radio taxi operators found aggregators more attractive in light of the higher
earnings potential (cf. Layak, Suman, February 2015). As a result, small operators found their
operations becoming financially unviable.
6. Analysis of the Emerging Radioshare/Cab Aggregator Industry
To make and sustain profits, a firm has to respond strategically to competition. Beyond the direct
rivals, the firm has to understand four other competitive forces that influence profitability. These
are the bargaining power of the customers, the bargaining power of the suppliers, the threat of
substitutes and the threat of new entrants. By analyzing all the five competitive forces, a firm can
gain an understanding of what is influencing the profitability (cf Porter, Michael, HBR January
2008).
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The Five-Forces Model of Competition
Threat of
of Substitute products or services
Rivalry among
existing competitors
Bargaining power
of Suppliers
Threat of New Entrants
Bargaining power
of Buyers
Five Forces Framework – Cab aggregator
The five forces framework understanding for the cab aggregator industry is derived and based on
the data and facts of customer experiences shared in the website Quora (cf. How do Ola cabs
make money, website, http://www.quora.com)
Bargaining power of the customers
The bargaining power of the customers is high as there is no switching cost. The customer can
choose between Ola or Uber or Meru in the taxicab aggregator providers. Currently the
customers are given various incentives (viz discounts, coupons, referrals) to switch from
radiotaxis & other taxis to the new taxicab aggregator model adopted by Ola or Uber. Further the
intense rivalry between these two players is benefitting the end customer with never before seen
low prices like Rs 7/km as against the normal rates of Rs 20/km in the radiotaxi segment and for
that matter even the auto-rickshaw fares.
Ola is also servicing to meet the needs of the customer segment whose mode of local travel is by
auto-rickshaws. Here the selling proposition to the customer is the easy availability of the auto-
rickshaw at the door step of the customer with hassle-free no bargaining fares.
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To meet the needs of newer customer segment groups like working professionals who are hard
pressed for time, Ola and Uber are serving them at their doorstep for their grocery delivery
needs.
At peak time, the pricing of peak charges to the customer by the taxicabs is influencing the
bargaining power relationship.
Bargaining power of the suppliers
In the taxicab aggregator industry, the suppliers are the drivers.
On the meter billing for the distance travelled, the driver receives 85-88% of the fare. In other
words, the aggregator retains 12-15% commission for providing the driver with the ride. For
mini hatchback car driver, the commission taken by the aggregator is 12% while for sedan car
driver, the commission is 15%. Currently, the aggregators are assuring the drivers an opportunity
to earn minimum Rs 2000 daily by making available an incentive of Rs 500/- for 12 rides and Rs
750/- for 14 rides & above. The hard working drivers hope to earn as much as Rs 2800 – Rs
3500 per day after paying for his fuel cost, vehicle repairs & maintenance, insurance and other
costs.
The other costs pertain to the driver having to pay Rs 5000 per month to the aggregator for
sourcing the ride opportunities. To be more precise, it is Rs 1000 per month for the first three
months followed by Rs 5000 per month subsequently. This is lower than the rate of Rs 6000 per
month charged by the radio taxi operators like Fasttrack, Easy cabs etc.
On the revenue side, the driver can hope to earn further incentives that are as follows. Firstly,
should he do business of Rs 1.5 lakhs in three months, the commission by Ola is waived off.
Secondly, the driver can earn referral fees of 2 grams gold for referring other drivers. Thirdly,
the driver can get limited medical reimbursement and free education from Ola as a loyalty bonus.
A driver need not own a car. He can avail the equated monthly installment option by seeking a
long term lease of the car with an initial down payment of Rs 35000-Rs 50000 to Ola.
On registering with Ola, the driver receives a mobile android phone. The driver has the freedom
to log in and log out during the day. His car has to necessarily display the Ola sticker, else there
is a penalty.
It is observed that some drivers hedge their bets by becoming not only an Ola driver but also a
Uber driver as it gives them the cushion of more ride opportunities per day.
Rivalry between companies
The taxi industry in India is $ 6-9 billion size. In this industry, the organized market is 4-5%. The
rest 95-96% comprises of operators with 2 to 50 cars operating in 1 or 2 cities.
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At one level, there is the rivalry between cab aggregators (like Ola, Uber) with radiotaxi
operators (like Easy cabs, Fast track, Meru cabs etc). Seeing the demand switch of the customers
to taxicab aggregators, radio taxi players like Meru are adopting a hybrid model.
At another level, there is the rivalry amongst the cab aggregator themselves. The competition is
taking place on the price since the last couple of years. Ola loses Rs 4 per km as it pays more to
the driver than it charges the customer.
As a new start up with a new business model that aims to change the existing paradigm, the
focus is to gain traction by gaining a faithful customer base with support from venture capital
investors. With a dominant market share and economies of scale, the aggregator would enjoy the
advantage of more cabs with more control in providing cars on time leading to a network effect.
It is hoped then that there would be an oligopoly and therefore profitability by charging
respectable commissions and earning through customer data & advertisements in an industry
space that will not be fragmented.
However it is noticed that of late Ola stopped giving discounts/coupons to the customers
expecting that the now habituated customer will continue with the service from Ola at standard
fare rates as shown in Exhibit III. The exhibit also explains the peak charges that are charged
during busy hours and the rationale behind the same.
Substitutes
The substitute for the cab aggregators are the public transport, autos, radio taxis etc
New entrants
Ola Cabs is the first to enter this market in January 2011 followed by TaxiForSure six months
later. Uber entered this market in July 2013. Ola acquired TaxiForSure in March 2015.
7.Rivalry - OLA vs UBERvs Everybody Else
The write up in this section is based on the study by Goutam Das (August 2015).
Ola was the first to start in December 2010 in the cab aggregation market. It was followed by
TaxiForSure in June 2011. Meru Cabs that started in 2007 as a radio taxi company with
exclusive ownership model (it bought cars and employed drivers) began to shift in June 2013 to
the new aggregation model. Uber entered the India market in October 2013.
Ola introduced Ola Mini (small cars), a new service in February 2014. It dropped its Mini Rates
from Rs 13 to Rs 10/km and its Sedan rates from Rs 16 to Rs 13/km in August 2014. The Mini
rates were attractively low that compared to the auto fares. Its ability to offer such low fares
through discount rides for customers while giving incentives to its drivers stemmed from its
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financial stronghold. This led to a price war where TaxiForSure was forced to drop its prices in
November from Rs 200/10 kms to Rs 49/4 kms in all the cities that it operated.When the drivers
did not agree to such low prices, TaxiForSure committed to pick up the deficit and paid them Rs
150 to start with. As the number of trips to the driver increased, it made up for the deficit by still
paying Rs 75.
TaxiForSure could not sustain this predatory pricing from Ola as it could not raise the funding
required to discount customers and compensate drivers. In March 2015, it was acquired by Ola
for $ 200 million.
Ola continues to play the same game today with Uber India.It dropped its TaxiForSure hatchback
prices from Rs 14/km to Rs 7/km matching UberGO fares. The Ola‘s Sedan prices are slashed to
Rs 11/km.
Radio taxis like Meru, Mega, Easy cabs are far more expensive with their sedans not costing
below Rs 20/km. To thwart the competition, Meru has run since August 2014, a happy-hour
scheme with a 30% cash back offers from time to time with a radio promotion in Delhi urging
the customers to download its app.
Illustrated below is a table that shows the moves and countermoves of Ola Cabs and Uber India.
Month & Year
New Service/
Promotions
Ola Cabs
Uber India
October 2014
Autos
The auto app is
different from the
cab app.
Ola introduced autos on its
platform
In the case of autos,
requests are broadcast
within a 1 km distance and
the first auto that accepts
the request gets the
business. While in the case
of cabs, Ola directs the
request to the nearest cab.
Post December
2014, after the rape
incident by a Uber
driver in Delhi
Ensuring Passenger
Safety
All passengers need
to do is press the
SOS button which
will trigger a ‗SOS
alert‘ sent directly
to the local PCR
Introduced an in-app 'SOS'
button
The app sends real-time
SOS alert to the nearest
local police and also
include trip information like
the exact location of the
cab, the drivers ID and the
Introduced an in-app 'SOS'
button.
The app sends real-time SOS
alert to the nearest local
police and also include trip
information like the exact
location of the cab, the
drivers ID and the car
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(Police Control
Rooms). The
company safety
experts will set up
dedicated monitors
in PCR which will
beam the real time
location of the car.
car number.
number.
March 2015
Food delivery
service
Customers can order
through the Ola app and
Ola cabs will deliver the
order in quick time.
Ran promotions with
uberGOURMET, a gourmet
meal service curated by
celebrity chefs.
On-Demand
Grocery Business
Introduced the Ola Store
Mobile App named as Ola
Cafe‘.
While ordering any
product, the customer can
either ask for immediate
delivery or chose a time
between 9 AM to 11 PM.
For every order above Rs
250, delivery is free;
whereas Rs 30 would be
charged for delivering
orders below that amount.
Ola promises to deliver
products within 60 minutes
of their order.
Imagine a busy women
executive returning home in
a Ola cab after a lengthy
meeting in the office, and
ordering her favorite pizza
on the go, considering that
Ola Café is embedded right
into the main app.
In case Ola was inspired by
UberEssentials, which started
a similar grocery delivery
service in the USA but Uber
had to cancel this service
after just one month
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April 2015
Zomato, restaurant discovery
company integrated an Uber
button on its app that will
help its customer book cab to
the restaurant one wishes to
visit.
Ride for as low as
Rs 3.5/KM this
weekend
During summer, and with
that, the onset of festivals,
concerts, football matches,
comedy shows and lazy
Sunday brunches, Uber
offered 50% discount on
UberGO on all rides
Autos
The auto
aggregation is
picking up pace and
is expected to
change the
landscape of the
three wheeler
market
Announced the introduction
of autos
May 2015
Inter City Services
For the first time, launched
inter-city services called
UberINTERCITY. The
service has been launched for
travel between Mumbai and
Pune. Unlike based-on-
distance pricing, the Pune-
Mumbai or vice-versa ride
rate is fixed at Rs. 3999/-
July 2015
Free rides in any
super car for 15
min
Uber has partnered with
Droom, a leading online
market place for cars, to
provide free ride in Ferrari,
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Hummer & Lamborghini.
This special ride is only valid
for Delhi users, and between
1 PM to 4 PM.
September 2015
Disguised phone
numbers for riders
and drivers in India
Deployed disguised phone
numbertechnology in India.
This ensures that all calls
between riders and driver-
partners are connected using
anonymous phone numbers
— so both sides can
communicate with each other
to coordinate a pick-up
without revealing their
personal phone numbers.
Wifi Cab
Entered into an innovative
collaboration with Bharti
Airtel – the largest wireless
carrier in India and third
largest wireless carrier in the
world.
Through this partnership,
riders in India can pay for
their trips with Airtel‘s
mobile wallet, Airtel Money.
Additionally, Uber riders in
Bangalore, Hyderabad,
Kolkata, Mumbai and Delhi
will now be the first in India
to enjoy free high-speed
internet from Uber, powered
by Airtel 4G. Free WiFi will
come to uberX and
uberSUV only, and there
will be no facility in uberGO.
Share a ride and
Split the cost
Launched in Bangalore, with
uberPool, passengers will be
able to share a ride—and
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split the cost—with another
person who happens to be
requesting a ride along a
similar route in your city.
When the app finds a match,
it notifies one of his co-
rider‘s first name.
Two Free rides to
Apollo hospital for
health check up
Partnering with Apollo
Hospitals in 11 cities to avail
a free ride to and from any
Apollo Hospital across 11
cities in India on booking a
health check.
All new Uber users will be
provided with a promo code
by Apollo which will give
them two free rides worth
INR 250 each.
Existing Uber users can avail
a 10% discount on Apollo
Personalized Health Check
(APHC) & DNA+ from
Datar Genetics, which is
being offered along with the
APHC, and a 15% discount
on Apollo Heart check and
Whole Body check.
New Long Distance
Fares
Introduced a change in
pricing for long distance
trips. After 16 KMs one will
be charged an additional fare
for every KM that one rides
in an uberX or uberGO. The
company claims that even
after this price change it will
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continue to be most
affordable choice for airport
trips. The new prices ensure
availability and reliability
when one needs an Uber the
most, no matter the time or
the destination.
Uber tied up with Airtel
India to allow its customers
to pay using Airtel mobile
wallet service (cf. Airtel Uber
tie up, The Hindu, September
2015). It also allows users to
use Airtel 4G data at no
charges (cf. Brustein, Joshua,
website, The New York
Times, May 2015).
Today, Uber has the largest funding of $ 10 billion globally with its commitment of $ 1 billion
for nine months in India translating to a monthly spend of $111 million. While Ola has raised a
disclosed amount of $652 million and is in the process of securing another $ 500 million and this
would be a good ammunition to retain its lead which it claims stands at 0.75 million trips/day.
Amit Jain, the President of Uber India, announced that the funds will be used to expand and
improve operations, expand into newer cities, develop new products that includes payment
solutions and establish a good support network. He expects Uber India to reach a target of 1
million trips/day by March 2016 from the current figure of 0.2 million trips/day with a robust
40% growth rate month on month.
Uber's move is similar to e-commerce major Amazon. Having lost the early mover advantage to
local rival Flipkart, Amazon has committed big money to expand in India, its fastest growing
market globally.
Both Ola and Uber, continue to pursue market share with aggressive discounts for passengers
and incentives for drivers. The market share of Ola and TaxiForSure combined is 74 per cent.
Meru's share has declined to 16 per cent while that of Uber is at five per cent. All other taxi
companies account for the rest (Figures as of November 2014).
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(cf. ―India‘s organized taxi market is dominated by ola‖, website,
https://qzprod.files.wordpress.com/2015/03)
Type
100% aggregated
Hybrid model
70% aggregated
Name
Ola Cabs
TaxiForSure
Uber India
Meru Cabs
Operations
102 cities
47 cities
18 cities in
India. First city
to launch in
India was
Bangalore
23 cities in India
Market share
(Nov 2014)
60%
14%
5%
16%
250000 cab drivers +
65000 auto et al
150000 cab
drivers
750000 trips/day,
claim disputed
(August 2015)
200000
trips/day
(August 2015)
Funding
raised as of
July 2015
$ 700 Million +
$ 64 Million
$ 1 Billion –
India specific
(Global $ 6
Billion)
$ 125 Million
Investors
DST Global,
Accel
Lowercase
India Value Fund
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Softbank, Falcon
Edge, Sequoia,
Steadview, Matrix,
Tiger Global etc
Partners,
Helion
Venture
Partners,
Blume
Ventures etc
capital, Menlo,
First Round,
benchmark,
Goldman
sachs, Google
ventures,
Baidu
Tata Capital
and Times of
India Group
invested in
Uber in its
latest funding
round where it
raised $1.2
billion led by
China's
Hillhouse
Capital Group
and other
investors.
Total Income
in Rs crores
(2013-14)
51.05 (Previous year
16.41)
2.26 (Previous
year NA)
PAT in Rs
crores (2013-
14)
-34.22 (Previous
year -22.80)
0.07 (Previous
year NA)
3.56 (previous year -
31.11)
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Developing a strategy in a newly emerging industry is a daunting task. Facing uncertainty,
imitation is rampant. Unable to risk going wrong or being left behind, the rivals will attempt to
match all new services and explore all new technologies. Explosive growth can make such times
profitable for many companies but profits will be temporary because imitation will ultimately
destroy industry profitability. The companies that will become enduringly successful will be
those that begin as early as possible to define and embody in their activities a unique competitive
position (cf Porter, Michael, HBR December 1996). The unique activities will translate to better
availability of cars, better handle on operations i.e. balancing demand & supply and improving
car utilization and therefore better service to the customer and profitability for the firm.
8. Controversies
In the study by Goutam Das (August 2015), it is noted that thecity governments are getting
increasingly concerned about the safety of its commuters. They are also concerned whether these
cab aggregator companies are meeting the local transport regulations.
For instance, Delhi has been the hotbed of legal tussles ever since the unfortunate Uber rape
incident in December 2014.
The Delhi Transport Authority in early 2015 questioned the credibility and required verification
of drivers plying Ola cabs, along with other competitors like Uber and TaxiForSure. The inquiry
has revealed that approximately 80% of drivers amongst all services did not possess permits to
ply commercial transport services in Delhi(cf. "80% of Uber, Ola cabs don’t have permits to
ply in Delhi, says minister", The Indian Express, 19 June 2015).
The Delhi Government has banned the services of app-based aggregators that were not compliant
with the Modified Radio Taxi Scheme of Delhi‘s Transport Department. Ola has taken a position
that it does not require such a license as its cab drivers have ALL India Tourist permits (AITP).
However AITP cabs violate a Supreme Court order that mandates the commercial vehicles in the
city to run only on the less polluting compressed natural gas (CNG) as these cabs run on diesel.
Both Ola and Uber have continued to operate in Delhi without a Radio taxi license with the
government finding it difficult to implement the ban. In the meantime, the Delhi government
refused the radio taxi licenses to the applications made by these companies.
In July 2015, when Ola approached the Delhi High Court to seek the quashing of the ban, the
court refused to provide interim relief citing that it failed to comply with the ban since January
and the use of CNG vehicles as against the diesel ones. It remains to be seen as to how the cab
based aggregators would respond to the court‘s stand. In the meantime, Uber came out with a
press statement requesting the government to explore solutions that balance the right to
livelihood of several thousand drivers while creating a favorable environment that supports a
transition to cleaner fuel alternatives and more efficient transportation models.
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9.Conclusion
The app based radiosharing companies givecustomers a choice between regulated taxi cab
companies and other modes of transportation. It provides drivers with "flexible and independent
jobs".Many users enjoy the fact that one can watch the car approach on their smartphone so they
know as to when it will arrive and that they don't need to take a credit card or cash with them, as
the money is automatically deducted from their account, with a receipt automatically sent to their
email.As these radiosharing cab aggregators do not require cars to be hailed, the customers in
less built up neighborhoods will enjoy the convenience of getting easily picked up.
Ridesharing services are growing in popularity across the globe – Sidecar, Lyft, Haxi, HeyTaxi,
Didi Kualdi etc. It is because the following three stakeholders find value in them: customers who
can travel in a sedan at low cost fares, drivers who have the potential to earn much more with
flexible schedules and investors who continue to fund these companies.The regulatory
environment will keep on evolving over time and will have to keep pace with ever changing
needs. The taxicab industry is poised towards a bright future in the wake of ever increasing
passenger conveyance demands of more than a billion Indians.
References
1. ―All India and state-wise number of taxed and tax-exempted motor vehicles registered in
India‖, website, www.data.gov.in/catalog/
2. "Airtel-Uber tie-up", website,
http://www.thehindu.com/news/cities/Hyderabad/airteluber-tieup-comes-to-
city/article7653810.ece, September 15, 2015, retrieved September 22, 2015
3. Amit Jain, Partner, BMR & Associates LLP (with inputs from Dhiraj Agarwal and
Gaurav Mittal), website, http://forbesindia.com/blog/economy-policy/horse-carriages-to-
taxicabs-new-paradigm-in-road-passenger-conveyance-in-india/#ixzz3vFyr7KBi (14
December 2015)
4. Brustein, Joshua (16 May 2011),"The Smartphone Way to Beckon a Car", The New York
Times, Retrieved 25 September 2015
5. G Seetharaman, ―Radio cab Businesses face tougher Mumbai ride; Search for viable
Business model On‖, Economic Times, March 9, 2014,
http://articles.economictimes.indiatimes.com/2014-03-09/news/48029457_1_meru-cabs-
sambhaji-bhosale-meru-driver, accessed
6. Ghosh, Debojyoti ―Ola acquires TaxiForSure for $ 200 million in a bid to compete with
Uber‖, website, http://forbesindia.com/article/special , accessed on 15 December 2015
7. Goutam Das, ―Taxi Wars‖, Business Today, August 30, 2015
8. "Indian car rental industry – opportunity to build an Indian travel
brand". http://www.ibef.org. Ibef.
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9. ―How do Ola cabs make money‖, website, http://www.quora.com)
10. ― India‘s organized taxi market is dominated by ola market share‖, website,
https://qzprod.files.wordpress.com/2015/03/india-s-organized-taxi-market-is-dominated-
by-ola-market-share_chartbuilder.png?w=640
11. Layak Suman ―Radio Cabs & taxi aggregators like Meru, Uber in acquisition mode with
eye on certified drivers‖ Economic Times, February 15, 2015,
http://articles.economictimes.indiatimes.com/2015-02-15/news/59166855_1_taxi-
operators-avinash-gupta-bookmycab
12. "Meru Wallet", website, http://www.merucabs.com
13. ―Mobile-Internet-users-in-India-to-double-by-2017-says-study‖, website,
http://www.livemint.com/Industry/VThUq5I4BivpTDZdQb5sNN/Mobile-Internet-users-
in-India-to-double-by-2017-says-study.html, accessed on 10/10/2015
14. Ola cabs, website, https://en.wikipedia.org/wiki/Ola_Cabs
15. "Ola aims to counter Uber with its Biz-class service",timesofindia-economictimes, Ola
aims to counter Uber with its Biz-class service, ET Bureau Sep 2, 2014,
http://articles.economictimes.indiatimes.com/2014-09- 02/news/53479832_1_ola-
cabs-taxiforsure-uber
16. "Ola now has $250-300M annual gross transaction run rate; peek at its numbers -
VCCircle". vccircle.com.
17. ―Ola raises $ 500 million in series F funding‖, website,
http://forbesindia.com/article/special /ola-raises-$500-million-in-series-f-
funding/41569/1#ixzz3vFuyBi3z
18. Porter, M.E ―What is Strategy?‖p.17, Harvard Business Review, November – December
1996
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Chicago". TechCrunch. AOL
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tweak business models,‖ Economic Times, October 26, 2014,
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booking-app-easy-cabs
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Retrieved 7 August 2015
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of NCT of delhi, www.delhi.gov.in/DoIT/DoIT_Transport/trrs31.pdf, accessed
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26. Uber, website, https://en.wikipedia.org/wiki/Uber
27. "80% of Uber, Ola cabs don‘t have permits to ply in Delhi, says minister". The Indian
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dont-have-permits-to-ply-in-delhi-says-minister/
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EXHIBIT I: PRICING MECHANSIM OF RADIOSHARE CAB AGGREGATORS
Pricing and Payments
Uber's pricing is similar to that of metered taxis, although all hiring and payment is handled
exclusively through Uber and not with the driver personally. In some cities, if the Uber car is
travelling at a speed greater than 11 mph (18 km/h), the price is calculated on a distance basis,
otherwise, the price is calculated on a time basis (cf. Krystal Peak, December 2011). At the end
of a ride, the complete fare is automatically billed to the customer's credit card. Uber has said its
prices are the premium that the customers pay for a cab service that is not only reliable, but also
punctual and comfortable (cf. Arrington, Michael, March 2011; Source: Wikipedia).
Rating score
Users of the app may rate drivers; in turn, drivers may rate users. A low rating might diminish
the availability and convenience of the service to the user
Surge Pricing
Uber uses an automated algorithm to increase prices to "surge" price levels, responding rapidly
to changes of supply and demand in the market, and to attract more drivers during times of
increased rider demand, but also to reduce demand. Customers receive notice when making an
Uber reservation that prices have increased (cf. Kedmey, Dan, December, 2014; Source:
Wikipedia).
The company applied for a US Patent on surge pricing in 2013 and awaits its approval. A few
other applications related to its operations were rejected for being obvious(cf."Uber Is Trying to
Patent Its Surge Pricing Technology", website, http://time.com/3642714/uber-surge-pricing-
patent/, December 19, 2014)
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At the core of Uber‘s success is its data and algorithmically fuelled approach to matching supply
and demand for cars. Uber says that Prices go up to encourage more drivers to go online. The
increase in price is proportionate to demand. Price surging can work in any of three ways:
1) By reducing demand for cars (less people want a car for a higher price)
2) By creating new supply (providing an incentive for new drivers to hit the roads)
3) By shifting supply (drivers) to areas of higher demand.
Uber rates are increased to ensure reliability when demand cannot be met so that it encourages
more drivers to be available during high demand. Uber‘s stated goal of the policy is to increase
the supply of drivers and ensure that cars are still available. The actual surge price is set by an
algorithm designed to make sure there is always a car available within a city within 20 minutes.
Uber lowers prices during periods of slack demand. The actual surge price is set by Uber based
on their guess about how much more demand there will be. To measure and predict demand,
Uber‘s system constantly tracks ride-request patterns in different parts of the city. It also
downloads weather-forecast data to get an idea of when to expect harsh conditions, and
employees are stay keenly aware of special events in the city that could affect demand and
traffic.
On days of skyrocketing demand, such as New Year eve, special days, Uber still promises
everybody will get a car. How? The solution is by publishing a heat map to the drivers.
But even a heat map isn‘t a flawless solution, because if every driver got to see the heat map,
they would all gravitate toward the same areas and leave the rest of the city dry. For this reason,
Uber publishes the heat map to drivers in a gradual manner, so a few get it at a time. Who gets
the map, and when, and how much of it is another complex math problem to explore. In the Uber
office, operations managers watch a screen showing a ―God View‖ of the entire city, which
displays all the active Uber cars in real time to ensure quality is maintained on the system at all
times. Only some of its employees have access to "God View", or a real-time aerial view of the
movement of its cars. This tool is available only to "employees working in operations or other
areas, like fraud prevention,"
The practice has often caused passengers to become upset and invited criticism when it has
happened as a result of holidays, inclement weather, or natural disasters. During New Year's
Eve 2011, prices were as high as six times normal rates, causing outrage (cf. Clay, Kelly,
October 2011; Source: Wikipedia). During the 2014 Sydney hostage crisis, Uber implemented
surge pricing, resulting in fares of up to four times normal charges; while it defended the surge
pricing at first, it later apologized and refunded the surcharges. Uber CEO Travis Kalanick has
responded to criticism by saying: "...because this is so new, it's going to take some time for folks
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to accept it. There's 70 years of conditioning around the fixed price of taxis (cf. Susan Decker
and Serena Saitto, December 19, 2014).
Uber released a post detailing why surge pricing is in place and how it works (cf. Kedmey, Dan,
December 2015; Source: Wikipedia). They emphasized that without surge pricing Uber would
not have its trademark service of pushing a button and getting a ride in minutes. This is detailed
in a case study around a sold-out-concert at Madison Square Garden when surge pricing took
effect. During this event, the number of people who opened the app increased 4x, but the actual
ride requests only rose slightly, enabling ride requests to be completed with the usual ETAs.
References
1. Arrington, Michael (March 2, 2011). "A Week With Uber And This Blogger Is Totally
Hooked". TechCrunch. AOL, website,http://techcrunch.com/2011/03/02/a-week-with-
uber-and-this-blogger-is-totally-hooked/; Sourced: https://en.wikipedia.org/wiki/Uber
2. Clay, Kelly "Is Uber Really a Good Alternative to Taxis?", website,
http://www.lockergnome.com/social/2011/10/27/is-uber-really-a-good-alternative-to-
taxis/, October 27, 2011; Sourced: https://en.wikipedia.org/wiki/Uber
3. Kedmey, Dan, "This Is How Uber‘s ‗Surge Pricing‘ Works", website,
http://time.com/3633469/uber-surge-pricing/, December 15, 2014; Sourced:
https://en.wikipedia.org/wiki/Uber
4. Krytsal Peak, "Uber pulls in another $32M for app-based car service".VatorNews,
website, http://vator.tv/news/2011-12-07-uber-pulls-in-another-32m-for-app-based-car-
service, December 7, 2011. Retrieved October 10, 2015
5. Susan Decker and Serena Saitto,"Uber Seeks to Patent Pricing Surges That Critics Call
Gouging", website, http://www.bloomberg.com/news/articles/2014-12-18/uber-seeks-to-
patent-pricing-surges-that-critics-call-gouging, December 19, 2014.
6. "Uber Is Trying to Patent Its Surge Pricing Technology", website,
http://time.com/3642714/uber-surge-pricing-patent/, December 19, 2014
7. Uber, website, https://en.wikipedia.org/wiki/Uber
EXHIBIT II: PROFILES OF RADIOSHARE CAB AGGREGATORS
OLA CABS
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OlaCabs has emerged as pre-eminent mobile app for personal transportation in India. Ola as it is
popularly known started as an online cab aggregator in Mumbai. It was founded in December
2010 and launched in January 2011 by the alumnus of Indian Institute of Technology Bombay,
Mr Bhavish Aggarwal (currently CEO) and Mr Ankit Bhati (CTO). Ola is owned by ANI
Technologies Pvt Ltd(cf. Ola Cabs, website, wikipedia).
In November 2014, Ola expanded to incorporate autos on-trial basis in Bengaluru(cf. Now Book
Auto Rickshaws in Bangalore via Ola Cabs, NDTV Gadgets). Post the trial phase, Ola Auto
expanded to other cities like Delhi, Pune and Chennai.
Today it is India‘s largest online and mobile cab hailing service and valued at $ 2.5 billion, the
third highest vaued consumer internet company in India. It has won the Forbes India Leadership
award as an outstanding startup because it has become a market disruptor in the personal
transportation space and is going beyond just cab services. Its mobile app can be used to book
from over 250000 cabs and 65000 vehicles across auto rickshaws, black & yellow taxis and bus
shuttle services (cf. ola taking india on a ride, website, http://forbesindia.com).
With over 350,000 vehicles registered on its platform, Ola continues to be the first choice for
customers and driver-partners across 102 cities in India with over 1 million booking requests a
day (cf. ola raises $ 500 million in series F funding, website, http://forbesindia.com).
Acquistion
In March 2015, Ola acquired TaxiForSure (founded by Aprameya Radhakrishna and
Raghunandan G) that had a presence in 47 cities with over 15000 vehicles registered on its
platform. Post the acquisition, TaxiForSure continued to operate as an independent entity with its
leadership team and 1,700 employees with Arvind Singhal leading as the new CEO (cf. Ola
acquires TaxiForSure for $ 200 million in a bid to compete with Uber, website,
http://forbesindia.com/article/special)
Funding
Till date, Ola had received six rounds of funding. In 2012, Ola raised an undisclosed amount in
Series A funding from US-based Tiger Global Management. In 2013, Ola received Series B
funding from Matrix Partners and Tiger Global.
In July 2014, Ola raised Rs 250 crore from Steadview Capital and Sequoia Capital. In October
2014, Japan‘s SoftBank Internet and Media led a Series D funding of $210 million (about Rs
1,281 crore), one of the largest fund raising in the Indian consumer technology and mobile space.
Existing investors Tiger Global, Matrix Partners India and Steadview Capital also participated in
the round. Ola also has angel funding from Rehan Yar Khan, Anupam Mittal of Shaadi.com and
Snapdeal co-founder Kunal Bahl. (cf. ola acquires TaxiForSure for $ 200 million in a bid to
compete with Uber, website, http://forbesindia.com/article/special).
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In November 2015, Ola closed $500 million in its Series F funding round. Baillie Gifford, Falcon
Edge Capital, Tiger Global, SoftBank Group, DST Global and Didi Kuaidi participated in this
round. Ola will use these funds to further accelerate its growth in the Indian market with a focus
on building mobility for a billion people (cf. Ola raises $ 500 million in series F funding.
Website, http://forbesindia.com/article/special).
Interestingly, Ola also roped in Ratan Tata, chairman emeritus of Tata Sons, the private holding
arm of the business conglomerate, as a small shareholder
Employee Relations
Ola Cabs tied up with Avanti Learning Centres for a good cause. The drivers who are associated
with Ola can get their children studying in the ninth and tenth standard to the learning centre and
avail free education (cf. Wikipedia).
References
1. Ghosh, Debojyoti ―Ola acquires TaxiForSure for $ 200 million in a bid to
compete with Uber‖, website, http://forbesindia.com/article/special , accessed on
15 December 2015
2. ―Now book auto rickshaws in Bangalore via Ola Cabs‖, website,
http://gadgets.ndtv.com/apps/news, accessed on 15 December 2015
3. Ola cabs, website, https://en.wikipedia.org/wiki/Ola_Cabs
4. ―Ola taking India on a ride‖, website, http://forbesindia.com/article/leaderhip-
awards-2015, accessed on 15 December 2015
5. ―Ola raises $ 500 million in series F funding‖, website,
http://forbesindia.com/article/special, accessed on 15 December 2015
TAXI FOR SURE
TAXI FOR SURE (Now acquired by OLA)
History
Taxiforsure.com is run by Serendipity Infolabs, which was started in June 2011 by two graduates
from NIT Suratkal and IIM Ahmedabad, Aprameya Radhakrishna and Raghunandan G based in
Bangalore (cf. TaxiForSure.com, website, http://www.helionvc.com). It is a taxi aggregator
company and provides facility to book a cab through calling, through their website or through
their mobile application.
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Funding
TaxiForSure raised seed funding from Accel Partners, Helion Venture Partners, Blume Ventures
(Unknown Amount) (2012) and followed a similar trajectory to raise $4 million followed by a
round of $10 million in 2014 (cf. Ramalingegowda, Chaitanya & Shrivastava, Manu, June 2014,
www.yourstory.com).
In early 2014, TaxiForSure had raised $50 million in series C round of funding (cf. Soni, Alok,
December 2014, www.yourstory.com).
Acquired
Ola (formerly Olacabs), the mobile app for personal transportation acquired TaxiForSure for
$200 mn in a cash and equity deal. With this deal, Ola, which is already the market leader in
the personal transportation space has further deepened its footprint with TaxiForSure‘s operator
led model. TaxiForSure is currently in 47 cities with over 15,000 vehicles registered on its
platform (cf. Soni, Alok, March 2015, www.yourstory.com)
References
1. Ramalingegowda, Chaitanya & Shrivastava, Manu, ―Clash of the Titans: Olavs
TaxiForSure vs Uber, website, http://yourstory.com/2014/06/ola-taxiforsure-uber/
2. Soni, Alok, website,http://yourstory.com/2015/03/ola-acquires-taxiforsure/
3. Soni, Alok, website,http://yourstory.com/2014/12/taxiforsure-nano-taxi-tata-motors/
4. TaxiForSure, website, https://en.wikipedia.org/wiki/TaxiForSure
5. http://www.taxiforsure.com
Meru Cabs:With the success of Ride Share start ups like Ola cabs, TaxiForSure in the Rideshare
services, Meru cabs started providing services through their mobile application and payment
through cash, card or wallet christened Cab Wallet. Meru Cabs wallet feature enables zero-click
checkout, i.e. one can book a cab, and the ride fare will be automatically deducted from one‘s
wallet once the ride is over (cf. meru-wallet)
First launched in Mumbai in April 2007, Meru Cabs has grown consistently terms of fleet size
and geographical presence. Headquartered in Mumbai, Meru Cab provides a radio taxi service in
seven key cities of India - Mumbai, Delhi, Hyderabad, Bengaluru, Jaipur, Ahmedabad, Chennai
Vadodara, Surat, Pune & Kolkata. Meru Cabs delivers a reliable taxi service by concentrating on
each touch point with its customers and devising systems, processes or technologies that will
deliver a reliable interface. Meru Cabs uses GPS/GPRS enabled technology in all of the cabs to
ensure complete passenger safety.
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Meru Cabs launched in Mumbai with 45 cabs in 2007; started operations in 2008 at Delhi,
Hyderabad & Bengaluru. It extended its services Jaipur & Ahmedabad in 2013 and Chennai by
March 2014. It partners with the airports at Mumbai, Delhi, Hyderabad & Bengaluru. It scaled to
a fleet of 6000+ cabs with more than 20,000 trips per day and serving more than 1.8 million
passengers.
It is one of the few transportation companies in the world to deploy an Oracle ERP and Siebel
CRM. It won the 'Best IT User Awards' by NASSCOM CNBC TV-18 in 2008, 2009 &
2010,Times Honour Award 2012 & Trip Advisor Traveller's Choice 2013.
Meru training academy believes that the critical difference between an ordinary taxi service and
a Meru Cabs service lies in the investment that they make into training their chauffeurs. After
meeting criteria like address verification, medical checkup, driving skills etc, the academy puts
the drivers through an intensive 5-day training program where knowledge on customer service,
hygiene, safe driving habits, how to handle an emergency is imparted.
It currently operates in 23 cities in India
References
1. http://www.merucabs.com
2. "Meru Wallet", website,http://www.nextbigwhat.com/meru-wallet-297/
Uber Technologies Inc. is an American international transportation network
company headquartered in San Francisco, California. Founded in the year 2009 by Travis
Kalanick and Garrett Camp, the company develops, markets and operates the Uber mobile app,
which allows consumers with smart phones to submit a trip request which is then routed to Uber
drivers who use their own cars (cf. Goode, Lauren, June 2011), (cf. Rusli, Evelyn, June 2014;
Source: Wikipedia).
Beginning in 2012, Uber expanded internationally. By end 2015, the service was available in 68
countries and 372 cities worldwide (cf. website, http://www.Uber.com). Since Uber's launch,
several other companies have copied its business model, a trend that has come to be referred to
as "Uberification"(cf. Huffington Post, January 2015).
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Uber started its operations in India in October 2013 and is already present in 18 cities.
In the study by vccircle (July 2015), Uber counts Bangalore and Kolkata as two of its fastest
growing cities globally. Uber Technolgies Inc, one of the two most valued startups globally
along with Chinese smartphone maker Xiaomi, is leaving no stone unturned to make India its
biggest global playground and take on local competitor Ola.
Funding
Uber is one the world‘s strongly funded startups. In the past, Uber has raised funding from
marquee investors like Fidelity Investments, Wellington Management, BlackRock Inc, Summit
Partners, Google Ventures, Menlo Ventures, New Enterprise Associates (NEA) and Qatar
Investment Authority. Uber was valued at $40 billion during its last round in December 2014.
At least two Indian family offices invested in Uber in its latest funding round where it raised $1.2
billion led by China's Hillhouse Capital Group and other investors.Both these family offices have
significant exposure to India's burgeoning technology services and the internet space. One is the
Times Internet Ltd, the digital arm of the Times of India Group, had inked a commercial
marketing partnership with Uber which also included a small undisclosed investment to facilitate
Uber's expansion in India. The other is the Tata Capital's flagship private equity fund Tata
Opportunities Fund (TOF)
References
1. "Apple Pay's Real Killer App‖: The Uber-ification of Local Services", Huffington Post.
Retrieved August 10, 2015; Sourced: https://en.wikipedia.org/wiki/Uber
2. Goode, Lauren, "Worth It?An App to Get a Cab", The Wall Street Journal. Dow Jones &
Company. June 17, 2011, Retrieved August 10, 2015
3. Rusli, Evelyn, "Uber Dispatches trips", Wall Street Journal, June 6, 2014,
Retrieved August 10, 2015
4. http://www.vccircle.com/news/technology/2015/08/19/tata-opportunities-fund-invests-
uber
5. http://www.vccircle.com/news/technology/2015/07/31/uber-readies-1b-war-chest-india-
take-ola
6. Uber, website, https://en.wikipedia.org/wiki/Uber
EXHIBIT III: STANDARD FARE RATES OF OLA CABS AND THE PEAK
CHARGES
The popular cars that are provided as Taxi Cab for service to the riders by Ola Cabs are the
following viz Toyota Innova, Tata Indica, Tata Indigo, Chevrolet Tavera, Mercedes Benz. The
standard fare rate varies from city to city. Given below is for three cities – Mumbai, Delhi and
Bangalore (cf. website, https://www.olacabs.com/fares/, accessed on 26 December 2015)
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MUMBAI
Standard Rate
Category
Minimum Bill
Extra km
charges
Wait time
charges
Ride time charges
Prime**
Rs 100 for first 4
Km
Rs 13 per Km
N/A
Rs 1 per Min (Post 5
Min)
Economy
Sedan**
Rs 100 for first 4
Km
Rs 13 per Km
N/A
Rs 1 per Min (Post 5
Min)
Mini**
Rs 100 for first 4
Km
Rs 11 per Km
N/A
Rs 1 per Min (Post 5
Min)
* Ride time includes total time from the pickup time to drop time.
Extra charges
Peak Time Surcharge
Surcharge may be applicable during peak hours and
will be conveyed during the booking.
Service Tax**
Additional Service tax would be applicable on the
bill amount.
* Tolls and tax will be charged as applicable.
Ola Advantage
No night charges
Transparent pricing
Invoice mailed at the end of ride
DELHI
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Standard Rate
Category
Minimum Bill
Extra km charges
Wait time charges
Ride time charges
Economy Sedan**
Rs 100 for first 4 Km
Rs 11 per Km
N/A
Rs 1 per Min
Prime**
Rs 100 for first 4 Km
Rs 11 per Km
N/A
Rs 1 per Min
Mini**
Rs 100 for first 4 Km
Rs 8 per Km
N/A
Rs 1 per Min
* Wait time includes time taken to board the cab after pickup time as well as waiting during the
trip.
* Ride time includes total time from the pickup time to drop time.
* Wait time is chargeable.
Extra charges
Peak Time Surcharge
Surcharge may be applicable during peak hours and
will be conveyed during the booking.
Service Tax**
Additional Service tax would be applicable on the
bill amount.
* Tolls and tax will be charged as applicable.
* For all pick-ups within Delhi, Mini rates would be applicable.
* For pick-ups outside Delhi, in NCR region, rates would be as per the rate card for each
category.
Ola Advantage
No night charges
Transparent pricing
Invoice mailed at the end of ride
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BANGALORE
Standard Rate
Category
Minimum Bill
Extra km
charges
Wait time charges
Ride time charges
Mini**
Rs 80 for first 4
Km
Rs 10 per Km
N/A
Rs 1 per Min (Post 5
Min)
Prime**
Rs 75 for first 3
Km
Rs 13 per Km
N/A
Rs 1 per Min (Post 5
Min)
Economy
Sedan**
Rs 100 for first 4
Km
Rs 13 per Km
N/A
Rs 1 per Min (Post 5
Min)
Airport Rate
Category
Minimum Bill
Extra km
charges
Wait time charges
Ride time charges
Prime**
Rs 600 for first 30
Km
Rs 16 per Km
Rs 2 per Min (Post 10
Min)
N/A
Economy
Sedan**
Rs 600 for first 30
Km
Rs 16 per Km
Rs 2 per Min (Post 10
Min)
N/A
Mini**
Rs 540 for first 30
Km
Rs 13 per Km
Rs 2 per Min (Post 10
Min)
N/A
* Wait time includes time taken to board the cab after pickup time as well as waiting during the
trip.
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* Ride time includes total time from the pickup time to drop time.
* Wait time is chargeable.
Extra charges
Peak Time Surcharge
Surcharge may be applicable during peak hours and
will be conveyed during the booking.
Service Tax**
Additional Service tax would be applicable on the
bill amount.
* Tolls and tax will be charged as applicable.
Ola Advantage
No night charges
Transparent pricing
Invoice mailed at the end of ride
PEAK TIME CHARGES
The answer to the question ―What is OLA‘s peak time charge?‖ and the rationale behind it is
very well explained in the FAQs section of Ola Cabs website.
Before knowing about OLA‘s peak time charge, it is important for one to know how OLA works.
Q: What is OLA’s business model?
OLA is an online marketplace for valid permit holder drivers (duly authorized & verified by the
Transport Authorities).
These drivers are independent and they are either self-employed (own their commercial
vehicles), or work for an Operator who owns multiple cars.
Like you have an OLA app on your smart phone to book a cab, these drivers have a similar
Driver mobile App on their smart phones. We activate the Driver app after a thorough check of
authenticity and conducting due diligence of the commercial & personal papers of the driver &
operator. These drivers decide their own time to login to the OLA application and accept
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requests for rides from customers. They may choose to remain logged out of the system as per
their convenience.
Q: What is OLA’s peak time charge?
OLA peak time charge is a fare-rationalizing rule of using a multiplier X or a flat surcharge to
the standard fares causing the fare to be higher than the standard fare during certain times the
day; i.e. if X is 1.2 during some point of time then the standard fare will be multiplied by 1.2 to
get the final fare.
Q: Why is there a need to apply a surcharge to one’s standard fare?
OLA being a marketplace doesn‘t control the number of vehicles online on its system/platform;
verified drivers & operators are independent & work as per their convenience. During a normal
day when demand & supply are met, there is no need to put an extra effort to pull the supply side
of vehicles.
OLA has observed that during certain times of the day, when more traffic is on road, routine
drivers tend to log out of the system to suit their convenience as there is no incentive for them to
put an extra effort. Similarly, when demand suddenly increases, not enough drivers might be
available on the road. Customers might be inconvenienced by not being able to find cabs during
such times.
As a system/solutions provider OLA has limited options to motivate the drivers and cater to the
high demand timings & scenarios. OLA has observed that the drivers are very sensitive to little
extra earnings for their extra effort to stay logged in to our system.
OLA applies an X multiplier or flat surcharge to the normal fare based on various situations and
scenarios like place of pickup, time of pickup, type of vehicle, demand situation, supply scenario
etc. Using advanced analytics, unique algorithm, past ride experiences etc. the OLA software
calculates an appropriate surcharge to apply over and above the normal fare. This enables OLA
to come up with appropriate incentives to drivers to make them stay logged in to the system for
the additional earnings. This enables customers to get their much needed service even during
peak times when demand for cabs is high.
The peak time surcharge works in two ways
a) It motivates drivers to stay & serve for a longer time even during difficult hours of the
day and when demand is high.
b) It filters out the less needed rides hence making the vehicle available to those who really
need a cab.
(cf. website, https://www.olacabs.com/info/faqs)
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Reference:
website, https://www.olacabs.com, accessed on 26 December 2015
website, https://www.olacabs.com/fares, accessed on 26 December 2015
website, https://www.olacabs.com/info/faqs, accessed on 26 December 2015
