Ola Rides to UK, But Can it Take the Front Seat?
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Indian start-ups are setting the stage for global expansion and leading the pack is the cab-hailing app Ola. Homegrown Ola has proved its might not only in the country but on international roads too. After a successful ride down under into the Australian and New Zealand markets, Ola is looking at bigger markets. The company has confirmed its foray into the European market.
As Ola enters UK, with it rides the dreams of millions of Indian entrepreneurs who haven’t had many success stories of startups from India making it big overseas.
But will Ola be able to match up to the global technology standards and take on its rival Uber?
Entrepreneur India spoke to experts to know whether Ola can have an uber positive growth story.
Ola Says Hello to the UK
Ola has obtained licenses to operate in South Wales and Greater Manchester, and will launch operations in South Wales within the next month. Ola will be the only ride-hailing app in the UK that offers passengers the option of Private Hire Vehicles and Black Cabs through one consumer-friendly platform. The company is working with local authorities across the UK to expand nationwide by end of 2018.
Talking about the expansion, Bhavish Aggarwal, Co-Founder & CEO of Ola, said “Ola is excited to announce its plans for the UK, one of the world’s most evolved transportation markets. The UK is a fantastic place to do business and we look forward to providing a responsible, compelling, new service that can help the country meet its ever demanding mobility needs. We look forward to our continued engagement with policymakers and regulators as we expand across the country and build a company embedded in the UK.”
Is There Room for Competition?
The UK’s cab-hailing market is not a lonely one. Crowded with apps like Uber, myTaxi, Kabbee, Gett, Addison Lee, BlaBlaCar etc., the question is whether Ola will be able to make room for itself? Pranjal Sharma, author of Kranti Nation: India and The Fourth Industrial Revolution said, “There is always room for competition even in the most crowded markets. However to get a share of the market every new entrant has to offer a value or service proposition that is better than the existing offerings.”
Sharma said that Ola will have to offer a great proposition to riders and drivers to create space for itself. Even from the perspective of getting drivers on board, it will be a difficult task as drivers tend to be careful while switching companies. “They will assess the quality of support and benefits before moving to Ola. Consumers may be willing to experiment more easily but most don’t want to install yet another app in the phone unless the service or cost is significantly better. Ola must have weighed these issues before entering UK. Clearly, it will not be easy,” said Sharma.
Automobile consultant Pranav Jain points out two major points that will facilitate the growth of Ola in the UK. He said that first, Ola's performance outside India i.e. Australia has been phenomenal till now. Jain goes on to quote Chandra Nath (VP, International business, Ola) to say that the company has been able to attract customers and driver-partners over their competitors, which also means that Ola has been able to establish their niche as well as grab a little share of other local players in the Australian market within less than six months. “Mr Nath dedicates this achievement to "Rideshare experience and affordability provided by the company", which brings me to the second point; Ola's strategy to attract customers as well as driver partners can be largely attributed to the costs at which it operates. Considering the ambiguity in consumer prices before Brexit, UK is expected to witness sensitivity soon after this takes place. This again would become an advantage for Ola that has ample amount of experience when it comes to dealing with price sensitive customers,” said Jain.
The Big Ring: Ola Vs Uber
Ola’s entry into the European market is yet another step on taking on its arch rival Uber. Uber has already had a run-in with the UK government as its license was recently repealed by London’s transport agency. That left Uber’s over 400,000 drivers in the city at a lurch. Although its license to operate is back again, it remains to be seen if Ola can ride on Uber’s delinquencies.
However, similar questions were raised during Ola’s foray into Australia, which was again a market dominated by Uber. In Australia, it operates in seven major cities. Over 40,000 drivers across Australia have registered since its launch in February and have completed millions of rides.
Sharma points that Ola is currently servicing only in major cities in Australia and that its availability in the suburbs is still low. “Consumers want access in all areas and restrictive options will not inspire them to move away from their existing preference. It may take a few years before Ola can offer serious competition to Uber in Sydney. The same applies to its entry in UK,” he said.
Sharma added that Ola’s success rides on its ability to meet the demand. He said that ride sharing is all about rapid scaling up. If cabs are not available or there is significant delay because of low supply, consumers will stay away. “Ola is not in a position to compete globally yet since many other companies like Taxify are scaling up pretty fast. Ola will be able to grow bigger than Uber only through acquisition of existing ride sharing companies including perhaps Uber in some markets,” he said.
Painting The Global Picture
Jain also points out that the global mobility ecosystem is slowly moving towards ride sharing. Jain said that if we consider the number of motor vehicles per 1000 people on the global level, developed markets like USA has around 900, Germany, Japan, France etc has about 550-600 motor vehicles per 1000 people. And if we see emerging markets, China has about 150, India has about 50, Brazil has around 250 and so on. “Being the flag bearer, Uber has been entering many of these emerging markets aggressively after establishing its base in developed markets. This way the company clearly has a monopolistic position. But a relatively new entrant in the global market, Ola as an organization can attain a greater market share once it proves itself in few developed markets. And that's exactly what Ola is doing presently. Looking at Ola's growth in India since 2012, it can be predicted that the road for Ola might be tough for a few years but after sometime the company is bound to gain traction at the global level,” he said.