Is the Duopoly Of Ola, Uber Coming To an End? Mobility experts opine that the entry and growth of other platforms and ONDC's efforts will eventually dissolve the long-standing domination

Just like Zomato and Swiggy in the food delivery space, Ola and Uber have been dominating the urban mobility space for the last few years. This is despite the scores of controversies that have surrounded them so far. For instance, these platforms have been blamed for surge pricing and cancellations.

Last year, the competition commission of India (CCI) even asked cab aggregators to adopt self-regulatory measures to address concerns around surge pricing. In an advisory, the CCI said, "Formulate clear and transparent policy on surge pricing and dissemination of the same to both riders and drivers, including adequate transparency with respect to the sharing of revenue on account of surge between the drivers and the CAs. Any change in policy be communicated, in a timely manner.".

Consumers have also raised safety concerns and blamed these platforms for a lack of transparency. In addition to that, the cab drivers and the ride-hailing platforms have been at loggerheads since the beginning. Driver-partners have often gone on strike demanding better pay and working conditions. However, despite these issues, these two platforms have been ruling the roost.

Will the entry of newer players, customers' frustration and the entry of ONDC into the space put an end to this duopoly?

But, before we get to that, let's understand why Ola and Uber have been dominating the market so far.

Uber, Ola market dominance

Early-mover advantage is one of the key reasons behind their success in urban cities. "Ola and Uber continue to be the main players in the market because they have become synonymous with on-demand transportation and have a high density of partners.," said Ashok Shastry, co-founder and CEO, DriveU.

According to Tracxn data, Ola has raised a total funding of $3.96 bn over 26 rounds. It's first funding round was on Apr 21, 2011. Founded in 2011, by January 2018, it served 125 million users in India, through its network of over 1 million driver-partners that it hosted across 110+ cities. On an aggregate basis, Ola serves as many as a billion rides annually, through its platform, it said in 2018. For Uber, India is one of the largest markets, with 600,000 monthly drivers and 8.5 million monthly riders, says a study by UK-headquartered consultancy firm PublicFirst last year.

Uber and Ola's market dominance in India despite controversies, Ankur Bansal, co-founder and director of BlackSoil Capital said, can be attributed to:

• Pioneering Advantage – Being early movers, they captured a substantial market share, solidifying their leadership position,
• Extensive Network – Their vast network of drivers and riders ensures unparalleled convenience and availability, making them the preferred choice,
• Strong Brand Recognition – Globally recognized brands with a reputation for reliable transportation services, fostering customer loyalty, and
• Robust Investor Backing – Substantial investments providing financial resources for expansion, marketing, and aggressive pricing strategies

Will newer platforms democratize the space?

Cancellations by drivers and the lack of options have left both users and driver partners frustrated and dissatisfied with the existing services offered by companies like Uber and Ola. Now seems to be the right time for other players to enter and the existing ones to scale.

Other players in the space include Rapido, BluSmart, Meru, Easycabs, inDrive, QuickRide, others. Most of them have been scaling fast as well. US-based inDrive recently announced its India expansion plans at full speed. The company looks to expand its operations to Bengaluru and Pune soon and to do that it has launched a complete marketing campaign. It also plans to offer services in regional languages, including Tamil. Last month, Delhi-based electric mobility startup BluSmart Mobility raised $42 Mn. The company said that it is looking to utilize the funds to boost its operations in India's megacities, taking its fleet from the current 3,500 EVs to 10,000 during FY24.

Will these players be able to break the duopoly any time soon?

"For consumers, it's all about getting to one place or another at a reasonable cost, and from what I see, many people try multiple apps simultaneously and opt for the first one to provide a cab which is priced fairly. So, on one side you need to ensure drivers are incentivized enough to be active on the platform, and the other, you need to make sure you're not pricing yourself out with consumers," said Shastry.

The growth of companies like inDrive in India raises the possibility that the long-standing duopoly in the ride-hailing industry may eventually dissolve, say experts. "Numerous factors have an impact on this change. First off, there is more competition now that there are so many new companies joining the market and growing their businesses. Due to the advantageous economics of EVs, the introduction of electric vehicle (EV) ride-hailing services also provides improved payment terms and incentives to drivers. Mobility companies like Lithium Urban are extending their reach by partnering with organisations to offer dependable transit options to employees. Furthermore, in order to set themselves apart from long-standing competitors like Ola and Uber, these newcomers are giving client satisfaction a high priority," said Bansal.

As a result, the market is diversifying and becoming more customer-focused, which opens the door for the duopoly to gradually fade.

The role ONDC will play

ONDC has onboarded Bengaluru-based auto booking app Namma Yatri onto the network. What kind of role will ONDC play in democratizing the space? ONDC's entry is expected to create a level-playing field for all stakeholders in the mobility space. It is expected to increase healthy competition and thereby innovation in the industry.

Namma Yatris service is currently available only in Bengaluru, where it has already onboarded over 45,000 drivers out of the total 150,000 auto drivers in a very short span and continues to add about 200-300 drivers each day. Experts expect ONDC, which is an open network, to enable collaboration and interoperability for Namma Yatri, which is expected to help Namma Yatri to expand its offerings in multiple cities across multiple modes of transport including cabs, buses and metro rail at a much larger scale, making transportation convenient and affordable.

The mobility app, backed by the Nilekani-led non-profit Foundation for Interoperability in Digital Economy and built by Juspay, is currently working on a subscription model for auto drivers and looking to build scale. "This is a brilliant move by Namma Yatri, and I have heard great things about supply availability and pricing from those who have used it. I think that ONDC will play a significant role in democratizing the space by removing companies with unsustainable spends that try to make up for by taking larger cuts of earnings from the actual service providers," said Shastry.