Oct 09, 2017

Ola Instant, a new logo, a refreshed app… all part of Ola’s latest battlefront against Uber

BYJayadevan PK

Its biggest rival is in a crisis. Its efforts to refresh its service is yielding results. And it’s flush with funds.
India’s ride-hailing company Ola has perhaps never had things going as much its way since its rival Uber entered India in August 2013. True to form, the company’s co-founder Bhavish Aggarwal, known for his take-no-prisoner approach, isn’t giving this opportunity a miss.
The seven-year-old Ola is gearing up to make an ambitious bid to dominate the Indian market. “We bet on Bhavish and there’s been a turnaround over the last year across service quality and new customer segments,” said a person directly familiar with the thinking of Ola’s board and the company’s top investors.
Backed with nearly $400 million in fresh funding from Chinese Internet giant Tencent and with more capital on its way (Ola is in talks with SoftBank’s Vision Fund to raise $2 billion), company insiders and its backers believe that Ola has an opportunity to edge out Uber in India like Didi Chuxing did in China.
“Would he (Bhavish) want to buy Uber India? The answer is ‘Of course!’. He believes he’s building a better product and he believes he’s at war with the world’s best,” the person quoted above said, asking not to be quoted by name because of the strategic nature of the information.
In August last year, China’s homegrown ride-hailing company Didi Chuxing acquired Uber’s China operations. In exchange, Uber got a 20% stake in the merged entity.
The person himself rated as remote the chances of an Ola takeover of Uber’s India operations over antitrust concerns that would arise.
FactorDaily has learned that in the next few months, Ola is set to go into a new “brand push”, lead by a logo redesign, launch a revamped version of its app with newer features, and offerings that it hopes will raise its market share to 75% from the 60% it claims today.

Ola Instant, new app features

Primary among these new initiatives is a service aimed at premium customers — an offering it will likely call “Instant”. It will be a service with which users can hail a taxi with a single tap. The idea is to mimic the experience of a chauffeur driven car for affluent users. “You won’t have to wait for availability or even key in the location before boarding,” said a second source familiar with the company’s plans, also requesting anonymity. The company has already started training its best drivers for this service that will be available for a select set of users on Ola.
The logo redesign will be subtle. “The new logo isn’t radically different from the current one but will be cleaner,” said the second source, adding the current logo with the letters OLA in a custom typeface in black and parrot green has already been reworked.
An Ola spokesperson did not respond to calls and an e-mail for comments on Saturday.

The app is being redone to make sure that the user has to tap fewer times to hail a cab. There’s also talk of adding features that use augmented reality and in-car functions, details of which aren’t very clear at the moment. Within the company, the new app design is being taken “very seriously” and even the board had to approve of it, the second source said. “They’ve started testing the new app within a closed group,” added the source.
An insider indicated though there was renewed rigour in its push, Ola was continuing with efforts to distinguish itself from its archrival. “It’s all about product differentiation if we have to win this,” a senior Ola engineer told FactorDaily. Ola has launched several features like Ola Play (its in-car entertainment feature), auto rickshaw rides, and SMS-based booking to get an edge over Uber in India.
With Softbank’s backing, Ola is also likely to enter the electric car segment. As we reported in May, details of Ola’s electric vehicles plan are sketchy but it’s likely to be a partnership between SoftBank, Ola, and Toyota. Although severely lacking in infrastructure, India has ambitious plans to put six million electric cars on the road by 2020 and wants to go all electric by 2030.
Also see: Electric cars are ready to take over the world — and India

Battle for Marketshare

Market share can be a tricky number to arrive at with both companies claiming to have a majority. Ola insiders say that the company does roughly about 1.5 million rides a day and Uber claims that it serviced 9.4 million trips a week in July– that’s about 1.3 million trips a day. As per Ola’s estimates, the company currently has a 60% market share and wants to get to 75%. With a majority market share, Ola believes that it will have better powers on the deal table.
The two companies are engaged in a bruising price war which is likely to end if Ola and Uber come to an agreement. “If both Ola and Uber stop driver incentives, both could be profitable today. We are burning cash on incentives but our incentives are less than half of what Uber provides,” said the first source quoted above. Ola, according to the source cited first, burns nearly $25 million a month.
“The cab-hailing business has been growing on discounts by Ola and Uber and that has completely upset the industry, and resulted in a lot of losses… however, in the days to come what will really change the game for cab companies is better service to customers. It will be important to create stickiness with the customer, who is not only seeking for a lower fare,” said Siddhartha Pahwa, former CEO of Meru Cabs.

Source: Paper.vc

If Softbank ends up investing $2 billion in Ola and $10 billion in Uber, the Japanese conglomerate would become a majority shareholder in Ola and an owner of a significant minority stake in Uber.
Logically, Softbank would want its portfolio companies (that includes Grab in Southeast Asia and Didi Chuxing in China) to focus on their core markets and not bleed each other out.
In an interview with The Economic Times, Rajeev Misra who leads Softbank’s $100 billion Technology Vision Fund, said that it hopes to “to make peace” between the two companies.
So far, Ola has been able to hold its own despite aggressive bets made by Uber in India. If it manages to wrestle market share from Uber, with a common investor in Softbank, it might even end up calling the shots in the biggest growth market for ride-hailing services in the world.

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Jayadevan PK is a writer of FactorDaily.