The Last few weeks have been hectic, a lot of you probably read about Uber & Ola’s relative usage and the implications there of for both companies in today’s newspapers. Since the traditional news media can do a far better job of fleshing this out — I thought I’ll focus on the highlights.
In the data measured since December — we found that Uber on average is cheaper than Ola. It’s aggressive pricing strategy seems to be working out. Why do we think so? Take a look at the average number of rides / customer for both companies.
Uber tends to get used approximately 4.5 times per month per customer. While that number of Ola is significantly lower at just under 3 rides per customer per month. Across 1 or 2 users this may not mean much but over millions of users — well, lets just sy the 2 companies start to look very different.
Why is this happening? Aren’t they both providing essentially the same service? NO.
UBER is becoming a habit, it’s changing the way you and I commute and how we think of car ownership. Ola is still an internet enabled taxi service.
Why brought us to this conclusion? A Majority of Uber rides are for short distances — you going to places nearby. For Ola a large chunk of the revenues come over longer distances — for example from or to the airport.
This could mean one of three things:
- Uber is pricing lower than Ola and that is paying off..
- People use Uber a lot more even for shorter trips (it’s becoming a habit).
- Ola isn’t available as much so people are choosing Uber. The issue of availability could be a direct result of how Uber handles drivers vs. Ola’s handling of drivers.
Is the Uber customer more affluent? Only slightly.
The implications for both companies are compelling. For example:
- Ola just raised $250 Million at approximately a $4 Billion valuation (unverified) so what does that make Uber India worth?
- A lot of people thought India will be like China — where Uber had to stop fighting with Didi and got in to a joint venture. India won’t be like that. Our data shows that Uber’s India business is stronger than that of Ola’s in many meaningful ways, including rides per customer, frequency of usage, stickiness of customers and potentially customer lifetime value and brand extensions.
- Uber’s been in the news for all the wrong reasons in the US — is India the bright spot in this time of gloom?
- Considering the implications of our data, will Ola be forced to seek a strategic buyer? Considering the conflict with Didi, who are the likely suitors? Grab?
- For regulators — this will present a far more interesting problem. Given their complete failure to act when Uber & Ola came in to the market in what was then a clear ‘non — compliance’ of the existing laws, what should they do now? Will they finally create policies that are in step with the times? Should they let the free market take its course? Investigate Uber’s pricing policy? It’s clear that customers are winning in all this and customer choice is not blocked given the many other taxi services.
I want to highlight: Our objective as a data company is not to put any one company down or anything quite so banal. We are simply presenting the data as it emerges and offering up an opinion on it. Over time we will give you the ability to do this yourself. You won’t need our assistance & you won’t need to call us up. It’ll be as simple as a Google search. That’s the goal anyway.
Thanks for your time,
Ashish
- Team KG
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You can reach me on ashish@kalagato.com
