New lane entrants threaten Ola and Uber’s monopoly

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Ola and Uber are the two most popular carpooling platforms in India. However, they face competition from several smaller start-ups, traditional players and category-specific business models.

After the Covid-19 pandemic slowed urban mobility for two years, Rapido in the automotive segment, BluSmart with its fleet of electric cars in Delhi-NCR, blockchain-based mobility start-up Drive, and other new and old companies in the lucrative airport and long distance services space are racing to take market share from the leaders.

Before the pandemic, Ola and Uber dominated ridesharing, especially in taxis, but with the economy growing, many companies believe the market is ripe for change.

People in the know say BluSmart, a Bengaluru-based company that makes all-electric taxis, is set to secure $250 million from investors like BP’s venture capital division. Tushar Garg, one of the company’s co-founders, told one of the major daily newspapers that 1,800 taxis in Delhi-NCR and another 500-700 are added every month.

Drife said on the Telegram instant messaging service that he was testing around 10,000 taxis in Bangalore. Users can set their prices on the platform and drivers can get paid daily.

Tanveer Pasha, the head of the Ola-Uber Taxi Drivers Association, says there are about 45,000 Ola and Uber drivers in the city. Before the pandemic, there were over 100,000 drivers.

All of these groups want to make Ola and Uber less efficient at a time when both are doing more rides than before.

Vumonic, a data collection platform, says there were 1.4 times more rides on Ola and Uber in April than in January 2020.

One of the major daily newspapers asked Ola about his market share and whether he faced competition in different categories, and Ola did not respond.

Uber also didn’t give specific numbers on market share, but they said one in two trips didn’t involve a car.

“The market is big enough for more than one player, and since we have the best products in the two-, three-, and four-wheeler categories on our platform in over 100 cities, we believe the competition is only making us improve for our customers, passengers and drivers,” said an Uber spokesperson.

Beyond calling a taxi

Companies are trying to expand not only in the taxi business but also in the car (three-wheeler) business.

Rapido co-founder Aravind Sanka told a major daily news that the company had the same market share in Bengaluru and Hyderabad as Uber after launching its car service during the pandemic.

Sanka said he had 18% of the market in the United States

Even though Rapido is known for its bike taxi service, the automotive category now accounts for the largest share of its gross market value (GMV).

Its GMV rose from $55 million in June 2021 to $314 million in June, and Sanka said more than 45% of its GMV comes from cars.

In April, food delivery service Swiggy led a $180 million investment round in Bengaluru-based mobility company Rapido. This gave Swiggy a 15% stake in the company.

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Emerging companies have taken advantage of the opportunity by understanding the analysis of problems and consumption patterns and focusing on solutions in categories that are likely to make money.

They have also focused on eco-friendly routes by ensuring prices are transparent, people are picked up on time, vehicles are clean and drivers are polite.

“Those who adapt quickly to customer desires will find niches and fill the gaps that open up. Vinay Piparsania, founder of mobility consultancy MillenStrat Advisory & Research, said: “Running a business like this is much more than a technology platform. It is built on a foundation of partnership through a customer-centric, collaborative and compliant ecosystem.

During the pandemic, it was difficult for people to share cars because they felt unsafe.

This has changed, and experts say that as the economy improves, it is restoring confidence among users.

“As a natural extension of our ticketing and accommodation business, we have started offering last mile solutions such as airport transfers, one-way taxi transfers and intercity and intracity taxi hire” , said Parikshit Choudhury, Commercial Director, Ground Transportation, MakeMyTrip. The company has partnered with Meru, BluSmart, Mega Cabs and other independent taxi operators to offer airport pickup and drop-off services.

“In one-way transfers, it works for both the passenger and the taxi driver as they only have to pay for one-way.” “MakeMyTrip can set up a return trip, which makes the best use of our assets,” Choudhury said.

Airport rides and inter-city rides are some of the most profitable aspects of the taxi business, as they take longer and bring in more money.

Kaushik Madhavan, vice president of Frost and Sullivan’s mobility practice, said, “Post-pandemic, commuter mobility needs have changed and become more complex. Taxi drivers and owners are struggling to cope with the uncertainty and commercial terms of existing deals with Ola and Uber.

Supply side crush

“During the pandemic, many drivers stopped paying their loans and bills and found other jobs. This meant fewer cars were available as commuters slowly started to return,” MillenStrat’s Piparsania said.

One of the main daily reports on May 22 that drivers were leaving Ola and Uber because fuel prices were rising and the incentives weren’t enough.

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Drivers who could stay in Ola and Uber’s business faced higher gas and maintenance prices, fewer riders, and no way to share riders.

Many of these people are trying to solve this particular problem.

One of the main daily news looked at Drife’s whitepaper, which states that platform commissions (Drife charges subscription fees) only make up about a third of “other” ridesharing platforms. Drivers earn 21-27% more with Drife than with incumbents.

“While travel demand has now exceeded pre-pandemic levels, particularly in metropolitan areas, the situation has changed dramatically. Uber and Ola have taken an opportunistic approach to getting back to business by raising fares, cutting driver incentives and cutting staff,” Madhavan said.

Due to manufacturing issues, there were fewer new and less reliable cars on the market. That means people continued to use ride-sharing services as offices reopened and long-distance travel and flights resumed.

“In turn, Ola and Uber drivers saw the opportunity to make the most money for themselves by avoiding rides that didn’t pay as well and skipping those that did, regardless. to get in trouble because Uber and Ola didn’t care,” said Piparsania of MilliStrat.

Several Ola and Uber drivers did not clean or maintain their cars as well as they should have. Piparsania said the effect on commuters was that they were forced to pay more for less service, causing them a lot of frustration and anxiety.

Move to corporate business.

Most people who use ride-sharing services more than once are commuters. In this market, specialized players also offer services adapted to this group.

Prior to the pandemic, companies like Move-in-Sync and Lithium Urban began to focus on commuting to work by partnering with companies to transport employees. These companies are going back to what they were doing before the pandemic.

Mumbai-based Eversource Capital bought most of Lithium Urban in March. In April, the company struck a deal with Tata Motors to buy 5,000 electric cars.

Self-drive rentals through Myles and Avis are now back to where they were before the pandemic.

“The last three months have been perfect. Myles Cars founder Sakshi Vij said business travelers and young urban vacationers are choosing self-driving options on their platform.

Due to the pandemic, people have become more aware of money and savings.

At the same time, there was a need for people to move around, like renting cars instead of buying their own.

Young people don’t think about long-term jobs, so they want to spend money on experiences instead of cars. Sunil Gupta, Managing Director and CEO of Avis India, said this trend is becoming increasingly popular.

“We have seen a smart recovery since February 2022, reaching the same level as before COVID-19, as more and more people travel within the country. It has also led us to reinvest in increasing the size of our fleet,” Gupta said.

Sakshi from Myles said: “We hope to have 5,000 vehicles on our platform over the next 12 to 18 months.

Experts say there is room for more than two players and that after the pandemic there will be a clear shift in power from the current duopoly to a more competitive mobility market.

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