Description: Startups are important as they bring freshness to an old setup. Ola changed the urban Indians
Ola Case Study
The year is 2009. A man walks out of the arrival terminal at the Indira Gandhi Airport, welcomed by the sound of thunder roaring in the night sky. Rain pours, splattering on the empty street in front of the airport. The man needs to get to Noida. The distance is roughly 30 km.
The man stands on the curb of the street. He doesn’t have a car to get home. There is only one taxi. It stands in the rain across the street. The taxi driver doesn’t care to take the car to the man. The man, sighing, picks ups his bags and walks to the taxi. He shoves his bag into the front seat and takes the back seat. ‘Noida’ the man says. The driver presses the pedal and the taxi starts moving.
Since it was raining, the man didn’t have the luxury to stand outside the cab and negotiate a fare with the taxi driver. He casually asks the driver what the charge will be, hoping the fare would be reasonable.
‘1000’ the driver says. The man argues, pleads, negotiates, and nothing happens. The driver knows he’s calling the shots. The man, for better or worse, will have to stump up 1000 bucks.
In 2019, the man can just book an Ola.
How to Disrupt an Industry?
How does a company disrupt an industry?
For one, there has to be a total lack of disregard for convention. Any company wishing to see vertical growth in innovation has to disregard the norms of an industry.
When Ola entered the taxi industry in 2011, it entered a field dominated by the unorganized sector. Independent taxi contractors, owners, offline aggregators, and radio taxis dominated the arena. And yet, there wasn’t a company with the strength to truly change the perception of the public regarding cabs.
Before Ola and Uber entered the Indian market, cabs were generally hailed by two demographics – affluent people and those in desperate need to get somewhere. The general opinion of cabs was of being extremely expensive and not particularly expensive. This opinion was not just to one or two particular companies, but the entire Indian taxi industry.
Ola changed all that. As an online aggregator, Ola had the advantage of connecting a ride with a driver as a third party mobile app. Furthermore, it could connect a ride to the nearest cab around.
There was no need to negotiate with the driver as Ola already had a set rate. There was no reason to walk to a taxi stand as Ola would ensure the car would reach wherever the rise was.
Beyond numbers and market share, Ola managed to do the one thing for the Indian taxi industry. It managed to change its perception. When someone thinks of the Indian taxi world, we think of two words, Ola and Uber.
Ola, being the first online cab aggregator in India managed to singlehandedly disrupt an industry.
How did it do so?
The answer is simple.
It managed to overcome the drawbacks of the unorganized sector. Cab companies before Ola and Uber were best known for swindling customers, charging arbitrarily high fares, lacking punctuality, and being apathetic to the problems of the customers.
As it competes with Uber for taking control of the Indian market, Ola continues to hold the distinction of being the first to challenge the old established order of the Indian taxi industry.
For startups, either big or small, challenging the conventional way of things is not a question of audaciousness or skill, but a function of innovation and will.
Ola’s Journey
Being the disruptor of the Indian taxi market is not enough though. Ola has to keep expanding in order to justify the many millions investors are pouring into its kitty.
It started its journey in December 2010. Founders Bhavish Aggarwal and Ankit Bhati were IIT graduates made Ola Cabs operation in Mumbai at first, later moving the company to Bangalore. In Bangalore, the company managed to get its funding. Using its resources well, the company managed to grow operations in a matter of a few years. By 2014, Ola had grown to add 2 lakh cabs to its network spanning 85 cities in India.
In the following years, Ola would go on to introduce autos to its network of vehicle, albeit at a steady pace. Its care rental option also was a great success for riders looking to get a cab for a longer period of time.
A key moment in Ola’s journey came in March 2015. After competing with Taxi For Sure, a fellow rival, for many years, Ola acquired it for $200 million. This purchase was a major reason why it was valued at $5 billion in the market later in 2015.
Competition with Uber
One cannot talk of Ola without talking of Uber.
Heads and tails, black and white, Ola and Uber, all these combinations have one thing in common. They are part of everyday culture now.
Ola’s current predicament is best represented by its competition with Uber. Uber, a global operator, is ready to invest whatever it takes to capture the large Indian market.
Ola advantage is its initial familiarity with the Indian market. Uber, however, is not standing still. Money is no bar for the San Francisco-based firm trying to wrestle control from Ola to capture the $10 billion India taxi industry.
The unique thing about this rivalry is the lack of differentiating factors between the two companies amongst neutral Indian users. There is nothing to the common user in India that Ola or Uber is doing better than the other.
A big advantage for Uber will be the number of drivers that are downloading its driver app. On this metric, Uber has left Ola far behind. In the future when the key factor in choosing between the two could become availability, the company with a larger number of drivers will naturally succeed. Right now, Uber seems to winning that battle.
One could argue that Ola is playing the long game of valuing customers over drivers. In any case, the battle between these two giants of the cab industry has been remarkable from an outsider’s perspective.
For now, Ola seems to playing a numbers game. It is banking on its wide presence and greater installs. There is naturally the threat of Uber matching Ola’s reach by throwing a large investment in the mix. Higher ups at Uber have constantly reiterated their desire to see Uber lead the market in India.
SWOT
Ola is in a good position right now. It is largely winning its battle with Uber with sheer force of numbers. There are some obvious weaknesses though which might derail its future. Competition can often be an impediment to innovation, as most resources are poured into beating someone else.
A SWOT analysis of Ola’s current position will help us understand its position better.
| Strengths | Weaknesses | Opportunities | Threats |
| Name recognition | Difficult to keep customers happy without constant discounts cash backs, and lowered fares | Many areas and sectors still ripe to be disrupted such as tier 3 and 4 cities. | Uber |
| Undisputed industry leader | Increase in mobile phone users only likely to increase more customers | Lack of regulation from central government means something might happen in the future | |
| Generally positive perception amongst customers | Large volume of cash flow | Lack of loyalty amongst customers | |
| Financially stable and backed up credible names in the investor field | Brand image susceptible to being tarnished due to misbehaviour of drivers. Social media amplifies incidents of misbehaving drivers disrupting the growth trajectory of the company | Opportunities to buy out lower level competition | Environmental regulations may cost company a lot |
| Ample resources to launch nationwide marketing campaigns | Two-wheeler booking explosion | Competitors with deep pockets using discounts and cashbacks to take away customers | |
| New customers brought by word of mouth | Establishing greater convenience with improvements to app |
In Conclusion
In conclusion, this article covers Ola’s journey from being a small startup to the giant it has become. Its competition with Uber will be one talked about for generations to come, just as the Cola wars and the Edison-Tesla rivalry is discussed to this day.
In order to grow faster, Ola will have to deploy a number of strategies that aim to make users more loyal and trusting of the brand.
About the Author – Gaurav Heera is amongst the a well-regarded digital marketing trainer in the industry. He founded DelhiCourses in 2008, an institute best known for its digital marketing course in Delhi.
