Speculative. This isn't about profits.

What do Ola and Uber want to become (in the short term)? A marketplace or platform for commuters to meet transport providers.

What is the present situation?
Auto rides in India are very common. For example, 1 lakh+ autos run in Delhi everyday, catering to 1 Cr.+ people. How do people hail an auto? By calling an auto that is in the vicinity. However, commuters have to haggle for fares, give a description of the destination to the driver and then hope that the driver takes the shortest route to the destination.

What are Ola and Uber doing?
They are addressing these pain points. An auto ride on either Ola or Uber is literally a one-touch process. You fill in the destination and then you call for an auto. Everything else is taken care of.

Why are Ola and Uber doing all of the above and still paying money?
1) To acquire customers - Customers (commuters and auto drivers) are used to the present situation. Changing their behavior takes money. Auto drivers are happy getting passengers on their own. Why would they want to get on board of some app that promises them customers? Ditto for commuters, who would want to see autos on Ola or Uber before hailing a ride
2) To retain customers - The on-boarded drivers need to be retained till this paradigm becomes the norm. In other words, till there are enough commuters using Ola/Uber and there are drivers using Ola/Uber to get their customers

What does Ola/Uber stand to gain from this?
Ola/Uber want customers (commuters) to think about Ola/Uber whenever they think of taking a ride. These commuters (speculatively) shall then open the app regularly and potentially transact through it. In the long term, these commuters can then be sold other "premium/profitable" services (UberFresh or say OlaCafe) or even shown ads. In the short term, they might choose to ride a cab instead of an auto.

Analogically speaking, what does a retailer look for when he/she opens a business? Window shoppers. Many window shoppers who can turn into potential customers.

That's what Ola/Uber are buying. Literally.

Thanks for A2A.

I am sharing two tips here which can help you save some bucks:

1. Best boarding/drop point: When selecting pickup or drop location. Do some experiments. The choosen point by app is not always to cheapest option. I have successfully saved some bucks by changing the pickup point to a different gate number of metro.
2. Go Share: Whenever possible, Choose Share/Pool rides. You save atleast 30% plus you don't have to pay for time spent in jams.
3. Break your journey: Time to time companies run promotion for certain kms ride. This can be done with Share pass as well. I had to cover a journey of 15kms. The total fare of journey was 189₹ with share and 237₹ on micro. I breaked it into two parts 10kms + 5kms. Currently, Ola is running offer DEL99 which is 99₹ for 10kms. I have Ola Share pass which makes the second journey to 50₹ only. So, Total ride cost becomes 149₹.

I am sure you can use the same tricks. Thanks!

Reach...

In B2C industry, unless a customer tries your product, he will not go ahead to use it.

One year back, when taxi industry was in the phase of growing, middle class customer still had a perception that taxi services are costly services and therefore preference to Autos.

1. No matter how low is the price point of Taxi, a layman will have a cold feet to try with an assumption that there can be hidden charges and cost of entire trip will be much more than whatever a company
2. Customer has not experienced the difference between traveling through an AC cab and an open auto
3. Perception that taxi will always take its sweet time to reach pickup location.

The need was to change these perceptions which can be done through customer database and trials generation.

By launching in auto segment, now Ola and Uber are capturing middle class segment under their umbrella.

1. They have database of auto users whom they can bombard with messages of discount to convince that taxis are also cheaper
2. Once in a while when customer will not get an auto, he will try to book a cab of ola / Uber and hence will be tilted towards using it frequently considering minimal price difference.

Everything is with a goal to change the behavior of the customer.

I have noticed that the following happens, since Uber began doing what they call “Up Front Pricing”:

You open your Uber app, and enter your pickup and destination. Take a look at what they say they’re going to charge.

Close the app, and then repeat the same steps, using the same pickup and destination. Look at the up-front price. Most times, the second time you do it, the price will be lower.

I’ve seen this on numerous occasions, and have had many riders report the same. Apparently, Uber tries to get whatever they can…and will actually lower the price if you don’t “bite” the first time. Try it and see what happens.

By the way, this occurs even when there’s no “surge” happening where you are.

I drive in Connecticut… YMMV

There same reason many businesses do not own the furniture they use (They lease it in most cases)

The same reason working institutions more often than not, contract transport as per their use case than outright buying the vehicles.

The very same reason that pan-walla at the end of your street uses store-credit to get his merchandise instead of paying for it upfront.

Still don't get it ? It's mainly to reduce their overall start up and overhead costs while allowing them to be marginally flexible with their operating costs. It's all about the bottom line.

I won't go through the whole business model of Ola but will give you the outliers

The purchasing cost for 100 base hatchbacks (for your concevenience) will cost about ₹5.5 crores. Add to that the cost of salaries for the 200 drivers (assuming a 12-hour work shift per head for 30 days) with a salary of ₹9k per head (median wage), that's another ₹18Lakh per month with the first one coming out of your pocket (start up, lack of a consumer base). Now, the parking for these 100 vehicles should be considered, as you can't presumably be comfortable with drivers using your vehicles for their off-the clock activities… that is another lump sum investment for a lot or a garage. And we haven't even considered the regular running costs of all these vehicles (fuel and repair costs)

Now Ola, by not owning the cars, is basically charging the drivers a fee for using their consumer integrated software resources or the "app" which helps them get to fares quickly and more efficiently. This way, the cabbies won't have to wait in one place hoping for someone to need a cab while Ola pockets a fee for every fare the cabbie gets with their app. That's a win-win.

That's the reason Ola started out without owning a single cab.

Current situation ? Ola does own some of the cabs, but these are under the "Buy us out" scheme from Ola, where the driver can work the car payments off to own the car.

There is no bussiness named ola car... It's ola cabs.. Which is now ola.. With the extension of ola cafe, and ola stores
But if you are asking about renting your car for ola cabs. It is a promising side bussiness. There are many who hire a driver for 15k and rent there car with ola cabs. Each months each is around 60-65k of which 15k and some incentive are shared with the driver. Rest is paid for the loan of car.. And rest is sheer profit. I have seen working men going for this model and earning around 10k by doing nothing. But this will obviously push you into a busy life with extra burden of managent and etc

Not Profited, Benefited!!

1. It is a Value Added Service which is making the service more desirable by increasing brand acceptance, which is a least of all benefits.
2. Deeper penetration into transport industry in India.
3. A regular customer of a service (like me) gets into his comfort zone and uses the service even when prices are slightly increased multiple times. I am sure you know what I mean. Do you remember Flipkart selling everything at such a low price initially? They call it "giving customer experience".
4. There is a significant percentage of people with lower willingness to pay are constantly lifting themselves to group with more disposable income and hence, higher willingness to pay. Guess which service they will opt for when they are on the other side?
5. Auto unions are constantly (sometimes violently) opposing taxi aggregation service as this services in filling the demand supply gap removing the chances of auto drivers demanding extra money (more than meter reading). If a significant percentage of these drivers change the side, the remaining will have no other choice but to opt for Ola or perish.

Thanks for A2A.

Price wise ,ola auto is definitely good. But there's a bug in ola app, especially for auto booking. It has happened to me all the time.

The first time I tried to book an auto, it started searching for the autos nearby. After few minutes of search , the app said it could not find any ride. So I tried again. Again the same result. So I started looking for other options of travel. But after few minutes I could see two autos standing in front of my house. When asked, both of them said they are ola autos and both of them have my name in their ride. I explained I did not get any booking confirmation or an OTP. But still they argued saying that I and my mother will have to share both the autos since they have come from a long distance.

It seems even when the app says no rides available, I have to check the “your rides” option in the app. There I could see two rides scheduled. Now why on earth will I check that option when the booking was not confirmed. This is absolutely not taken. Also ola puts a fine of 15rs in case the auto arrives at pick up point and then it is cancelled. In that 15rs, 11 gets paid to auto drivers and 4rs to Ola. So that's how they are making profit in a wrong way. That 15rs gets charged for the customer , next time we try to book an auto or a cab.

I definitely don't recommend ola auto, but in case it is very necessary, I make sure I check the your rides option before trying again in case of no rides available.

I had a talk with a Ola Cab driver that how you and the company make money.

Since, he was the driver of a Mini Cab (costing Rs. 100/- for first 4 kms and Rs. 10/- per km thereafter + Rs. 2/- per minute waiting), he gets Rs. 14/- per km from the company (Rs. 10/- the one which we give and Rs. 4/- extra by the company plus the waiting amount too).
And the company takes 12% of the total billing (which includes Rs. 14/- + Rs. 2/-) from the driver at the end of every month.

When I asked if they paid any one time Registeration Fee to the company, he said that the company used to take Rs. 10,000/- as one time Registration Fee (from new drivers) but now the don't.

So, this is how the company used to earn and earns now.

It’s because they get to save themselves from a lot of costs and admin work by not owning the vehicles. Once you own the vehicle, you have to worry about purchasing, insurance, driver salaries (regardless of productivity) as well as maintenance.

By owning the vehicle they would become inefficient in that they would have to pay the cost of owning a vehicle and hiring a driver regardless of how much activity they have on their platform or how many trips the drivers take.

While it may be necessary in cases where market penetration can benefit greatly from the vehicles it is largely smarter to not own any

It doesn't earn profit as of now but is benefited!!

1. It is a Value Added Service which is making the service more desirable by increasing brand acceptance, which is a least of all benefits.
2. Deeper penetration into transport industry in India.
3. A regular customer of a service (like me) gets into his comfort zone and uses the service even when prices are slightly increased multiple times. I am sure you know what I mean. Do you remember Flipkart selling everything at such a low price initially? They call it "giving customer experience".
4. There is a significant percentage of people with lower willingness to pay are constantly lifting themselves to group with more disposable income and hence, higher willingness to pay. Guess which service they will opt for when they are on the other side?
5. Auto unions are constantly (sometimes violently) opposing taxi aggregation service as this services in filling the demand supply gap removing the chances of auto drivers demanding extra money (more than meter reading). If a significant percentage of these drivers change the side, the remaining will have no other choice but to opt for Ola or perish.

Thanks for A2A.

Practically yes (Ola auto vs Regular auto)

Let me narrate two incidents.

First happened day before yesterday. Me and my lady co employee left office after 8:30 PM due to some office works. Outside of office we asked auto for her place. It is about 1.5 kms. Auto drivers demanded ₹50. According to Bangalore high Court, only ₹29 can be charged for first 4 kms. Then I suggest her to take Ola auto. She booked the same in ₹29 only.

The other one just happened today. My friend came to Bangalore early morning. She was new to city. I asked her about the location of bus stop. It is about 5 kms from here. I arrived there in a bill of ₹58 and paid driver ₹60 without any pressure. But due to miscommunication, I stepped down 1 km away from exact location. I called a regular auto. He started meter but it's display was not working. I thought that anyway he will charge me ₹29. After going forward for 1 km and coming back 1 km, he patted his meter and Bill was ₹84. I gave him ₹100 note and asked for ₹10. He started arguing with me. I was not in position to fall in discussion. So I left that conversation and moved. After leaving my friend at proper place. I booked Ola auto back. It again was cheaper. I paid only ₹50 (bill ₹45).

My suggestion to everyone to book an Ola auto if you want to ride auto. In regular auto you will feel like a ride in a zoo ( in terms of payment). In regular auto, you ride and pay twice, thrice, and so on.

How do OLA and UBER work?

I have been speaking with drivers and in general, the concept is: You pay less (through discounts) and the driver gets paid a lot more. Uber and Ola are funding the difference, largely as “acquisition cost” for customers. I tweeted this lot:

• Uber and Ola pay their drivers a different amount from what you and I pay when we take a ride.
• Uber is prepaid, Ola has prepaid options. Effectively, money goes from you to the startups, and from them to the drivers.
• The drivers see the Rs. 10 per km plus x,y,z rate. Plus a Rs. 100 per ride bonus if they do a minimum number per day. (5 for Ola)
• What you and I pay is a discounted fare plus coupons plus whatever else. Half or less of what driver gets.
• So we pay less than an auto would cost us. The driver gets more than what he would get otherwise.
• This sounds stupid. But the logic their investors say will work is: Get them cheap, and keep ‘em, we can charge more later.
• But like you see in Flipkart and Amazon, that day can be YEARS away. So enjoy this and hope it lasts for a while.
• Neither startup is yet innovating on car tech or pooled rides yet. Their money will make that happen.

Nothing wrong with this at all. In fact, like Flipkart’s big discount sales and Amazon’s low prices, it’s a great time to be a user. When their discounts vanish, it will seem like they have driven competitors out of business…for a few hours. In the retail business, margins have stayed very low forever, in mass products – if many companies die, new ones will quickly fall in place. Kinda like the airline business, where hardly any one is ever profitable because someone or the other keeps coming up and discounting like crazy.Their Valuations Are Irrelevant

To me, it doesn’t matter that they’re raising money at what sounds like obscene valuations. I wondered in 2011 whether the Indian Internet was a bubble. My thoughts were, yes, but so what, you should still participate! We cannot, because Flipkart and Amazon and Infibeam and Snapdeal are not listed. Neither are Ola and Uber. That means while I would love to piggyback on the bubble (it’s not necessarily bad as a word) I simply cannot.
In that sense, the fact that they are overvalued in someone’s opinion is not relevant. It’s not your money, it’s not going to be your money, so boo.
But the relevant question is: Do they continue to need funding to be alive? If the money stops coming, are they dead? Will that ruin everything?It will be good even if they die

Assume they run out of money; it won’t be now, they will take, say, a year to die, or more. Even if that, they have created an ecosystem that won’t go away in a hurry.
Destruction can be a powerful thing. It generates good, with what is left behind and what people can start to pick up on the cheap.
With Ola and Uber, we’ve seen what is possible – for a traveller to be able to communicate with a taxi driver who wants to ferry people and get paid, through the internet and mobile phones, using credit cards and prepaid money, and online maps for discovery. This is the alternative to your having to walk down to the road, find a cab/auto and hope they will take you to where you want to go. For people with kids, health issues, disabilities and time constraints, it’s gone from a terrible experience to a decent one.
Assume Uber and Ola grow to 100,000 cars, and you could find them anywhere. Then take away that Ola and Uber; any other service that accepts credit cards and has mapping software will be created in less than 3 months. Drivers already know what to do – click accept, take person from place A to place B, get paid. If all it takes is this software, and Ola and Uber have established the practice, they are unlikely to be beaten by lack of funding, it will be either competition or regulation that will kill them.
My point is: Their death will not change the fact that our lives have been changed – in fact, we’ll find ways to make them better. So we shouldn’t worry about that consequence, really. More Banked Drivers Means So Many Things

You get drivers on the network, all of whom have a bank account. They all are businessmen, not employed by Uber or Ola. They are all independent entrepreneurs.
The fact that they are banked, and are getting continuous credit into their accounts means banks and financiers can lend to them. From short-term credit to appliances to things that can make their rides better. From TV for children who will then not jump around) to barf bags for late night party pickups to in-seat massagers to whatever – it’s a market that will flourish and currently does not even exist, for the most part.
The drivers themselves can offer more than just a ride. They can offer “regular” rides to customers who go to the same place every day, if Ola/Uber were to allow this somehow. (Or, think of another startup that does it, for regular rides!)
You could pool a cab for two-three riders, online. Supposedly Uber has a car pool in test already. I’d love to have rides even cheap
The lowest-cost car, the Tata Indica has an owner payout of about Rs. 1500 per day on a weekend, says an Ola driver I talked to. He drives the car on the weekends only – his day job is as a corporate driver. Since the average driver can do 10 rides a day and sees Rs. 900 by Ola just as bonuses, this is probably the lower end of the spectrum – they should be able to earn Rs. 2500 to Rs. 3000 per day.
Costs are largely the EMI on the car – which would probably be Rs. 15,000 per month for a 3 year loan on a taxi. (Say Rs. 750 a day). Running costs are Rs. 5 per km (diesel) or Rs. 7 per km (petrol). This can also be cut down by intelligent use of fuel, or by using second hand versions of better cars. For a 100 km per day, this means a cost of Rs. 500 per day. For a total of Rs. 1250 per day as cost, the equation favours the driver. (In fact, it makes so much sense for unemployed graduates to become drivers – its far more money!)Auxiliaries: The TaxiCab Training Academy and Rental

Given that the industry’s problem is that drivers aren’t adequately trained and perhaps don’t have enough knowledge of the roads, it makes sense to create a training academy for etiquette, how to use maps, how to escalate issues etc.
There’s a ticket to employment as a car owner/driver at the end, so people will pay. Much like they pay for Java courses.
Ola/Uber can pay for each successful hire – since they get trained professionals. (Startups are lousy customers in India though – they’re more likely to put people on the road outside your academy and hire them directly. But lets say this doesn’t happen)
Such training academies can facilitate a different person owning a car than driving it – a car rental system where drivers take a car, pay on a daily basis and ride it around. This is the system that currently prevails in autos.
A driver can be a delivery person as well, in off-peak hours. (Deliver goods from one part of the city to another – nodes of a courier company for instance).
There’s so much you can do with this kind of ecosystem.The Game: It’s only the end of the beginning

While this game may end tomorrow in some worldwide crisis we should have foreseen, note that it is impossible to say when it will be over. By that time, Ola/Uber may be entrenched. Or, there could be a hundred such operators with someone like Google telling you, through colourful icons on maps, which service’s cab is available at what distance from you.
Bus operators (like BMTC in Bangalore) can get their act together and offer maps of each bus in real time so you can decide which one to take.
Regulators can clamp down on pricing and force rates on to such operators.
Uber has had a lot of negative press because of their negative relationship with press in general. I wouldn’t read too much into that, because honestly this is just a big-ass ego trip for everyone. It may be relevant that a CEO is an ass, or it may be more relevant that your alternatives are worse. We won’t get into that today; it’s important, but a different point.
But whatever happens, these players will be around for a year or more, at the very least. This is the time to make the best of their investments; use their free services while they’re available.

Used it twice.

First time: Driver was well dressed, well behaved, decent. If you live in Pune, you would know that this is rare. The amount taken was exactly as it was displayed in Ola App - unlike the usual on-the-way hikes they demand in fare. The guy even said Good Night!

Second time: Booked on app. Called driver. He asked where I have to go. He sounded hesistant. Anyway, he confirmed to meet at pick-up location. In next 30 seconds, I got a message that driver has cancelled cab because I did not reach destination on time. I called him again, he did not pick up. Second attempt, he answers and says that he cancelled because his rick broke down. Hard to believe because just 30 seconds before he said he is already at the location. I tried to complain at Ola, but there were just options and sub-options but no 2-way communication.

I think there is a tiny chunk of auto drivers who are genuinely good and honest. Rest of them deserve the fate they have because of radio cabs.

Ola Auto was a huge success in India.

In fact Ola has been able to use Auto category to reach the larger & untapped segment.

Ola Auto’s unique selling points are quick travel, doorstep pickup, fixed fares, cashless payments and free WiFi on all rides. That too at a special fare of just Rs 29 for 4km which is the most economical travel option after two-wheeler segment.

Ola was successful in leveraging it’s categories and giving the most suitable category to the people.

Bike < Share < Auto < Micro < Mini < Prime < Play < SUV < Rentals < Outstation

Ola Auto 360 degree Brand Campaign

If your Ola Auo driver permits, then you can travel with everyone you need..

• Source of revenue: Commission to be charged from auto drivers for providing them with customers (Bookings)
• Intended customer base: Local everyday commuters
• Products: A driver and customer app across all OS + Dozens of back end products
• Details of financing:
• Involved parties: OLA, auto driver, customer, bank, RTO
• A rate card to be defined based on various variables (base fare, per km, per min, wait time)
• RTO pricing has to be followed while defining variables
• Commission amount is decided according to business projections
• An end to end financial product developed and integrated in collaboration with banks. All transactions happen real time and whole flow is automated.

How are they tracking the cash payment made by customers directly to the auto drivers?

Each transaction has a unique id and a different invoice is generated for each unique id. The invoice is stored in database, commission to be charged is calculated and added to receivables from the driver.

Quae ~ which, what sort of , may be referring to a woman or other word of feminine gender that does not appear in the sentence. Rictus often refers to an open mouth.

Literally: Which is on the edge of the aperture? or What sort of person is on the edge of the gaping mouth.

Edit: since writing the above I have discovered where the Latin is from: Ptolemy’s Star guide. Under the heading “Ursa Major”. The Latin is not in the form of a question. (My misinterpretation there.) so the sentence has an astronomical theme possibly meaning … which is on the edge of the mouth (of the Great Bear constellation.)

Yes Ola Auto Is Good , I'm From Chennai . I Regularly Use Ola Auto To Travel Near By Places . Ola Auto Can Booked Using Ola App. Many Would Think Ola Auto May Be Time Consuming Process But Not If We Book a Ride Call The Driver he will Arrive in 5Min in Our Door step. Ola Provides a Very Lowest Price of 29 For 4Km . The Price Rs 29 Is Not Increase d To 40 Rupees or 50 Rupees It's Shocking Because My Usage in Norma l Auto Would Cost minimum 70 to 100 (Moggappair East - Anna nagar West ) Distance Of 4 KM But Ola Auto Costs Just Rs 29 And They Pick Up At Our Door Step . If Wanna Travel Near By Places About 4KM Ola Auto Is Best and Cheaper Way To Reach Your Destination .

The first driver to get connected with OLA was a man named Ashok Kumar (name changed for privacy reasons) , however the first taxi driver to get a customer was a man named Vijay Shetty (name changed for privacy reasons).

The first customer , was an OLA employee named Sanjay Das (name changed for privacy reasons), while the first female customer was again an OLA employee named Juhi Desai(name changed for privacy reasons).

Just pulling your leg :-)

Like any other business , at first it was a pilot project and its life started in an incubator.

OLA started ops in Mumbai in December 2010.The founder Bhavish Agarwal is from IIT , Mumbai and probably that city was a familiar space and of course the fact that Mumbai city had the largest number of taxis in India.

The first taxi drivers to align with OLA would probably have been connected via personal contacts , and presentations of high incentives to join up would have ensured their interest in this business model.

The taxis were owned and run by people in an unorganized manner and there was no way a driver would be able to reach out to customers in real time.

In the initial days the incentives offered to taxi drivers to join OLA were much higher than where they stand today- that is because the situation of high demand from OLA shifted to a deluge of supply of taxi drivers.

As time went by , the incentives disappeared and the number of customers started getting distributed over a wide base of drivers.

Today a taxi driver with OLA has lots to crib about , whereas the first few were singing their praises for quite some time.