On-Demand Cab Industry in India

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Investors are betting big on online cab-service industry in India, looking for the next Flipkart or Snapdeal in the taxi-app industry. These players don’t own cars or employ drivers; they simply connect customers with drivers, using technology, and charge a commission varying from 15–20% on each ride. This aggregator model will always prevail over the one that involves owning cars.

The cab service market is estimated to be around 13–15 billion USDopportunity and only 10% of it falls under the organized category. Players like Ola have already attained a unicorn status (billion dollar plus valuation) in a short span of time. Currently in 90 cities in India, Ola run by Bhavish Agarwal plans to use the funding to reach out to over 200+ cities in India over 2016. Ola recently acquired Taxi for Sure for a whooping 150 million USD. Other players competing with Ola are - Meru, Uber, Zoomcar, Mega Cabs.

Huge opportunities and challenges exist in the sector:

a) Smart phone penetration in India is on the rise. IAMAI-KPMG estimates that there will be a total of 500 million Internet users (out of a total population of 1.25 billion) in India by 2017, up from a current number of about 350 million. According to the report, the number of mobile Internet users in two years will be 314 million.

b) Verification of Driver, conduct and other safety measures

c) Low debit/credit card penetration in the country. Will have to explore the cash payment model as well.

d) Internet and mobile connectivity

e) Launching Multilingual app will help

f) Discount wars will surely emerge

g) Threat from Auto/local/ transport modes or personal vehicles

h) Car pool mobile apps may eat some market share

i) Customer Service (are the drivers trained on human aspects of business service)

Interesting space to watch out for over the next 2–3 years in India. Ola being the Flipkart, while UBER being the amazon of the industry. May be a Snap deal might also emerge in the space.

Siddhartha Sharma

Strategy Consultant and Growth Expert

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