Road to Riches is Paved with Low-cost Choices. Ask Uber

The Economic Times - - Disruption: - Aditi.Shri­vas­tava1 @times­group.com

Bengaluru: Uber and Ola are open­ing a new front in their on­go­ing battle for lead­er­ship in In­dia’s cab ag­gre­ga­tion busi­ness with spe­cific ser­vices that tar­get the value-con­scious con­sumer.

Uber aims to in­vest fur­ther in low­cost rid­ing op­tions like car­pool­ing, bike taxis and auto rick­shaw ser­vices to snag a wider swathe of con­sumers and take the battle to Ola. Last week, Ola launched its cheap­est taxi-hail­ing ser­vice- OlaMi­cro — and claims the new prod­uct is its most pop­u­lar yet. “We want to make transportation avail­able for every­one and cabs may not al­ways be the most af­ford­able op­tion for all seg­ments,” said Amit Jain, VP, Uber In­dia.

Pric­ing is prov­ing to be the most in­tensely fought battle for cab ag­gre­ga­tors, in their hunt for more pas­sen­gers. In ad­di­tion these com­pa­nies are also fac­ing reg­u­la­tory pres­sure on a com­monly used tool — surge pric­ing — where cost of a cab ride in­creases dur­ing peak hours. Last week, the Kar­nataka state gov­ern­ment said it would not al­low surge pric­ing for app-based ride-hail­ing ser­vices.

The fare and other charges can­not be higher than the fare fixed by the gov­ern­ment from time to time, ac­cord­ing to the new pol­icy. Uber has in the last two years fo­cused more on pro­vid­ing low-cost ride op­tions.

Ola’s Mi­cro ser­vice of­fers air con­di­tioned cab rides at .₹ 6 per kilo­me­tre, in a bid to at­tract those who haven’t taken a cab ride be­fore.

“(It) will be the most pocket friendly mode of in­tra-city cab travel,” sa- id Pranay Jivra­jka, Chief Op­er­at­ing Of­fi­cer at Ola.

Ex­perts are of the view that the de­mand for taxis is slow­ing down, if not flat­ten­ing, which is the rea­son why taxi app com­pa­nies have to in­crease the cus­tomer base for other prod­ucts. “In or­der to tap cus­tomers who use pub­lic trans­port, there is a need to give eco­nom­i­cal and faster op­tion for shorter dis­tances,” said Jas­pal Singh, founder of transportation con­sult­ing firm Valoriser Con­sul­tants.

Uber, which launched a bike taxi ser­vice in March, is now “as­sess­ing how two-wheel­ers can be the right an­swer for short-dis­tance trips par­tic­u­larly those that help pro­vide last mile con­nec­tiv­ity”, said Jain.

And in sev­eral cities, the com­pany no longer of­fers lux­ury sedans for its pre­mium ser­vice but has re­placed it with large-size ve­hi­cles like the Mahin­dra SUV and XL in­di­cat­ing a larger ve­hi­cle by size and not by the ex­pe­ri­ence it­self.

Be­fore the launch of any low-cost cat­e­gory, Uber’s Jain said the firm makes some key changes to its app to drive adop­tion. “We ex­pect this (auto) seg­ment to be large on cash pay­ment and hence that will be avail­able right from launch,” he said.

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