An Uber Update from Australia

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(Preet) #1

We reported earlier that Ola was taking on Uber in Australia and succeeding to do so since it had a leveraged market advantage Most of the drivers in Australia are Indian's and by retaining the cultural identity of Ola, drivers preferred to work for them than for Uber.

Australia is Ola's first international step and is a major market to test its organizational capabilities. Ola is based in Perth and added a new location in Sydney last week. Ola is providing drivers will a larger percentage of the income and as a promo offering riders a free ride to start off their customer relationship with Ola.

Uber has been operating as a monopoly in Australia for some time, and Ola is now providing a new competitive edge that will challenge the stagnant and bad reputation of Uber. As one local driver, 39-year-old Oliver ward said "Uber doesn't really have a great reputation for treating people fairly. It's good to see some new competition."

For Ola, Australia is a great opportunity, the rides are more expensive than in India, and rideshare is not as popular yet, where less than 20% of all Australians that use e-commerce for buying products use ridesharing as a transportation solution.

Since Australia is a virgin market, and since Uber has been alone, one naïve forecaster from technology firm Forrester, Satish Meena stated that "In the ride-sharing market currently, there are no real enemies. Everyone is willing to share the pie." This might seem true for him, but even in Australia, Uber will not be happy to compete.

In reply to Meena's statement, Uber's GM for Australia and New Zealand, David Rohrsheim told the media that "We welcome competition because it keeps us focused on delivering the very best product." Which is a muted battle cry for what will emerge in the following few months?

In December, Taxify hit the roads of Australia, and the Australian regulatory requirements are quite lax, which gives ridesharing companies great potential for success in the Australian gig economy.

While Australia might have lax rideshare regulations, it has tough labor laws, and Uber is facing issues around the benefits, and retirement plans for Uber drivers. Uber will challenge driver's rights to such benefits if they work for more than one service, claiming that this is proof the drivers are independent contractors and not semi-employees.

Ola's Attack

Ola challenges Uber' market share by enticing drivers over with a better incentive plan. Ola will only take a 7.5% fee in comparison to Uber's 25% fee. This is a significant difference, where drivers claim that by working for Ola they will reach $39 per hour with Ola in comparison to $30 with Uber. One Uber driver Cheri Gristwood stated "It's a dramatic difference. I work my butt off, and with Ola, I come home with a lot more."

Ola's incentive to steal drivers from Uber is working out well for them, so far Ola has managed to contract 7,000 new drivers, but this is still afar crying from Uber's 82,000. Taxify is still new to the scene, and there are not statistics from them as yet.

Uber's self-defeat

It seems that Uber is its worst enemy since the success of Ola comes from within. One Ola customer told the media that she learned of Ola while taking a ride with Uber. The driver was using tow mobile phones, and when she asked the driver what the second phone was for, he told her about Ola.

Cecilia Cornu, the passenger, explained that about the Uber driver, "He told me my ride would have been cheaper if I had booked it through Ola, as they were running a promotion with free rides. As soon as I got to work, I downloaded the Ola app."

Ola International

Ola is not marketing to Indian drivers specifically, but they do hope and expect that Indian drivers will sign on more than others, they state that 1.9 percent of the population in Australia is Indian born, that accounts for 24 million people.

Ola app issues

The Ola app is still problematic, and it continues to have bugs and issues, in some instances it continues to calculate a ride even after it is over. The registration process is also a bit more complex than that of Uber's. However, these are technical issues that can be sorted out, and most probably will be solved soon

The SoftBank Paradigm

One of Ola's major investors is Japan's SoftBank, and one of the issues facing Ola's founder is the impact that SoftBank has in everyday decision making. Bhavish Aggarwal, the founder of Ola, is busy trying to find new sources of investment to counter the SoftBank influence. He is worried that SoftBank will try to take over the company completely and will use their influence to change the direction that Ola wants to take in global expansion. It is no secret that SoftBank is trying to organize the world into rideshare sectors, where their investment into Uber, Didi, Grab and Ola will be separated into geographical fences. This way Softbank can hope to maximize their income through minimizing cohesive competition between rival investments in the same territory.

Aggarwal is fully aware of how Uber does business and how SoftBank influences decisions. So far Uber has entered and left three major markets, China, Russia and now Southeast Asia, and in each market have sold out to a local company. Ola does not want to go that route, although he does expect something similar to happen in India eventually.

In regard to Australia, Aggarwal told the press that "We are very excited about launching Ola in Australia and see immense potential for the ride-sharing ecosystem in a country which embraces new technology and innovation."


(Andrew Martin) #2

I am anticipating Ola overtaking Uber in Australia, but honestly, not due to the Indian culture but due to the way Ola pays and incentivizes drivers to leave Uber for them. Uber still has a bad name in Australia, and Ola can cash in on this image. Now add to that the “advantage” that culture has, or has not. When you look at Ola and Uber in India, you see the same plight of their drivers and realize there is no cultural advantage when money is involved, an unscrupulous business owner will plunder and steal just as well whether they are Indian or American, money has no culture or color, it is just money.


(Steve Mann) #3

I think both Ola and Uber are in the same boat. After reading up on what is happening in India, I don’t see how a handful of immigrant drivers will make much of a difference in the balance of power in Australia. Uber will always find drivers with the right incentives.