UpGrad Product Management

Competitor Analysis

Student Name: Meenakshi Garg

Introduction to the
Company
Objective of the Study
• Study the Indian Taxi market and identify major trends
• Do a competitive analysis of the Indian Taxi market for Meru Cabs
• Study Ola as Meru’s primary direct competitor and compare against Meru Cabs

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Overview of the Indian Taxi Industry
• Size of India taxi market was around $ 6.4 billion in 2016, and is forecast to grow at a CAGR of 13.7% during 2017 – 2022, to reach $
14.3 billion
• Increasing market of the taxi services can be attributed to changing lifestyle of people and increase in disposable income of people
especially in Tier 1 and tier 2 cities
• There has been a shift in the market from offline taxi services to online taxi services with the rise in internet penetration in India
• This shift can be attributed to various factors such as hassle free travel experience in air conditioned and well maintained cars,
booking convenience through phone , well behaved and skilled drivers, multiple payment options, 24×7 customer support, electronic
fare meters, GPS enabled vehicles, variety of cars including luxury cars etc.

Various challenges in the growth of Online cab Industry

• Shortage of supply caused by driver strikes and decreased
loyalty of drivers due to decreased driver incentives
• Highly competitive market with low switching cost for users
and increasing competition from low cost services like
shared auto, growing subway network etc.
• Lack of clarity on ever changing government regulations like
ban on surge pricing in Bangalore etc.

Online Taxi Market Size (Total completed rides in Mn) 2015-

2016 growth trends
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Competitive Analysis of Indian Online Cab Industry
Meru Cabs

Indirect Competitors
Direct Competitors

Self Drive Car Services

Public Transport Systems

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Company Background
Founded by Neeraj Gupta in 2007 in association with True North
(formerly known as India Value Fund Advisors). Prior to this
venture, Neeraj set up Mumbai’s largest fleet service business
that catered to some of the finest names in the media and
outsourced service business. He is a Commerce Graduate from
Hans Raj college
Goal and Mission –To offer a reliable, Safe and Transparent transport solutions for India
Strategy: Started as traditional green Radio Taxis, Meru Cabs has now branched out to online
booking of sedan, hatchback and SUV . Meru is the only taxi service that does not charge Surge
Pricing. Meru owns half the cars on its platform which it leases to drivers. The drivers agree to a
specific number of rides to repay the instalments. The other half of Meru’s fleet comprises cars
owned by drivers listed on the platform, a model similar to that of Ola and Uber. Meru also runs
Meru Genie,(hatchback cab service) Meru Eve(for women and by women), Meru Enable(for
disabled)
Current Employees: 500-1001
Revenue: Rs . 322.6 crore in revenues in FY16
Funding: 75 million USD from 2 funding rounds from Brand Capital and True North
Products: Meru cabs enables cab bookings via mobile app, website, call center or hail a cab on
road, Facebook messenger and google maps. You can book local cabs, outstation cabs or rental
cabs.
Meru for Business offers products like P2P travel, outstation trips, executive rentals, airport trips,
employee transport services and events and bulk bookings
Markets: Headquartered in Mumbai, Meru is now present across 24 cities in the country
No. of Acquisitions - NA
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Founded by Bhavish Aggarwal and Ankit Bhati in 2010. Bhavish
and Ankit are both alumni of IIT Bombay. Before Ola, Bhavish
worked with Microsoft Research for two years, filing two patents
alongside having three papers published in international
academic journals
Goals and Mission: 'Provide a cab to every Indian by organizing the huge unstructured cab
market in India
Strategy: online cab aggregator with variety of transport services including cabs, auto rickshaws,
bikes and carpooling services. It also has its own digital payment wallet called Ola Money and has
a dynamic pricing system where prices vary according to peak and non peak times (surge pricing).
Current Employees: 6000(as of 2017)
Revenue: Rs. 758 crore in FY 2016. It commands around 150,000 bookings per day with 45% of
market share in India
Funding: 3.2 billion USD from 15 funding rounds. 13 lead investors including Tamasek, Softbank
and Tencent Holdings
Products: P2P drives for customers via mobile app, call center , website. You can book local cabs,
outstation cabs or rental cabs Also offers Ola Auto and bike services in some cities. Also offer Ola
corporate services like P2P travel, employee pick up and drop, employee travel management
services. Innovative services like Ola Share, Ola Play ,Ola Pass, Ola Select to hook the customers
Markets: Headquartered in Bangalore, Ola is present in 110+ cities in India. Besides India, also
present in few cities in Australia and UK
No. of Acquisitions – 5 – Ridlr, Foodpanda India, Qarth, Geotagg,Taxiforsure.com
 Business Model Analysis

Fleet Strategy : Company owned cars which are rented to drivers at a daily rate and drive r
owned cars . They also offer franchise service for cabs and technology to be operated in other
geographies
Cab pricing Model : 2 models for local cabs –approx. fare based on the meter or fixed fare. For
rentals, fixed price basis distance and time combination.
Target Customers : Currently operating in 24 cities in India with a target market of B2C and B2B
customers. Meru Cabs is planning to double its B2B offerings and offer corporate employee
transportation, car rentals and airport contracts (increase B2B revenue 75-80% from 40-45%
currently).
Revenue Model: Meru leases the car to the driver and they pay approx. INR 1200 per day Other
source is from advertisement on and within the car
From non owned cars it earns trip based commission (15-20% of the bill). Additionally, they have
corporate tie-ups from where they get volume based revenues. Meru from their side assures a
certain no. of trips t the drivers
Fleet Strategy: 2 incentive plans-1. Based on # of bookings and based on earnings. Drivers can
attach their own car or can attach a fleet of their cars. Limited option of leasing the cars also
available
Cab Pricing Model : Surge pricing basis peak time and cab availability. Approx. price shown
upfront to the customer. Outstation and rentals, similar to Meru
Target Customers : Mostly B2C operations currently. 4 segments of customers, those who don’t
mind sharing the cabs, the one who prefer taking personal Cab wherever they go, office goers
and outstation / long journey commuters.
Revenue Model: Ola provides an online platform for the consumers (cab riders) to meet easily
with the producer (cab vendor) and usually charges 11-13% of the total bill amount for a trip.
Other revenue streams include digital wallet, volumes through corporate and event tie ups,
vehicle onboarding fee, in car advertisements, fleet leasing to drivers, peak time charges, car
type(diff fares for diff cars)

Key Product Differentiators: Key Product Differentiator:

• No surge pricing • Features like Ola Play, Ola Share, Ola Select and ride passes
• Traditional radio taxi offering in addition to online booking • Self Ola Money digital wallet
Recent Innovations
Cab Marketplace : launched recently in April(pilot in Delhi), Meu has offered marketplace in the
cab industry where drivers will be shown a recommended fare and he can chose to bid for a fare
lower or higher than the recommended fare. Similarly, customers will be shown different fares
demanded by upto 10 divers, their ratings and their expected time of arrival. Customers can pick
the driver they want for the booking

Business Model Shift of Meru and Ola - Meru started as a radio taxi player in 2007 in Delhi. Meru had a strong back end and owned its fleet. With advent of Ola and Uber, they realized their front end
was not strong enough and thus they shifted to app based platform. Post driver strike in 2012 and realizing owning a fleet of cars is costlier operationally, not scalable and is bound within a city on pay per
km basis, Meru shifted to driver owned car model. Currently, Meru has a fleet of about 20,000 cars, of which 6,000 are company-owned and rest are aggregated. Similar to Meru, Ola also started out as
taxi
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rental fleet business where they owned the cars, but unbranded and available on 8hr 80km kind of billing but soon they moved to a online cab aggregator model like Uber to be able to scale and low
operational costs
Strengths and Weaknesses
Strengths Ola Cabs Weakness Ola Cabs Customer Pain Points Ola Cabs
• Wide product line from cabs, bikes to rickshaws • Limited control on drivers • Unreliable surge pricing
• High number of investors backing the company • Unclear regulatory environment • Limited availability of cabs
• State of the art technology with strong data analytics • Largely dependent on internet availability • Unsupportive customer care
• First mover advantage compared to Meru in app although recent feature allows user to book • Drivers cancelling cabs and
based cab booking space offline as well asking for high ratings for
• Low Investment as does not need to own cars • High customer acquisition cost with heavy their incentives
• Strong brand name discounts and promotions. • Drivers complaining of
• Increased revenue from surge pricing decreasing incentives and
• 45% market share in India, has gone international as income
well

Strengths Meru Cabs Weakness Meru Cabs Pain Points Meru Cabs
• Training academy for the drivers • High fixed cost as it owns its fleet • Limited availability of cabs
• Larger control on drivers due to owning the fleet • Late mover to the app based aggregator model • Lower quality of the app
• Larger share of airport rides leading to increased thus lost market share and opportunities • No cab share option or long
advertising revenue and higher fares • Limited fleet size term pass option thus
• Longer experience in the India cab market • Regulatory environment and high customer higher costs
• Strong back end system acquisition cost. Although Meru has high share of
• Innovation like marketplace system for cabs can be radio bookings for airport rides and corporate Source
a big differentiator bookings which helps it
• No surge pricing thus transparency and reliability • Sustainability due to low investor base
for user

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Product Comparison
Parameter Ola Meru

App Downloads IOS: Data not available IOS: data not available
Android: 50,000,000+ Android: 1,000,000+
Windows: Data not available Windows: Data not available

App Ratings IOS: 2.6, 7,352 reviews IOS: 2.4, 52 reviews

Android:‎4.1 , 969,562 reviews Android: 3.8, ‎54,895reviews
Windows: 3.3, 8,972 review Windows: 4, 1774 reviews

User Experience Easy to use app, most functionality available in single page.
Once booked, shows all the relevant driver details on the app
page.
App slow to load and refresh. Too many
options for the user to chose adds to slight
complexity of the app usage. The interface is
cluttered and difficult to navigate. Shows the
picture of the driver after booking which is
good

App Functionality Good with features like schedule your cab, variety of cabs like
micro, mini, local outstation etc., SOS button, payment options.
One problem could be with the driver marking ‘Arrived’ before
he has arrived which leads to customer being penalized
unnecessarily
No support functionality on the app leading
to user emailing or calling the customer
service. No Share and loyalty features
available. Incorporates useful feature to
book cab for someone else. Does not group
cabs in different category upfront.

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Possible Initiatives by Ola
• Going to international markets in Australia and UK. Source
• With the acquisition of Ridlr, Ola might be adding public transport services. Ridlr operates as a personal transport portal that
allowed users buy tickets for public transport in 17 Indian cities and also monitor traffic congestion using IOT devices. Given that
public transport are one of the indirect competitors in the industry, this might be a critical move for Ola. Source
• In addition to expansion abroad, Ola has launched a ‘lite’ version of its app that works on the slowest internet connectivity and thus
will be able to make it accessible to its consumers in tier II and III cities of the country Source

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Sources
https://www.techsciresearch.com/report/india-taxi-market/1450.htm
https://mybigplunge.com/opinion/redseer-online-taxi-market-in-india-future-holds-for-cab-aggregators/l
https://www.crunchbase.com/organization/meru-cabs#section-funding-rounds
https://officechai.com/startups/meru-marketplace-model/
https://unicornomy.com/how-does-ola-make-money/

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